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Is there a “reverse wash sale” rule? | Yes, the newly bought shares will have a long-term holding period, regardless of when you sell them. In addition, it's only a wash sale if you sold the first shares for a loss; it's not a wash sale if you sold them for a gain. Wikipedia mentions this: When a wash sale occurs, the holding period for the replacement stock includes the period you held the stock you sold. Example: You've held shares of XYZ for 10 years. You sell it at a loss but then buy it back within the wash sale period. When you sell the replacement stock, your gain or loss will be long-term — no matter how soon you sell it. Charles Schwab also mentions this: Here's a quick example of a wash sale. On 9/30/XX, you buy 500 shares of ABC at $10 per share. One year later the stock price starts to drop, and you sell all your shares at $9 per share on 10/4/XY. Two days later, on 10/6, ABC bottoms out at $8 and you buy 500 shares again. This series of trades triggers a wash sale. The holding period of the original shares will be added to the holding period of the replacement shares, effectively leaving you with a long-term position. |
Short term cutting losses in a long term investment | What might make more sense is to 'capture' your losses. Sell out the funds you have, move into something else that is different enough that the IRS won't consider it a wash sale, and you can then use those losses to offset gains (you can even carry them forward) You would still be in the market, just having made a sort of 'sideways move'. A month or two later (once you are clear of wash sale rules) you could shift back to your original choices. (this answer presumes you are in the US, or somewhere that lets you use losses to offset gains) |
Correct way to amend tax return as a result of not correctly reporting gains on sale of private stock based on Installment method? | After much research, the answer is "a": recompute the tax return using the installment sales method because (1) the escrow payment was subject to "substantial restrictions" by virtue of the escrow being structured to pay buyer's indemnification claims and (2) the taxpayer did not correctly elect out of the installment method by reporting the entire gain including the escrow payments on the return in the year of the transaction. |
how does one start an investing club (as a company)? | +1 for noting that you are in it for the long haul. I also think this is a great project and activity to do with friends. Setting up and start-up investment company could be done as a simple LLC. The decision making process can be decided among the members -- if you want to defer to the others then so be it. Make it flexible so that you can change your mind in the future. If this is not intended to be a source of revenue or income for you (note your "in it for the long haul") One way of sourcing the capital and managing the resulting taxes you might want to consider is setting up a self-directed retirement account and making the investment from there. proceeds as you and your friends choose to take them would flow back into the retirement account. As with most investment and tax related questions we should all take the little extra time and money to follow up on internet-based advice with your own lawyer, investment adviser and accountant. These licensed individuals when under contract assume a degree of responsibility for their answer which is not available online. :) |
Is investing exlusively in a small-cap index fund a wise investment? | If the OP is saving 33% if his/her current income, he/she doesn't want or need yet more income from investments right now. The advice on "diversifying" in the other answers is the standard "investment advisor" response to beginner's questions, and has two advantages for the advisor: (1) they won't get sued for giving bad advice and (2) they can make a nice fat commission selling you some very-average-performance products (and note they are selling you "investment industry products," not necessarily "good investment opportunities" - advisors get paid commission and bonuses for selling more stuff, not for selling good stuff). My advice would be to drip-feed some of your excess income into the emerging market sector (maybe 1/3 or 1/4 of the excess), with the intention of leaving it there untouched for up to 20 or 30 years, if need be. At some unknown future time, it is almost certain there will be another EM "boom," if only because people have short memories. When that happens, sell up, take your profits, and do something less risky with them. You might consider putting another slice of your excess income into the commodities sector. I don't know when the oil price will be back at $150 or $200 a barrel, but I would be happy to bet it will happen sometime in the OP's lifetime... Since you apparently have plenty of income and are relatively young, that is the ideal time to adopt a risky investment strategy. Even if you lose your entire investment over the next 5 years, you still have another 20 years to recover from that disaster. If you were starting to invest at age 56 rather than 26, the risk/reward situation would be very different, of course. |
Comparison between buying a stock and selling a naked put | Option prices are computed by determining the cost of obtaining the option returns using a strategy that trades the underlying asset continuously. It sounds like what you are describing is rapidly trading the option in order to obtain returns similar to those of the stock. The equality goes both ways. If the option is appropriately priced, then a strategy that replicates stock returns using the option will cost the same as buying the stock. Because you can't trade continuously, you won't actually be able to replicate the stock return, and it may seem like you are making arbitrage profit (puts may seem abnormally expensive), but you do so by bearing tail risk (i.e., selling puts loses more money than owning the associated stock if an unusually bad event occurs). |
What are some sources of information on dividend schedules and amounts? | Yahoo Finance is definitely a good one, and its ultimately the source of the data that a lot of other places use (like the iOS Stocks app), because of their famous API. Another good dividend website is Dividata.com. It's a fairly simple website, free to use, which provides tons of dividend-specific info, including the highest-yield stocks, the upcoming ex-div dates, and the highest-rated stocks based on their 3-metric rating system. It's a great place to find new stocks to investigate, although you obviously don't want to stop there. It also shows dividend payment histories and "years paying," so you can quickly get an idea of which stocks are long-established and which may just be flashes in the pan. For example: Lastly, I've got a couple of iOS apps that really help me with dividend investing: Compounder is a single-stock compound interest calculator, which automatically looks up a stock's info and calculates a simulated return for a given number of years, and Dividender allows you to input your entire portfolio and then calculates its growth over time as a whole. The former is great for researching potential stocks, running scenarios, and deciding how much to invest, while the latter is great for tracking your portfolio and making plans regarding your investments overall. |
What is a checking account and how does it work? | A savings account and a checking account (or a "demand" account, or a "transactional" account) have different regulations. For example, fractional reserve requirements are 10% against checking accounts, but 0% against savings accounts. The theory is that savings accounts are sticky, while checking accounts are hot money. So the Fed wants to stop banks from creating accounts that are regulated as savings accounts but have the features of checking accounts. In the past, this was done by forbidding banks to pay interest on checking accounts. They eliminated that rule back in the inflation years, and instead imposed the rule that to qualify as a savings accounts for regulatory purposes, banks must discourage you from using them as transactional accounts. For example, by limiting the number of withdrawals per month that can be made from a savings account. If the Fed gave up on trying to enforce a distinction, I suspect there would soon no longer be a distinction. |
What are some time tested passive income streams? | Renting a house out using a management company is mostly passive income. Earning affiliate income from companies that pay on a recurring basis is closer to passive income. |
What is a good way to save money on car expenses? | Keep up on routine maintenance. That's the best way to prolong the life of your car, and it'll save you money in the long run because you won't have to replace your car as often. Accelerate gently. The harder you push the gas pedal, the more gas you use. Coast to a stop rather than using your brakes. If you can avoid stopping by slowing down well before a red light so that by the time you actually get to the light it is green again, do so. Avoid high-speed driving. At highway speeds, wind resistance plays a big part in how much gas your car uses. If you can plan your trips to take slower routes, do so. Don't be the guy driving 55 in the left lane on the highway, though. Avoid stop-and-go traffic. Keeping to a constant speed is the most efficient. Plan your trips to avoid areas with lots of traffic, lots of curb-cuts and intersections, etc. Leave lots of space in front of you so you have time to anticipate other drivers intentions and slow down rather than having to slam on your brakes at the last second. Avoid short trips. Cars work best when they can get all the way up to operating temperature, and stay there for a while. If you're just going two miles, ride your bike. Live close to work and a grocery store, so you can walk or ride your bike rather than driving. Use your car for road trips and your quarterly trips to CostCo to restock the larder. If you can get away with not owning a car, sell it. Ride your bike, use public transit, or walk. If you can share a car with a significant other and only one of you has a long car commute, there's no sense in you both owning a car. |
How should minor children be listed as IRA beneficiaries? | First - for anyone else reading - An IRA that has no beneficiary listed on the account itself passes through the will, and this eliminates the opportunity to take withdrawals over the beneficiaries' lifetimes. There's a five year distribution requirement. Also, with a proper beneficiary set up on the IRA account the will does not apply to the IRA. An IRA with me as sole beneficiary regardless of the will saying "all my assets I leave to the ASPCA." This is also a warning to keep that beneficiary current. It's possible that one's ex-spouse is still on IRA or 401(k) accounts as beneficiary and new spouse is in for a surprise when hubby/wife passes. Sorry for the tangent, but this is all important to know. The funneling of a beneficiary IRA through a trust is not for amateurs. If set up incorrectly, the trust will not allow the stretch/lifetime withdrawals, but will result in a broken IRA. Trusts are not cheap, nor would I have any faith in any attorney setting it up. I would only use an attorney who specializes in Trusts and Estate planning. As littleadv suggested, they don't have to be minors. It turns out that the expense to set up the trust ($1K-2K depending on location) can help keep your adult child from blowing through a huge IRA quickly. I'd suggest that the trust distribute the RMDs in early years, and a higher amount, say 10% in years to follow, unless you want it to go just RMD for its entire life. Or greater flexibility releasing larger amounts based on life events. The tough part of that is you need a trustee who is willing to handle this and will do it at a low cost. If you go with Child's name only, I don't know many 18/21 year old kids who would either understand the RMD rules on IRAs or be willing to use the money over decades instead of blowing it. Edit - A WSJ article Inherited IRAs: a Sweet Deal and my own On my Death, Please, Take a Breath, an article that suggests for even an adult, education on how RMDs work is a great idea. |
How would bonds fare if interest rates rose? | 1. Interest rates What you should know is that the longer the "term" of a bond fund, the more it will be affected by interest rates. So a short-term bond fund will not be subject to large gains or losses due to rate changes, an intermediate-term bond fund will be subject to moderate gains or losses, and a long-term bond fund will be subject to the largest gains or losses. When a book or financial planner says to buy "bonds" with no other qualification, they almost always mean investment-grade intermediate-term bond funds (or for individual bonds, the equivalent would be a bond ladder averaging an intermediate term). If you want technical details, look at the "average duration" or "average maturity" of the bond fund; as a rough guide, if the duration is 10, then a 1% change in interest rates would be a 10% gain or loss on the fund. Another thing you can do is look at long-term (10 years or ideally longer) performance history on some short, intermediate, and long term bond index funds, and you can see how the long term funds bounced around more. Non-investment-grade bonds (aka junk bonds or high yield bonds) are more affected by factors other than interest rates, including some of the same factors (economic booms or recessions) that affect stocks. As a result, they aren't as good for diversifying a portfolio that otherwise consists of stocks. (Having stocks, investment grade bonds, and also a little bit in high-yield bonds can add diversification, though. Just don't replace your bond allocation with high-yield bonds.) A variety of "complicated" bonds exist (convertible bonds are an example) and these are tough to analyze. There are also "floating rate" bonds (bank loan funds), these have minimal interest rate sensitivity because the rate goes up to offset rate rises. These funds still have credit risks, in the credit crisis some of them lost a lot of money. 2. Diversification The purpose of diversification is risk control. Your non-bond funds will outperform in many years, but in other years (say the -37% S&P 500 drop in 2008) they may not. You will not know in advance which year you'll get. You get risk control in at least a few ways. There's also an academic Modern Portfolio Theory explanation for why you should diversify among risky assets (aka stocks), something like: for a given desired risk/return ratio, it's better to leverage up a diverse portfolio than to use a non-diverse portfolio, because risk that can be eliminated through diversification is not compensated by increased returns. The theory also goes that you should choose your diversification between risk assets and the risk-free asset according to your risk tolerance (i.e. select the highest return with tolerable risk). See http://en.wikipedia.org/wiki/Modern_portfolio_theory for excruciating detail. The translation of the MPT stuff to practical steps is typically, put as much in stock index funds as you can tolerate over your time horizon, and put the rest in (intermediate-term investment-grade) bond index funds. That's probably what your planner is asking you to do. My personal view, which is not the standard view, is that you should take as much risk as you need to take, not as much as you think you can tolerate: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ But almost everyone else will say to do the 80/20 if you have decades to retirement and feel you can tolerate the risk, so my view that 60/40 is the max desirable allocation to stocks is not mainstream. Your planner's 80/20 advice is the standard advice. Before doing 100% stocks I'd give you at least a couple cautions: See also: |
Why can't you just have someone invest for you and split the profits (and losses) with him? | A 'indexed guaranteed income certificate' (Market Growth GIC) fits the criteria defined in the OP. The "guaranteed" part of the name means that, if the market falls, your capital is guaranteed (they cover the loss and return all your capital to you); and the "index linked" or "market growth" means that instead of the ROI being fixed/determined when you buy the GIC, the ROI depends on (is linked to) the market growth, e.g. an index (so you get a fraction of profit, which you share with the fund manager). The upside is that you can't 'lose' (lose capital). The fund manager doesn't just share the losses with you, they take/cover all the losses. The downside is that you only make a fraction of whatever profit you might make by investing directly in the market (e.g. in an index fund). Another caveat is that you buy a GIC over some fixed term, e.g. you have to give them you money for a year or more, two years. |
How do I report this cash bonus/tip on income tax return? | Employers are not supposed to give cash gifts to their employees, even if you try to call it a "gift" for tax purposes. Presumably, the reason your wife's employer gave her cash was to be nice and save her taxes on that amount. Her employer already paid tax on that money so that your wife doesn't have to. If she plans to declare it anyway, then she should instead give it back and ask for it to be added to the W2 as an end of year bonus. This way her employer could then deduct the payment and pay her a larger amount of money. (The additional amount would be approximately their tax rate minus about 7.45% for FICA.) In fact, if your wife's tax rate is more than 15% lower than her employer's, then this is actually mathematically best for both parties. |
Should I buy a house with a friend? | Sure, form an LLC with an attorney's advice. You need a buyout clause, operating agreement, etc. If you're not married, never buy a home for personal use with someone else. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | because it cost the insurer more, obviously. while this sounds snarky, it's important to realize that actual insurance companies set their insurance rates based on actual historical costs. for some reason people who report low miles have cost the company more dollars per reported mile than people who report high miles. in that sense, insurance is not overpriced. if it were truly overpriced, then an insurer would specialize in such insurance and make a killing on the free market. the more interesting questions is why do drivers who claim to travel very few miles cost the insurance companies so much per mile? that question has a host of possible answers and it's difficult to say which is the largest cost. here are just a few: |
Helping my family sell their oil stocks. What to buy? | *("Fee-only" meaning the only money they make is the fee your folks pay directly; no kickbacks from financial products they're selling.) The answer to this is: for God's sake, leave it alone! I commend you on wanting to help your family avoid more losses. You are right, that having most of one's retirement in one stock or sector is just silly. And again yes, if they're retired, they probably need some bonds. But here's the thing, if they follow your advise and it doesn't work out, it will be a SERIOUS strain on your relationship. Of course you'll still be a family and they'll still love you, but emotionally, you are the reason they lost the money, and that will an elephant in between you. This is especially the case since we're talking about a lot of money here (presumably), and retirement money to boot. You must understand the risk you're taking with your relationships. If you/they lose, at best it'll make things awkward, and you'll feel guilty about their impoverished retirement. At worst it can destroy your relationship with your folks. What about if you win? Won't you be feted and appreciated by your folks for saving them from themselves? Yes, for a short while. Then life moves on. Everything returns to normal. But here's the thing. You won't win. You can't. Because even if you're right here, and they win, that means both they and you will be eager for you to do it again. And at some point they'll take a hit based on your advise. Can I be blunt here? You didn't even know that you can't avoid capital gains taxes by reinvesting stock gains. You don't know enough, and worse, you're not experienced enough. I deduce you're either a college student, or a recent grad. Which means you don't have experience investing your own money. You don't know how the market moves, you just know the theory. You know who you are? You're me, 20 years ago. And thank God my grandparents ignored my advise. I was right about their utilities stocks back then, too. But I know from what I learned in the years afterwards, investing on my own account, that at some point I would have hurt them. And I would have had a very hard time living with that. So, tell your folks to go visit a fee-only financial adviser to create a retirement plan. Perhaps I'm reading into your post, but it seems like you're enthusiastic about investing; stocks, bonds, building wealth, etc. I love that. My advise -- go for it! Pull some money together, and open your own stock account. Do some trading! As much as people grouse about it, the market really is glorious. It's like playing Monopoly, but for keeps. I mean that in the best way possible. It's fun, you can build wealth doing it, and it provides a very useful social purpose. In the spirit of that, check out these ideas (just for you, not for your folks!), based on ideas in your post: Good luck. |
What happens to the original funds when a certified bank check is not cashed? | The answer probably varies with local law, and you haven't said where you're located. In most or all US states, it appears that after some statutory length of time, the bank would transfer the money to the state government, where it would be held indefinitely as "unclaimed property" in the name of the recipient (technically, the payee, the person to whom the check is made payable). This process is called escheatment. Most states publish a list of all unclaimed property, so at some later date the payee could find their name on this list, and realize they were entitled to the funds. There would then be a process by which the payee could claim the funds from the state. Usually the state keeps any interest earned on the money. As far as I know, there typically wouldn't be any way for you, the person who originated the payment, to collect the money after escheatment. (Before escheatment, if you have the uncashed check in your possession, you can usually return it to the bank and have it refunded to you.) I had trouble finding an authoritative source explaining this, but a number of informal sources (found by Googling "cashier check escheatment") seem to agree that this is generally how it works. Here is the web site for a law firm, saying that in California an uncashed cashier's check escheats to the state after 3 years. Until escheatment occurs, the recipient can cash the check at any time. I don't think that cashier's checks become "stale" like personal checks do, and there isn't any situation in which the funds would automatically revert to you. |
How are people able to spend more than what they make, without going into debt? | Rich people use debt for various reasons. The question should not assume that billionaires don't use debt. They also pay lower interest rates on that debt because they have enough collateral that their debt is safer than a typical mortgage. Many rich people will use interest only mortgages on their primary residences so that they can keep their stock earning at higher growth rates than the mortgage interest that they are paying all while writing off a portion of that mortgage interest on their taxes. Taking an artificially low salary and receiving equity for the larger portion of compensation is also a tax strategy to limit the amount of taxes owed on that income. If paid directly in stock grants, that will count as income, but if paid in options, then the purchased stock will only be taxed at the lower capital gains rates if the stock is held for a year after the options are exercised. Every billionaire will have complicated tax avoidance strategies that will require multi-year planning for the best long-term minimization of taxes. Debt is a strategic part of that planning. Also consider that a major part of that upscale lifestyle (corporate jets, fancy meals, etc.) is on the company dime because the CEO is always on the clock. As long as he is meeting with business prospects or doing other company business, those expenses will be justified for the corporation and not attributed as income. |
Is it possible for the average person to profit on the stock market? | I'd refer you to Is it true that 90% of investors lose their money? The answer there is "no, not true," and much of the discussion applies to this question. The stock market rises over time. Even after adjusting for inflation, a positive return. Those who try to beat the market, choosing individual stocks, on average, lag the market quite a bit. Even in a year of great returns, as is this year ('13 is up nearly 25% as measured by the S&P) there are stocks that are up, and stocks that are down. Simply look at a dozen stock funds and see the variety of returns. I don't even look anymore, because I'm sure that of 12, 2 or three will be ahead, 3-4 well behind, and the rest clustered near 25. Still, if you wish to embark on individual stock purchases, I recommend starting when you can invest in 20 different stocks, spread over different industries, and be willing to commit time to follow them, so each year you might be selling 3-5 and replacing with stocks you prefer. It's the ETF I recommend for most, along with a buy and hold strategy, buying in over time will show decent returns over the long run, and the ETF strategy will keep costs low. |
What's the general principle behind choosing saving vs. paying off debt? | It has to do with return. I don't know if Canada has a matching feature on retirement accounts, but in the US many companies will match the first X% you put in. So for me, my first $5000 or so is matched 100%. I'll take that match over paying down any debt. Beyond that, of course it's a simple matter of rate of return. Why save in the bank at 2% when you owe at 10-18%? One can make this as simple or convoluted as they like. My mortgage is a tax deduction so my 5% mortgage costs me 3.6%. I've continued to invest rather than pay the mortgage too early, as my retirement account is with pre-tax dollars. So $72 will put $100 in that account. Even in this last decade, bad as it was, I got more than 3.6% return. |
What are some signs that the stock market might crash? | Although it is impossible to predict the next stock market crash, what are some signs or measures that indicate the economy is unstable? These questions are really two sides of the same coin. As such, there's really no way to tell, at least not with any amount of accuracy that would allow you time the market. Instead, follow the advice of William Bernstein regarding long-term investments. I'm paraphrasing, but the gist is: Markets crash every so often. It's a fact of life. If you maintain financial and investment discipline, you can take advantage of the crashes by having sufficient funds to purchase when stocks are on sale. With a long-term investment horizon, crashes are actually a blessing since you're in prime position to profit from them. |
Why have I never seen a stock split? | Are you sure you're not just looking at prices that are adjusted for the split, e.g. Yahoo? For example, Gilead Sciences (GILD) split a few months ago, but if you look at a price chart, there isn't an interruption even though the split is clearly marked. (Look in the past six months; it split in January). However, you could also simply be watching companies that happen to not split, for a variety of reasons. This isn't a criticism, but rather just a consequence of whatever stocks you happen to be watching. However, a quick search for information on stock splits yields a few articles (mainly from the Motley Fool) that argue that fewer companies are performing stock splits in recent years; the articles mainly talk about tech companies, and they make the argument that even though the shares in Google and Apple have a high stock price: Google and Apple aren't all that expensive by traditional valuation metrics. Google trades at just 15 times next year's projected profitability. Apple fetches a mere 13 times fiscal 2012's bottom-line estimates. These articles are a bit dated in terms of the stock prices, but the rationale is probably still good. Similar logic could apply for other companies; for example, since May 2009, Panera's stock price has climbed by almost a factor of 4 without splitting. The articles also make the point that stock splits were traditionally seen as bullish signs because: Companies splitting to bring their share prices back down to more accessible levels were optimistic in building those sand castles back up. One could make a fair argument that the overall economic climate isn't as bullish as it used to be, although I would only be convinced that this was affecting stock splits if data could be gathered and tested. A stock split can also raise the price of a stock because if small investors feel the stock is suddenly more accessible to them, they purchase more of it and might therefore drive up the price. (See the Investopedia article on stock splits for more information). Companies might not see the necessity in doing this because their stock price isn't high enough to warrant a split or because the price isn't high enough to outprice smaller investors. One interesting point to make, however, is that even though stock splits can drive small investors to buy more of the stock, this isn't always a gain for the company because professional investors (firms, institutions, etc.) have a tendency to sell after a split. The paper is a bit old, but it's still a very neat read. It's possible that more and more companies no longer see any advantage to splitting because it might not affect their stock price in the long run, and arguably could even hurt it. Considering that large/professional investors likely hold a higher percentage of a company's shares than smaller investors, if a stock split triggers a wave of selling by the former, the increasing propensity to buy of the latter may not be enough to offset the decline in price. Note: My answer only refers to standard stock splits; the reasons above may not apply to a decrease in the number of reverse stock splits (which may not be a phenomenon; I don't know). |
Auto Loan and Balance Transfer | This is what your car loan would look like if you paid it off in 14 months at the existing 2.94% rate: You'll pay a total of about $277 in interest. If you do a balance transfer of the $10,000 at 3% it'll cost you $300 up front, and your payment on the remaining $5,000 will be $363.74 to pay it off in the 14 month period. Your total monthly payment will be $1,099.45; $5,000 amortized at 2.94% for 14 months plus $10,300 divided by 14. ($363.74 + 735.71). Your interest will be about $392, $300 from the balance transfer and $92 from the remaining $5,000 on the car loan at 2.94%. Even if your lender doesn't credit your additional payment to principal and instead simply credits future payments, you'd still be done in 15 months with a total interest expense of about $447. So this additional administration and additional loan will save you maybe about $55 over 14 or 15 months. |
Can I just file a 1040-ES? | Yes, you can send in a 2012 1040-ES form with a check to cover your tax liability. However, you will likely have to pay penalties for not paying tax in timely fashion as well as interest on the late payment. You can have the IRS figure the penalty and bill you for it, or you can complete Form 2210 (on which these matters are figured out) yourself and file it with your Form 1040. The long version of Form 2210 often results in the smallest extra amount due but is considerably more time-consuming to complete correctly. Alternatively, if you or your wife have one or more paychecks coming before the end of 2012, it might be possible to file a new W-4 form with the HR Department with a request to withhold additional amounts as Federal income tax. I say might because if the last paycheck of the year will be issued in just a few days' time, it might already have been sent for processing, and HR might tell you it is too late. But, depending on the take-home pay, it might be possible to have the entire $2000 withheld as additional income tax instead of sending in a 1040-ES. The advantage of doing it through withholding is that you are allowed to treat the entire withholding for 2012 as satisfying the timely filing requirements. So, no penalty for late payment even though you had a much bigger chunk withheld in December, and no interest due either. If you do use this approach, remember that Form W-4 applies until it is replaced with another, and so HR will continue to withhold the extra amount on your January paychecks as well. So, file a new W-4 in January to get back to normal withholding. (Fix the extra exemption too so the problem does not recur in 2013). |
Can a company block a specific person from buying its stock? | A more serious problem: how do you know who's really buying your stock? "Shell companies" are an increasingly obvious problem in corporate and tax accountability. There are jurisdictions where companies can be created with secret lists of directors and shareholders. If stock is bought by one of these companies, it is very hard to trace it to a particular individual. |
Can I open a Demat account in India from abroad? | You need 2 things One a Demat Account and second a Broker Account. If you need to trade online, then an agreement [Power of Attorney] between Your Saving Bank Account, the Demat Account and the Trading Account. So there are quite a few forms that need signature and proof of identify. Physical presence is required. |
Should an IRA be disclaimed to allow it to be distributed according to a will? | There are two different possible taxes based on various scenarios proposed by the OP or the lawyer who drew up the OP's father's will or the OP's mother. First, there is the estate tax which is paid by the estate of the deceased, and the heirs get what is left. Most estates in the US pay no estate tax whatsoever because most estates are smaller than $5.4M lifetime gift and estate tax exemption. But, for the record, even though IRAs pass from owner to beneficiary independent of whatever the will might say about the disposition of the IRAs, the value of the deceased's IRAs is part of the estate, and if the estate is large enough that estate tax is due and there is not enough money in the rest of the estate to pay the estate tax (e.g. most of the estate value is IRA money and there are no other investments, just a bank account with a small balance), then the executor of the will can petition the probate court to claw back some of the IRA money from the IRA beneficiaries to pay the estate tax due. Second, there is income tax that the estate must pay on income received from the estate's assets, e.g. mutual fund dividends paid between the date of death and the distribution of the assets to the beneficiaries, or income from cashing in IRAs that have the estate as the beneficiary. Now, most of OP's father's estate is in IRAs which have the OP's mother as the primary beneficiary and there are no named secondary beneficiaries. Thus, by default, the estate is the IRA beneficiary should the OP's mother disclaim the IRAs as the lawyer has suggested. As @JoeTaxpayer says in a comment, if the OP's mother disclaims the IRA, then the estate must distribute all the IRA assets to the three beneficiaries by December 31 of the year in which the fifth anniversary of the death occurs. If the estate decides to do this by itself, then the distribution from the IRA to the estate is taxable income to the estate (best avoided if possible because of the high tax rates on trusts). What is commonly done is that before December 31 of the year following the year in which the death occurred, the estate (as the beneficiary) informs the IRA Custodian that the estate's beneficiaries are the surviving spouse (50%), and the two children (25% each) and requests the IRA custodian to divide the IRA assets accordingly and let each beneficiary be responsible for meeting the requirements of the 5-year rule for his/her share. Any assets not distributed in timely fashion are subject to a 50% excise tax as penalty each year until such time as these monies are actually withdrawn explicitly from the IRA (that is, the excise tax is not deducted from the remaining IRA assets; the beneficiary has to pay the excise tax out of pocket). As far as the IRS is concerned, there are no yearly distribution requirements to be met but the IRA Custodial Agreement might have its own rules, and so Publication 590b recommends discussing the distribution requirements for the 5-year rule with the IRA Custodian. The money distributed from the IRA is taxable income to the recipients. In particular, the children cannot roll the money over into another IRA so as to avoid immediate taxation; the spouse might be able to roll over the money into another IRA, but I am not sure about this; Publication 590b is very confusing on this point. All this is assuming that the deceased passed away before well before his 70.5th birthday so that there are no issues with RMDs (the interactions of all the rules in this case is an even bigger can of worms that I will leave to someone else to explicate). On the other hand, if the OP's mother does not disclaim the IRAs, then she, as the surviving spouse, has the option of treating the inherited IRAs as her own IRAs, and she could then name her two children as the beneficiaries of the inherited IRAs when she passes away. Of course, by the same token, she could opt to make someone else the beneficiary (e.g, her children from a previous marriage) or change her mind at any later time and make someone else the beneficiary (e.g. if she remarries, or becomes very fond of the person taking care of her in a nursing home and decides to leave all her assets to this person instead of her children, etc). But even if such disinheritances are unlikely and the children are perfectly happy to wait to inherit till Mom passes away, as JoeTaxpayer points out, by not disclaiming the IRAs, the OP's mother can delay taking distributions from the IRAs till age 70.5, etc. which is also a good option to have. The worst scenario is for the OP's mother to not disclaim the IRAs, cash them in right away (huge income tax whack on her) or at least 50% of them, and gift the OP and his sibling half of what she withdrew (or possibly after taking into account what she had to pay in income tax on the distribution). Gift tax need not be paid by the OP's mother if she files Form 709 and reduces her lifetime combined gift and estate tax exemption, and the OP and his sibling don't owe any tax (income or otherwise) on the gift amount. But, all that money has changed from tax-deferred assets to ordinary assets, and any additional earnings on these assets in the future will be taxable income. So, unless the OP and his sibling need the cash right away (pay off credit card debt, make a downpayment on a house, etc), this is not a good idea at all. |
Credit Card Points from Refund | That transaction probably cost the merchant $0.50 + 3% or close to $5. They should have refunded your credit card so they could have recouped some of the fees. (I imagine that's why big-box retailers like Home Depot always prefer to put it back on your card than give you store credit) Consider yourself lucky you made out with $0.15 this time. (Had they refunded your card, the 1% of $150 credit would have gone against next month's reward) Once upon a time folks were buying money from the US Mint by the tens of thousands $ range and receiving credit card rewards, then depositing the money to pay it off.. They figured that out and put a stop to it. |
Why is everyone saying how desperately we need to save money “in this economy”? | I would add to the other excellent answers that another factor besides just high unemployment numbers is the fear people have regarding the "financial" aspects of the country, that is the value of stocks and the value of the dollar. When the economy is sluggish it means people aren't buying enough, therefore companies aren't making enough, therefore their profits are too low and people start to divest from them, and stock prices drop. Or even the fear of this happening can induce people to sell off shares. The point is, people are worried "in this economy" because if--due to unemployment, low spending/consumer confidence--the stock market crashes again as it did in 2008/09, that represents a lot of savings lost, e.g. 40-50% of what one was counting on to retire with, particularly if you panic sell at the bottom. Now suddenly it's as if you had a huge robbery, and you will have to work longer into your retirement years than you'd planned. Similarly, if, due to monetary policy, the U.S. inflates the dollar, what one saved for retirement may not be sufficient. (These arguments are true for shorter periods than just one's retirement, but just taking that as an example). So it's not just unemployment that is worrisome "in this economy". This said, I agree with George Marian that one ought to be careful and plan well regardless of the winds of the economy. I guess for most people (and companies), though, "in this economy" means they can't get away with the kind of carelessness they might have during a boom. |
What evidence exists for claiming that you cannot beat the market? | common sentiment that no investor can consistently beat the market on returns. I guess its more like very few investor can beat the market, a vast Majority cannot / do not. What evidence exists for or against this? Obviously we can have a comparison of all investors. If we start taking a look at some of the Actively Managed Funds. Given that Fund Managers are experts compared to common individual investors, if we compare this, we can potentially extend it more generically to others. Most funds beat the markets for few years, as you keep increasing the timeline, i.e. try seeing 10 year 15 year 20 year return; this is easy the data is available, you would realize that no fund consistently beat the index. Few years quite good, few years quite bad. On Average most funds were below market returns especially if one compares on longer terms or 10 - 20 years. Hence the perception Of course we all know Warren Buffet has beat the market by leaps and bounds. After the initial success, people like Warren Buffet develop the power of "Self Fulfilling Prophecy". There would be many other individuals. |
Can I default on my private student loans if I was an international student? | What are the consequences if I ignore the emails? If you ignore the emails they will try harder to collect the money from you until they give up. Unlike what some other people here say, defaulting on a loan is NOT a crime and is NOT the same as stealing. There is a large number of reasons that can make someone unable to pay off a loan. Lenders are aware of the risk associated with default; they will try to collect the debt but at the end of the day if you don't have money/assets there is not much they can do. As far as immigration goes, there is nothing on a DS-160 form that asks you about bankruptcies or unpaid obligations. I doubt the consular officer will know of this situation, but it is possible. It is not grounds for visa ineligibility however, so you will be fine if everything else is fine. The only scenario in which unpaid student loans can come up relevant in immigration to the US is if and when you apply for US Citizenship. One of the requirements for Citizenship is having good moral character. Having a large amount of unpaid debt constitutes evidence of a poor moral character. But it is very unlikely you'd be denied Citizenship on grounds of that alone. I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America? Yes, they probably already have. How would this affect me if I visit America often? Does this mean I would not ever be able to live in America? No. See above. You will have a hard time borrowing again. Will they know when I come to America and arrest me at the border or can they take away my passport? No. Unpaid debt is no grounds for inadmissibility, so even if the CBP agent knows of it he will not do anything. And again, unpaid debt is not a crime so you will not be arrested. |
How can I save on closing costs when buying a home? | Good answers here. I would like to add one more (less obvious) way to save - look for houses that are For Sale By Owner (FSBO). Owner's who are selling without an agent do not have to pay a seller's agent fee. The closing cost savings here are actually on the seller's side of the transaction. However, since you know the seller is saving money, you may be able to negotiate a lower overall selling price with them (or it may be priced lower than comps already) because of this factor. FSBO houses maybe trickier to find than those listed by an agent, because they will not appear on the national MLS used by realtors to find/advertise houses that aren't being sold by their own clients. You may need to physically walk the streets of the neighborhood you're interested in moving to, to look for FSBO yard signs. FSBO sellers may also advertise in local newspapers. |
Standard Deviation with Asset Prices? | You can use google docs to create a spreadsheet. In field A2, I put Google will load the prices into the sheet. At that point, I add the following into C12, then copy that line all the way down to the botton of column C. You can find my spreadsheet here. It calculates the moving 10 day standard deviation as a percentage of average price for that time period. |
Is Stock Trading legal for a student on F-1 Visa doing CPT in USA? | you dont need any permits or be inside the US to trade the exact same securities on US exchanges. you can literally move your bitcoin from a chinese exchange to us exchange in seconds. i don't see how you can possibly run into legal issues if anyone from outside the country can trade bitcoins on an exchange inside the country without any permit. a lot of these exchanges dont ask for ID or social security number anyways. none of it is government regulated. also trading anything is never a passive income. theres no such thing as an easy or obvious investment. there are always risks- and the actual risk is often deceivingly low |
Trading: who takes the money from CAC 40 Or DAX | I am guessing that when you say "FRENCH40" and "GERMAN30" you are referring to the main French and German stock market indices. The main French index is the CAC-40 with its 40 constituent companies. The main German index is the DAX, which has 30 constituents. The US30 is presumably the Dow Jones Index which also has 30 constituents. These are stock market indices that are used to measure the value of a basket of shares (the index constituents). As the value of the constituents change, so does the value of the index. There are various financial instruments that allow investors to profit from movements in these indices. It is those people who invest in these instruments that profit from price movements. The constituent companies receive no direct benefit or profit from investor trading in these instruments, nor does the government. |
Convention for adding ishares (ETFs) into personal accounts | ETF is essentially a stock, from accounting perspective. Treat it as just another stock in the portfolio. |
Better rate for investment between CD or savings | Excel has two functions you can use: Your question has the CD with a APR and the savings account that mentions both APR and APY. So convert them both to APY to compare them. The savings account (2.27 APY) will return more money based on the numbers in your question (2.27% vs 1.56%) The previous part was the math part of the answer. The following takes into other considerations. For this case the Savings account will return a larger amount of money if the conditions don't change. The CD rate is guaranteed, but the savings account could change every business day. The savings rate could go up, or down. If you expect the savings account rate to rain higher than the CD you might not want to lock into the CD. If you expect the savings rate will drop then get the CD. Of course there are penalties if you cash in the CD early. |
Is it possible to buy commodity ETFs (e.g. silver) through Questrade? | Questrade is a Canada based broker offering US stock exchange transactions as well. It says this right on their homepage. ETFs are traded like stocks, so the answer is yes. Why did you think they only offered funds? |
Equity market inflow meaning | Inflows to the US equity market can come from a variety of sources; for instance: You were paid a year-end bonus and decided to invest it in US equities instead of foreign equities, bonds, savings or debt reduction. You sold foreign equities, bonds, or other non-US equities and decided to invest in US equities. You decided a better use of cash in a savings account, CD or money market fund, was to invest in US equities. If for every buyer, there's a seller, doesn't that also mean that there were $25B in outflows in the same time period? Not necessarily. Generally, the mentions we see of inflows and outflows are net; that is, the gross investment in US equities, minus gross sales of US equities equals net inflows or outflows. The mere fact that I sold my position in, say, Caterpillar, doesn't mean that I had to re-invest in US equities. I may have bought a bond or a CD or a house. Because of fluctuations in existing stocks market value, bankruptcies and new issues, US equities never are and never will be a zero-sum game. |
Is my wash sale being calculated incorrectly? | According to Wikipedia this is still a wash sale: In the USA wash sale rules are codified in "26 USC § 1091 - Loss from wash sales of stock or securities." Under Section 1091, a wash sale occurs when a taxpayer sells or trades stock or securities at a loss, and within 30 days before or after the sale: |
Gigantic point amount on rewards card - what are potential consequences? | I can't give you proper legal advice, but if I called their customer service and used half an hour of my time to wait and explain the situation in detail, and their official response was "just use the points," I would do just that. Of course you would have stronger legal standing if you had recorded their answer, or had it in writing from them. But I don't think spending these points will come crashing down on you. And morally I see absolutely no problem with spending these points; it is not as if you are stealing from someone else. These points can usually be given away in any kind of crazy manner. Sometimes there are lotteries or events where they give away 100,000 points for new customers who open up an account on a specific weekend. Sometimes they give points to customers who want to terminate their contracts as an attempt to coax them into staying. They have given you a lot of points and don't really care. As a result you are probably staying their customer forever – and will most likely tell this story to many friends. This is free advertising for them. Heck, maybe they would even make a news story out of this some day, it could be good publicity. Everyone is essentially getting these points "for free" but in fact the company has a business case by improving their image and customer retention with these points. So you can spend these points with a sound mind morally. Legally you would have to contact a lawyer, but I think chances for legal repercussions are small if you have done your duty, informed them and their customer service basically said it's ok. |
Are cashiers required to check a credit card for a signature in the U.S.? | Who cares? If your card gets stolen, most cards provide you with 100% liability protection. Just sign the thing! |
Most effective Fundamental Analysis indicators for market entry | The three places you want to focus on are the income statement, the balance sheet, and cash flow statement. The standard measure for multiple of income is the P/E or price earnings ratio For the balance sheet, the debt to equity or debt to capital (debt+equity) ratio. For cash generation, price to cash flow, or price to free cash flow. (The lower the better, all other things being equal, for all three ratios.) |
Buy tires and keep car for 12-36 months, or replace car now? | I don't see how anyone could give you a hard-and-fast formula, unless they know where to get some applicable statistics. Because several factors here are not a straight calculation. If you don't replace the tires but keeping driving the car, what is the increased probability that you will get into an accident because of the bald tires? How much will bald tires vs new tires affect the selling price of the car? Presumably the longer you drive the car after getting new tires, the less increase this will give to the market value of the car. What's the formula for that? If you keep the car, what's the probability that it will have other maintenance problems? Etc. That said, it's almost always cheaper to keep your current car than to buy a new one. Even if you have maintenance problems, it would have to be a huge problem to cost more than buying a new car. Suppose you buy a $25,000 car with ... what's a typical new car loan these days? maybe 5 years at 5%? So your payments would be about $470 per month. If you compare spending $1000 for new tires versus paying $470 per month on a new car loan, the tires are cheaper within 3 months. The principle is the same if you buy with cash. To justify buying a new car you have to factor in the value of the pleasure you get from a new car, the peace of mind from having something more reliable, etc, mostly intangibles. |
why do I need an emergency fund if I already have investments? | Emergency funds have a very specific and obvious benefit; you'll have money sitting around in case you need it. A lot of people think a big car repair or some unexpected home repair is an emergency, and that's fine. Emergency also expands up to "I lost my job four months ago and we're a year in to a recession, the stock market is down 30% and I need to pay my rent or mortgage." Sure, you could just sell some of your stocks that have lost 30% and pay your rent. I know nobody likes to think about it, but the stock market can go down. I know nobody likes to think about it, but the economy can slink in to a recession. In fact, here's a small list of recent U.S. recessions: No competent investment adviser would advise that your emergency funds should be subject to market volatility because that completely defeats the purpose of an emergency fund. It's possible that this manager wants you to indicate a separate emergency fund to allocate a portion of your account to a low volatility US Treasury fund or something of the like, this would be materially different than investing in a broad market/large cap fund like VOO or VTI. The effects of inflation are not so bad that you should put your emergency money in the market. Who cares what inflation was if you have to sell an asset at a loss to pay rent? One last point. Index fund ETFs are not "safe." Investing in diversified funds is safER than buying individual company stocks. |
Can I claim GST/HST Input Tax Credits (ITCs) on Uber, taxi, or limousine fares? | The Canada Revenue Agency describes in detail here what information businesses must generally include on their invoices so that GST/HST registrants can claim Input Tax Credits (ITCs) for the expenses. Quote: Sales invoices for GST/HST registrants You have to give customers who are GST/HST registrants specific information on the invoices, receipts, contracts, or other business papers that you use when you provide taxable goods and services. This information lets them support their claims for input tax credits (ITCs) or rebates for the GST/HST you charged. [...] The page quoted continues with a table describing what, specifically, needs to be on a sales invoice based on the total amount of the invoice; the requirements differ for: total sale under $30, total sale between $30 to $149.99, and total sale $150 or more. For the total sale under $30 category, the only things a sales invoice must contain to support an ITC claim are (1) the provider's business name, (2) the invoice date, and (3) the total amount paid/payable. i.e. When the total sale is under $30, there is no requirement for any GST/HST amount to be indicated separately, nor for a business number to be present on the invoice. Hence, IMHO (and I am neither an accountant nor a lawyer), if your Uber rides are for $30 or less, then you shouldn't expect a GST/HST number anyway, and a simple invoice as described should be enough for you to claim your ITCs. Whether or not the provider is registered in fact for GST/HST is beside the point. For amounts over $30, you need a bit more. While the page above specifies that the provider's business number should be included beginning with the next level of total sales, there are exceptions to those rules described at another page mentioned, Exceptions to invoice requirements, that specifically apply to the taxi/limousine case. Quote: Exceptions to invoice requirements GST/HST registrants are required to keep the necessary documentation to support their claim for ITCs and rebates. In certain circumstances the documentation requirements have been reduced. [...] For taxi or limousine fares your books and records must show: So at a minimum, for fare in excess of $30 total, you should ask the driver to note either (a) the amount of GST/HST charged, or (b) a statement that the fare includes GST/HST. The driver's business number need not be specified. Consequently, if your receipt for a ride in excess of $30 does not contain any such additional information with respect to GST/HST, then I would expect the receipt does not satisfy the CRA's requirements for supporting your ITC claim. i.e. Keep your individual rides under $30 each, or else get a better receipt from the driver when it is above that amount. p.s. It should go without saying, but your rides, of course, must be considered reasonable business expenses in order to qualify for GST/HST ITCs for your business. Receipts for rides of a personal nature are not eligible, so be sure to maintain proper records as to the business purpose and destination for each ride receipt so claimed. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | Skimmers are most likely at gas station pumps. If your debit card is compromised you are getting money taken out of your checking account which could cause a cascade of NSF fees. Never use debit card at pump. Clark Howard calls debit cards piece of trash fake visa/mc That is because of all the points mentioned above but the most important fact is back in the 60's when congress was protecting its constituents they made sure that the banks were responsible for fraud and maxed your liability at $50. Debit cards were introduced much later when congress was interested in protecting banks. So you have no protection on your debit card and if they find you negligent with your card they may not replace the stolen funds. I got rid of my debit card and only have an ATM card. So it cannot be used in stores which means you have to know the pin and then you can only get $200 a day. |
If the co-signer on my car loan dies, can the family take the car from me like they're threatening to? | My family members, particularly my aunt (his daughter), are telling me that when my grandpa dies they are taking my car. Bring this up with Grandpa. If this is what he wants to have happen, then help him make it happen before you finish paying $12,000 on a car worth only $6,000. Let the Aunt and other relatives deal with the remaining $12,000. If that isn't what he wants to have happen, then work out how you and he can legally make sure that what he wants to have happen actually happens. If the Aunt or others bring it up, make sure they understand that you still owe $12,000 on the car, and if they get the car they also get the loan. If they refuse to pay the loan then make sure they know you will cooperate with the bank when they attempt to repossess the car - up to and including providing them with keys and location. This will hurt your credit, and you will be on the hook for the remaining portion of the loan, but you at least won't have to deal with all of it - they'll sell it at auction and your loan amount will fall a little. But the best course of action is to work with Grandpa, and make sure that he understands the family's threats, how that will affect you since you're on the loan, and what options you'd like to pursue. |
How can I increase my hourly pay as a software developer? | You are paid hourly? I would have expected most IT people to be on salary Depends what your boss is like, he might be easy going and just give a raise if you ask for it. Failing that, do some self improvements, learn something new, take a course, maybe take some PHP certifications or even java certifications? Then at least you can say you're trying to move up In regards to pay, have a look on monster or some US job sites, at jobs similar to what you do and with the similar requirements, that should give you an idea of what you should be on. If all else fails, find a new job, that is always a good way of moving up Hope this helps |
Better approach to close loans? | It is typically best to pay minimum payments to 2 of the loans and pay aggressively on the third loan. Some will tell you to pay the highest interest rate loan off first because "personal finance" is about "finance" and mathematically that saves you the most interest. Some will tell you to pay the smallest balance loan off first because "personal finance" is "personal" and the psychological "win" of paying off a loan is more valuable than the small amount of interest difference between this strategy and paying off the loan with the highest interest rate first. |
Abundance of Cash - What should I do? | There's a few different types of investments you could do. As poolie mentioned, you could split your money between the Vanguard All World ex-US and Vanguard Total Stock Market index. A similar approach would be to invest in the Vanguard Total World Stock ETF. You wouldn't have to track separate fund performances, at the downside of not being able to allocate differential amounts to the US and non-US markets (Vanguard will allocate them by market cap). You could consider investing in country-specific broad market indices like the S&P 500 and FTSE 100. While not as diversified as the world indices, they are more correlated with the country's economic outlook. Other common investing paradigms are investing in companies which have historically paid out high dividends and companies that are under-valued by the market but have good prospects for future growth. This gets in the domain of value investing, which an entire field by itself. Like Andrew mentioned, investing in a mutual fund is hassle-free. However, mutual fees/commissions and taxes can be higher (somewhere in the range 1%-5%) than index funds/ETF expense ratios (typically <0.50%), so they would have to outperform the market by a bit to break-even. There are quite a few good books out there to read up about investing. I'd recommend The Intelligent Investor and Millionaire Teacher to understand the basics of long-term investing, but of course, there are many other equally good books too. |
How can someone with a new job but no credit history get a loan to settle another debt? | The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and "ready to give up" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it. |
Why would a bank take a lower all cash offer versus a higher offer via conventional lending? | One other point to consider is that cash offers often include no contingencies. That is, the offer comes in and if the seller signs then the deal is done, without any chance that the buyer backs out. As you can imagine, this is an attractive option in some situations. |
Fund or ETF that simulates the investment goals of an options “straddle” strategy? | I am not aware of a single instrument that encapsulates what you are after; but the components do exist. At least in Canada, there are many Options traded on the Montreal Exchange that are based on Toronto ETFs. All the standard TSX ETFs are represented, as well as some of the more exotic. With a regular investment account approved for Options you should be able to do what you want. In a parallel vein, there are also double down and up ETFs. One such example are the Horizons BetaPro series of ETFs. They are designed to return double the market up or down on a daily basis and reset daily. They do need to be watched closely, however. Good Luck |
Reason for “qualified” buyer requirements to exercise stock options/rights spun off from parent company? | An option gives you the legal right to buy stock. However, you cannot exercise a stock option unless you have the ability to buy the stock. In the United States, securities not fully registered with the SEC for public sale cannot be purchased except by qualified investors. |
Which practice to keep finances after getting married: joint, or separate? | My wife and I have a different arrangement. I like to track everything down to the transaction level. She doesn't want everything tracked. We have everything joint and I track everything except she has one credit card where I do not see the statements only the total. She is more comfortable, because she can buy things without me seeing the price for individual transactions. |
Paying Off Principal of Home vs. Investing In Mutual Fund | I was going to ask, "Do you feel lucky, punk?" but then it occurred to me that the film this quote came from, Dirty Harry, starring Clint Eastwood, is 43 years old. And yet, the question remains. The stock market, as measured by the S&P has returned 9.67% compounded over the last 100 years. But with a standard deviation just under 20%, there are years when you'll do better and years you'll lose. And I'd not ignore the last decade which was pretty bad, a loss for the decade. There are clearly two schools of thought. One says that no one ever lost sleep over not having a mortgage payment. The other school states that at the very beginning, you have a long investing horizon, and the chances are very good that the 30 years to come will bring a return north of 6%. The two decades prior to the last were so good that these past 30 years were still pretty good, 11.39% compounded. There is no right or wrong here. My gut says fund your retirement accounts to the maximum. Build your emergency fund. You see, if you pay down your mortgage, but lose your job, you'll still need to make those payments. Once you build your security, think of the mortgage as the cash side of your investing, i.e. focus less on the relatively low rate of return (4.3%) and more on the eventual result, once paid, your cash flow goes up nicely. Edit - in light of the extra information you provided, your profile reads that you have a high risk tolerance. Low overhead, no dependents, and secure employment combine to lead me to this conclusion. At 23, I'd not be investing at 4.3%. I'd learn how to invest in a way I was comfortable with, and take it from there. Disclosure (Updated) - I am older, and am semi-retired. I still have some time left on the mortgage, but it doesn't bother me, not at 3.5%. I also have a 16 year old to put through college but her college account i fully funded. |
Why does a stock's price fluctuate so often, even when fresh news isn't available? | News about a company is not the only thing that affects its stock's price. There is also supply and demand. That, of course, is influenced by news, but it is not the only actor. An insider, with a large position in their company's stock, may want to diversify his overall portfolio and thus need to sell a large amount of stock. That may be significant enough to increase supply and likely reduce the stock's price somewhat. That brings me to another influence on stock price: perception. Executives, and other insiders with large positions in their company's stock, have to be careful about how and when they sell some of that stock as to not worry the markets. Many investors watch insider selling to gauge the health of the company. Which brings me to another important point. There are many things that may be considered news which is material to a certain company and its stock. It is not just quarterly filings, earnings reports and such. There is also news related to competitors, news about the economy or a certain sector, news about some weather event that affects a major supplier, news about a major earthquake that will impact the economy of a nation which can then have knock-on effects to other economies, etc... There are also a lot of investors with varying needs which will influence supply and demand. An institutional investor, needing to diversify, may reduce their position in a stock and thus increase supply enough that it impacts the stock's price. Meanwhile, individual investors will make their transactions at varying times during the day. In the aggregate, that may have significant impacts on supply and demand. The overall point being that there are a lot of inputs and a lot of actors in a complicated system. Even if you focus just on news, there are many things that fall into that category. News does not come out at regular intervals and it does not necessarily spread evenly. That alone could make for a highly variable environment. |
Determining current value for real estate for inheritance purposes | My question is... how is this new value determined? Does it go off of the tax appraised value? The tax assessors values are based on broad averages and are not very useful in determining actual home value. The most defensible valuation outside of a sale is a professional appraisal, real-estate agents may or may not give you reasonable estimates, but their opinions are less valuable than that of a professional appraiser. Additionally, agents hoping to land you as a client (even if you tell them you're not trying to sell) could be motivated to over-estimate. In many instances a few opinions from agents will be good enough, but if there is any contention a professional appraisal will be better. Should you, prior to your death, get an independent appraiser to appraise the value of the property and include that assessment of the properties value with the will or something? The real-estate market fluctuates too much to make having an appraisal done prior to your death a practical approach in most circumstances. You could make arrangements so that an appraisal would be scheduled after your death. Here's a good resource on the topic: Estimating the Value of Inherited Real Estate |
What am I actually buying when trading in CFDs | CFDs (Contracts for Difference) are basically a contract between you and the broker on the difference in price of the underlying between the time you open a position and close a position. You are not actually buying the underlying. With share CFDs, the outcome is a bit like buying the underlying shares on margin. You pay interest for every day you hold the CFDs overnight for long CFDs. However, with short positions, you get paid interest for every day you hold your short position overnight. Most people use CFDs for short term trading, however they can be used for medium to longer term trading just as you would hold a portfolio on margin. What you have to remember is that because you are buying on margin you can lose more than your initial contract amount. A way to manage this risk is by using position sizing and stop loses. With your position sizing, if you wanted to invest $10,000 in a particular share trading at $10 per share, you would then buy 1000 shares or 1000 CFDs in that share. Your initial expense with the CFDs might be only $1000 (at a margin rate of 10%). So instead of increasing your risk by having an initial outlay of $10,000 with the CFDs you limit your risk to the same as you were buying the shares directly. |
Do real nappies (reusable / cloth diapers) really save money? | I don't think they do. And here's why. If you don't want your child to get skin irritation, you need to watch closely and change the "nappy" right when it got wet. For newborns it means like every 2 hours. It creates a big pile of laundry, but the main thing — additional burden on mother. So, even if you save a little on diapers, you will spend that on water+electricity bill + comforting the mother more often than you would otherwise. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | Quoted from money.howstuffworks.com: NASDAQ has come up with an auction approach called the opening cross. Here's how it works. In the morning, a computer program looks at all the orders that have come in overnight in each different stock. Based on those orders, the program picks a price level that would be the best opening price. However, it also looks to see if there's a trade imbalance. For example, if a company announced bad news after the market closed, there might be 10 times more sell orders than buy orders. NASDAQ then broadcasts the price and imbalance information to its network of dealers with the goal of offsetting the imbalance. It then lets dealers place orders. This all happens very quickly, in a time window of two minutes or so, right before the market opens. Dealers can place orders, and those orders are factored into the opening price. Further reading here: Opening Price calculation |
How does a public company issue new shares without diluting the value held by existing shareholders? | Let's say the company has a million shares valued at $10 each, so market caps is $10 million dollar = $10 per share. Actual value of the company is unknown, but should be close to that $10 million if the shares are not overvalued or undervalued. If they issue 100,000 more shares at $10 each, the buyers pay a million dollar. Which goes into the bank account of the company. Which is now worth a million dollar more than before. Again, we don't know what it is worth, but the market caps should go up to $11 million dollar. And since you have now 1,100,000 shares, it's still $10 per share. If the shares are sold below or above $10, then the share price should go down or up a bit. Worst case, if the company needs money, can't get a loan, and sells 200,000 shares for $5 each to raise a million dollars, there will be suspicion that the company is in trouble, and that will affect the share price negatively. And of course the share price should have dropped anyway because the new value is $11,000,000 for $1,200,000 shares or $9.17 per share. |
Can I buy a new house before selling my current house? | You can make a contingent offer: "I will buy this house if I sell my own." In a highly competitive environment, contingent offers tend to be ignored. (Another commentator described such a contingency clause as synonymous with "Please Reject Me".) You can get a bridge loan: you borrow money for a short term, at punishingly high interest. If your house doesn't sell, you're fscked. You pay for two mortgages (or even buy the other house for cash). If you can afford this, congratulations on, you know, being super-rich. Or you can do what I am doing: selling one house and then living at my mom's until I buy another one. (You will have to stay at your own mom's house; my mom's house will be full, of course.) Edit: A commentator with the disturbingly Kafkaesque name of "R." made the not-unreasonable suggestion that you buy both and rent out one or the other. Consider this possibility, but remember: On the other hand, if the stars align, you might not want to extricate yourself. If the tenant is paying the mortgage and a little more, you have an appreciating asset, and one you can borrow against. With a little work and a little judicious use of leverage, doing this over and over, you can accumulate a string of income-producing rental properties. |
How long do wire transfers take? | The experience I have with wire transfers is from Australia to the US. These transfers can take up to 5 business dates (i.e. a whole week including the non-business days of the weekend). I would have thought intra-European transfers would be quicker, given how behind most US (regional) banks are in their electronic transfers. However, I don't think you should be worried just yet. |
US ISA equivalent for tax exempt investment & savings | As far as I know, there is no direct equivalent. An IRA is subject to many rules. Not only are there early withdrawal penalties, but the ability to deduct contributions to an IRA phases out with one's income level. Qualified withdrawals from an IRA won't have penalties, but they will be taxed as income. Contributions to a Roth IRA can be made post-tax and the resulting gains will be tax free, but they cannot be withdrawn early. Another tax-deductable investment is a 529 plan. These can be withdrawn from at any time, but there is a penalty if the money is not used for educational purposes. A 401K or similar employer-sponsored fund is made with pre-tax dollars unless it is designated as a Roth 401K. These plans also require money to be withdrawn specifically for retirement, with a 10% penalty for early withdrawal. Qualifying withdrawals from a regular retirement plan are taxed as income, those from a Roth plan are not (as with an IRA). Money can be made harder to get at by investing in all of the types of funds you can invest in using an IRA through the same brokers under a different type of account, but the contribution will be made with post-tax, non-deductable dollars and the gains will be taxed. |
When can we exercice an option? | American options (like those on ADBE) can be exercised by the holder anytime before expiration. They will be exercised automatically at expiration if they are in the money. However, if there is still time before expiration (as in this case), and they are not extremely in the money, there is probably extrinsic value to the option, and you should sell it, not exercise it. European options are only automatically exercised at expiration, and only if they are in the money. These are usually cash settled on products like SPX or VIX. They can not be exercised before expiration, but can be sold anytime. |
Non Resident Alien Spouse Treated As Resident - Self Employment Income | First, the SSN isn't an issue. She will need to apply for an ITIN together with tax filing, in order to file taxes as Married Filing Jointly anyway. I think you (or both of you in the joint case) probably qualify for the Foreign Earned Income Exclusion, if you've been outside the US for almost the whole year, in which cases both of you should have all of your income excluded anyway, so I'm not sure why you're getting that one is better. As for Self-Employment Tax, I suspect that she doesn't have to pay it in either case, because there is a sentence in your linked page for Nonresident Spouse Treated as a Resident that says However, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. and since Self-Employment Tax is just Social Security and Medicare tax in another form, she shouldn't have to pay it if treated as resident, if she didn't have to pay it as nonresident. From the law, I believe Nonresident Spouse Treated as a Resident is described in IRC 6013(g), which says the person is treated as a resident for the purposes of chapters 1 and 24, but self-employment tax is from chapter 2, so I don't think self-employment tax is affected by this election. |
I have $100,000 in play money… what to do? | For any sort of investment you need to understand your risks first. If you're going to put money into the stock or bond market I would get a hold of Graham's "The Intelligent Investor" first, or any other solid value investing book, and educate yourself on what the risks are. I can't speak about real estate investing but I am sure there are plenty of books describing risks and benefits of that as well. I could see inflation/deflation having an effect there but I think the biggest impact on the landlord front is quality of life in the area you are renting and the quality of the tenant you can get. One crazy tenant and you will be driven mad yourself. As for starting a business, one thing I would like to say is that money does not automatically make money. The business should be driven by a product or service that you can provide first, and the backing seed capital second. In my opinion you will have to put energy and time worth much more than the 100k into a business over time to make it successful so the availability of capital should not be the driving decision here. Hope this helps more than it confuses. |
Why do people take out life insurance on their children? Should I take out a policy on my child? | It's Permanent Insurance, sold as a savings scheme that is a bad deal for most people. The insurance aspect really doesn't mean much to most people. The classic example that's been around for decades is the "Gerber Grow Up Plan". Basically, it's a whole-life policy that accumulates a cash value. The pitch is typically given to grandparents, who kick in $10/mo and end up with a policy that is worth a little more than what was paid in. Why do people do it? Like most permanent life, it's usually an expensive investment choice. |
Money transfer to the U.K | I've been using xetrade for quite awhile, also used nzforex (associated with ozforex / canadian forex, probably ukforex as well) -- xetrade has slightly better rates than I've gotten at nzforex, so I've been using them primarily. That said, I am in the process of opening an account at CurrencyFair, because it appears that I'll be able to exchange money at better rates there. (XETrade charges me 1.5% off the rate you see at xe.com -- which is the FX conversion fee I believe -- there are no fees other than the spread charged). I think the reason CurrencyFair may be able to do better is because the exchange is based on the peer-to-peer trade, so you could theoretically get a deal better than xe.com. I'll update my answer here after I've been using CurrencyFair for awhile, and let you know. They theoretically guarantee no worse than 0.5% though (+ $4.00 / withdrawal) -- so I think it'll save me quite a bit of money. |
How do I determine how much rent I could charge for a property or location? | A good way to find the rates of rental prices is to look what other landlords are charging for similar properties in your area. The proper investigation of property rental market should be make by using property listing platforms. The other method is online rent calculator. There are a bunch of them on the Web. Briefly speaking, the rent calculator uses industry data to look at the typical rent you might expect from a property in a post code. Remember that the rent you charge has to be at least equal to the cost of your monthly mortgage bill. When you’re deciding what to charge, don’t forget to factor in an estimate of repair costs, taxes, homeowners association fees and insurance. |
What is the preferred way to finance home improvements when preparing to sell your house? | I'm assuming that when you sell the house you expect to be able to pay off these loans. In that case you need a loan that can be paid off in full without penalty, but has as low an interest rate as possible. My suggestions: |
Bond ETFs vs actual bonds | ETFs are just like any other mutual fund; they hold a mix of assets described by their prospectus. If that mix fits your needs for diversification and the costs of buying/selling/holding are low, it's as worth considering as a traditional fund with the same mix. A bond fund will hold a mixture of bonds. Whether that mix is sufficiently diversified for you, or whether you want a different fund or a mix of funds, is a judgement call. I want my money to take care of itself for the most part, so most of the bond portion is in a low-fee Total Bond Market Index fund (which tries to match the performance of bonds in general). That could as easily be an ETF, but happens not to be. |
Returning to the UK after working in Switzerland, What to do with my Swiss Francs? | If you "have no immediate plans for the money and will probably not return to Switzerland for a long time or at all" then it might be best just to exchange the money so then you can use/invest it in the UK. Maybe keep a bill or two for memory-sake - I do that whenever I travel to a foreign country. |
How do banks lose money on foreclosures? | The "just accounting" is how money market works these days. Lets look at this simplified example: The bank creates an asset - loan in the amount of X, secured by a house worth 1.25*X (assuming 20% downpayment). The bank also creates a liability in the amount of X to its depositors, because the money lent was the money first deposited into the bank by someone else (or borrowed by the bank from the Federal Reserve(*), which is, again, a liability). That liability is not secured. Now the person defaults on the loan in the amount of X, but at that time the prices dropped, and the house is now worth 0.8*X. The bank forecloses, sells the house, recovers 80% of the loan, and removes the asset of the loan, creating an asset of cash in the value of 0.8*X. But the liability in the amount of X didn't go anywhere. Bank still has to repay the X amount of money back to its depositors/Feds. The difference? 20% of X in our scenario - that's the bank's loss. (*) Federal Reserve is the US equivalent of a central bank. |
Do I have to pay a capital gains tax if I rebuy different stocks? | Yes. As long as the stock is in a taxable account (i.e. not a tax deferred retirement account) you'll pay gain on the profit regardless of subsequent purchases. If the sale is a loss, however, you'll risk delaying the claim for the loss if you repurchase identical shares within 30 days of that sale. This is called a wash sale. |
15 year mortgage vs 30 year paid off in 15 | All of the answers given so far are correct, but rather narrow. When you buy a 30-year-mortgage, you are buying the right to pay off the debt in as long as 30 years. What you pay depends on the interest rate and how long you actually take to pay it off (and principal and points and so on). Just as you are buying that right, the mortgager is selling you that right, and they usually charge something for it, typically a higher rate. After all, they, and not you, will be exposed to interest risk for 30 years. However, if some bank has an aneurism and is willing to give you a 30-year loan for the same price as or lower than any other bank is willing to go for a 15-year loan, hey, free flexibility. Might as well take it. If you want to pay the loan off in 15 year, or 10 or 20, you can go ahead and do so. |
Tracking Gold and Silver (or any other commodity investment) in Quicken 2010? | You don't need to use a real stock like GLD. You can just create a "stock" called something like "1 oz Gold" and buy and sell them as if they were shares. It won't auto-update the price like GLD, but that's not a big deal to update manually once a month or so. I prefer to have accurate data that is correct at a particular point in time to having data that is 2-3% off, or that requires entering the ounces as 10x reality. YMMV. This is very similar to how you track US Savings Bonds in Quicken (and might be described in the help under that topic.) |
Roth IRA all in one fund, or not? [duplicate] | In your case, you could very well leave it in something like FFFFX, which for readers is a self balancing fund with a target retirement date of 2040. These funds are a conglomeration of other funds that tend to move more conservatively as time passes. However, I like to put no more than 10% of my portfolio in one fund with exceptions made for balances less than 20K. So If I had 18K it really wouldn't matter if it was in FUSEX a S&P 500 index fund. However by investing in FFFFX you pretty much meet that requirement. So you are golden if that fund meets your goals. For me, I kind of hate bonds and despite being of similar age, I have almost no money invested in bonds. |
What should I do with $4,000 cash and High Interest Debt? | I'm going to suggest a slightly different approach. Most answers seem to suggest paying off the lower rate card to clear it. Some answers / comments also talk about emergency funds. One risk of paying off a card is that the card issuer may choose to reduce your credit limit if they see you as high risk, to prevent you re-spending the money. If you don't trust yourself with the card then this could be a good thing (and remember you're always free to ask for a limit decrease). But if you want access to emergency funds, then I would suggest paying half onto each card. That way if one card cuts you off, you have a chance of still having access to the other in an emergency. |
How do amortization schedules work and when are they used? | Both Credit Card and Mortgage work on same principle. The interest is calculated on the remaining balance. As the balance reduces the interest reduces. The Mortgage schedule is calculated with the assumption that you would be paying a certain amount over a period of years. However if you pay more, then the balance becomes less, and hence the subsequent interest also reduces. This means you would pay the loan faster and also pay less then originaly forecasted. The other type of loan, typically personal loans / auto loans in older days worked on fixed schedule. This means that you need to pay principal + Pre Determined interest. This is then broken into equal monthly installment. However in such a schedule, even if you pay a lumpsum amount in between, the total amount you need to pay remains same. Only the tenor reduces. |
How to decide on limits when purchasing/selling stocks? | You said your strategy was to put it into a index fund. But then you asked about setting stock limits. I'm confused. Funds usually trade at their price at the end of the day, so you shouldn't try to time this at all. Just place your order. If you are buying ETFs, there is going to be so much volume on the market that your small trade is going to have no impact on the price. You should just place a market order. A market order is an order to buy or sell a stock at the current market price. A limit order is an order to buy or sell a security at a specific price. In the US, when you place a trade with any broker, you can either place a limit order or a market order. A market order just fills your order with the next best sellers in line. If you place an order for 100 shares, the sellers willing to sell 100 shares at the lowest price will be matched with your order (sometimes you may get 50 shares at one price and 50 shares at a slightly different price). If your stock has a lot of volatility and you place a market order for a small amount of shares, you will get the best price. If you place a limit order, you specify the price at which you want to buy shares. Your order will then only be filled with sellers willing to sell at that price or lower (i.e. they must be at least as good as you specified). This means you could place an order at a limit that does not get filled (the stock could move in a direction away from your limit price). If you really want to own the stock, you shouldn't use a limit order. You shouldn't only use a limit order if you want to tell your broker "I will only buy this stock at this price or better." p.s. Every day that passes is NOT a waste. It's just a day that you've decided investing in cash is safer than investing in the market. |
How can I invest in an index fund but screen out (remove) certain categories of socially irresponsible investments? | You could certainly look at the holdings of index funds and choose index funds that meet your qualifications. Funds allow you to see their holdings, and in most cases you can tell from the description whether certain companies would qualify for their fund or not based on that description - particularly if you have a small set of companies that would be problems. You could also pick a fund category that is industry-specific. I invest in part in a Healthcare-focused fund, for example. Pick a few industries that are relatively diverse from each other in terms of topics, but are still specific in terms of industry - a healthcare fund, a commodities fund, an REIT fund. Then you could be confident that they weren't investing in defense contractors or big banks or whatever you object to. However, if you don't feel like you know enough to filter on your own, and want the diversity from non-industry-specific funds, your best option is likely a 'socially screened' fund like VFTSX is likely your best option; given there are many similar funds in that area, you might simply pick the one that is most similar to you in philosophy. |
interest rate on online banks | I beg to differ: Israel has an incredibly well managed central bank, and the usury market is wonderfully competitive. It's a shame Stanley Fischer has retired. His management is the case study in central bank management. Rates are low because inflation is low. The nominal rate is irrelevant to return because a 2% nominal return with 1% inflation is superior to a 5% nominal return with 9% inflation. A well-funded budget is the best first step, so now a tweak is necessary: excess capital beyond budgeting should be moved quickly to internationally diversified equities after funding, discounted and adjusted, longer term budgets. Credit will not pay the rate necessary for long term investment. Higher variance is the price to pay for higher returns. |
Transfer $50k to another person's account (in California, USA) | It will not be a problem; people regularly move larger sums. It will be reported to law authorities as large enough to be potentially of interest, but since you can explain it that's fine. |
How can I figure out how much to bid on a parking space? | Scenario 1: Assume that you plan to keep the parking space for the rest of your life and collect the income from the rental. You say these spaces rent for $250 per month and there are fees of $1400 per year. Are there any other costs? Like would you be responsible for the cost of repaving at some point? But assuming that's covered in the $1400, the net profit is 250 x 12 - 1400 = $1600 per year. So now the question becomes, what other things could you invest your money in, and what sort of returns do those give? If, say, you have investments in the stock market that are generating a 10% annual return and you expect that rate of return to continue indefinitely, than if you pay a price that gives you a return of less than 10%, i.e. if you pay more than $16,000, then you would be better off to put the money in the stock market. That is, you should calculate the fair price "backwards": What return on investment is acceptable, and then what price would I have to pay to get that ROI? Oh, you should also consider what the "occupancy rate" on such parking spaces is. Is there enough demand that you can realistically expect to have it rented out 100% of the time? When one renter leaves, how long does it take to find another? And do you have any information on how often renters fail to pay the rent? I own a house that I rent out and I had two tenants in a row who failed to pay the rent, and the legal process to get them evicted takes months. I don't know what it takes to "evict" someone from a parking space. Scenario 2: You expect to collect rent on this space for some period of time, and then someday sell it. In that case, there's an additional piece of information you need: How much can you expect to get for this property when you sell it? This is almost surely highly speculative. But you could certainly look at past pricing trends. If you see that the value of a parking space in your area has been going up by, whatever, say 4% per year for the past 20 years, it's reasonable to plan on the assumption that this trend will continue. If it's been up and down and all over the place, you could be taking a real gamble. If you pay $30,000 for it today and when the time comes to sell the best you can get is $15,000, that's not so good. But if there is some reasonable consistent average rate of growth in value, you can add this to the expected rents. Like if you can expect it to grow in value by $1000 per year, then the return on your investment is the $1600 in rent plus $1000 in capital growth equals $2600. Then again do an ROI calculation based on potential returns from other investments. |
If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? | While you are required to do so as others have said, it's actually in your interest to do so. In a recent article at GlobeInvestor, Tim Cestnick discusses the benefits of filing tax returns for teens. This situation may or may not apply to you but the message is the same. The main benefits are (1) create RRSP contribution room and (2) be eligible for GST/HST credits and other possible one-shot credits (think oil royalty surplus cheques in Alberta). Excerpt: You see, when Lincoln was 14, he filed a tax return and reported $2,000 of income that year. He paid no tax thanks to the basic personal tax credit, but he created $360 of RRSP contribution room that year. Beginning in 2003, Lincoln started working part-time in his father's business. His father agreed to pay him $6,000 each summer to work in the business, to help save money for university. Lincoln didn't pay any tax on the money he earned in those summers because his basic personal tax credit was always higher than his earnings. In addition, Lincoln added to his RRSP contribution room simply by filing a tax return each year. |
Why do I not see goods and services all change their price when inflation is high? | In most circumstances prices do not change on a daily basis on most goods and services, and just because inflation is high does not mean all prices of every good and service has to increase over the short term. Prices are determined by costs of doing business, manufacturing costs and wage growth, and by competition. For example, if one product has very little competition and costs to produce it have gone up, then the seller might increase prices by 10% to cover their cost of buying the goods off the manufacturer, whilst another product may have plenty of competition, the seller has sourced a new manufacturer from overseas with lower manufacturing costs, they might lower their selling costs by 5% to better compete and increase their sales. Inflation figures are calculated from a set basket of goods and services, and if inflation increases it does not mean that all prices in that basket have gone up, only that the aggregate for the whole basket of goods and services has gone up since the last inflation figures were calculated. |
Debit card for minor (< 8 y.o.) | You might consider a Green Dot card. You can personalize the name on the card. There is no risk of over-drafting. There are some fees when you fill the card in stores, but it is free to open and manage online. Check out their site and see if it will work for you. It could be a great pair with a joint bank account for you and your kids. https://www.greendot.com/greendot/ Rock on for teaching personal finance and responsibility to your kids! |
First concrete steps for retirement planning when one partner is resistant | You can take a queue from any sales opportunity and position it in ways that will still appeal to someone who intends to continue working perpetually. Here are some of the points I would make: 401k matching funds are free money that you will have access to in ~20 years whether you retire or not. Long-term savings that grow in the stock market turn into residual income that will add to your standard of living whether you retire or not. There are tax advantages to deferring income if you are in a high tax bracket now. You will have flexibility to withdraw that money in future years where you might have lower earnings. (For example, in a future year, you could take a sabbatical trip to Europe for a few months without pay and draw on your savings during that time that you are not making money.) Even if you don't invest in a 401k, you and max out HSA accounts if you are eligible, and position that as money for medical expenses. If you never have medical reasons to spend that money, you can still withdraw at retirement age like a 401k or IRA. (Though it gets taxed as income if not used for qualified medical purposes at retirement time.) With an unwilling partner, it's difficult to make a lot of progress, but if you have matching funds from your employer, do make sure that you are getting at least those for yourself. Ultimately if he doesn't want to save for himself, you should for yourself. There are no guarantees in life. If he dies or leaves, you must be prepared to take care of your own needs. |
Stranger in Asia wants to send me $3000 in Europe over Western Union because he “likes me”? [duplicate] | It can be a money laundering scheme. The stranger gives you cash for free at first, then proposes to give you more but this time asks you to "spend" a fraction of it (like 80%). So on his side the money comes from a legitimate source. So you do it because after all you get to keep the rest of it and it is "free" money. But you are now involved in something illegal. Having money for which you cannot tell the origin is also something highly suspicious. You will not pay tax on it, and the fiscal administration of your country might give you a fine. Customs might also be able to confiscate the money if they suspect it comes from an illegal source. |
I have an extra 1000€ per month, what should I do with it? | 1: Low fees means: a Total Expense Ratio of less than 0,5%. One detail you may also want to pay attention to whether the fund reinvests returns (Thesaurierender Fonds) which is basically good for investing, but if it's also a foreign-based fund then taxes get complicated, see http://www.finanztip.de/indexfonds-etf/thesaurierende-fonds/ |
Why can't the government simply payoff everyone's mortgage to resolve the housing crisis? | Interestingly, ancient Judaism and Christianity held a Jubilee year every 50 years in which all debts were forgive, slaves were freed, etc. "The land must not be sold permanently, for the land belongs to me. You are only foreigners, my tenant farmers." -Leviticus 25:23 Jubilee would more resemble "the government declares all mortgages and credit card debts void" with FDIC caping the payouts when banks fell into receivership, not simply "the government pays off all mortgages". Yet, it still demonstrates that primitive societies employed tools similar to what you describe. There is surely all manor of interesting analysis of the economic impacts of Jubilee by Jewish religious historians. You might even find arguments that communism was invented because Western Judeo-Christian societies abandoned Jubilee. As an aside, I'm surprised that nobody here directly discussed the velocity of money. If you wipe out a mortgage, you might convert a spender into a saver, especially during a recession, meaning you've injected slow money. Conversely, anyone too poor for a mortgage probably spends all their money, meaning giving them a job injects faster money. In addition, it's much cheaper to hire tons of poor people to do useful things, like repairing bridges. |
Is it possible to borrow money to invest in a foreign country? | Most likely, this will not work they way you think. First things first, to get a loan, the bank needs to accept your collateral. Note that this is not directly related to the question what you plan to do with the loan. Example: you have a portfolio of stocks and bonds worth USD 2 million. The bank decides to give you a loan of USD 1 million against that collateral. The bank doesn't care if you will use the loan to invest in foreign RE or use it up in a casino, it has your collateral as safety. So, from the way you describe it, I take it you don't have the necessary local collateral but you wish to use your foreign investments as such. In this case it really doesn't matter where you live or where you incorporate a company, the bank will only give you the loan if it accepts the foreign collateral. From professional experience with this exact question I can tell you, there are very few banks that will lend against foreign property. And there are even less banks, if any, that will lend against foreign projects. To sum it up: Just forget banks. You might find a private lender to help you out but it will cost you dearly. The best option you have is to find a strategic partner who can cough up the money you need but since he is taking the bigger risk, he will also take the bigger profit share. |
What is a formula for calculating equity accumulated while repaying car loan? | By the sounds of things, you're not asking for a single formula but how to do the analysis... And for the record you're focusing on the wrong thing. You should be focusing on how much it costs to own your car during that time period, not your total equity. Formulas: I'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) So at the risk of over-specifying, I'll err on the side of starting at the very beginning. Any financial loan analysis is built on 5 items: (1) # of periods, (2) Present Value, (3) Future Value, (4) Payments, and (5) interest rate. These are usually referred to in spreadsheet software as NPER, PV, FV, PMT, and Rate. Each one has its own Excel/google docs function where you can calculate one as a function of the other 4. I'll use those going forward and spare you the 'real math' equations. Layout: If I were trying to solve your problem I would start by setting up the spreadsheet up with column A as "Period". I would put this label in cell A2 and then starting from cell A3 as "0" and going to "N". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. Then I would set up two tables side-by-side with 7 columns each. (Yes, seven.) Starting in C2, label the cells/columns as: "Rate", "Car Value", "Loan Balance", "Payment", "Paid to Interest", "Principal", and "Accumulated Equity". Then select and copy cells C2:I2 as the next set of column headers beginning in K2. (I usually skip a column to leave space because I'm OCD like that :) ) Numbers: Now you need to set up your initial set of numbers for each table. We'll do the older car in the left hand table and the newer one on the right. Let's say your rate is 5% APR. Put that in cell C1 (not C3). Then in cell C3 type =C$1/12. Car Value $12,000 in Cell D3. Then type "Down Payment" in cell E1 and put 10% in cell D1. And last, in cell E3 put the formula =D3*(1-D$1). This should leave you with a value for the first month in the Rate, Car Value, and Loan Balance columns. Now select C1:E3 and paste those to the right hand table. The only thing you will need to change is the "Car Value" to $20,000. As a check, you should have .0042 / 12,000 / 10,800 on the left and then .0042 / 20,000 / 18,000 on the right. Formulas again: This is where spreadsheets become amazing. If we set up the right formulas, you can copy and paste them and do this very complicated analysis very quickly. Payment The excel formula for Payment is =PMT(Rate, NPER, PV, FV). FV is usually zero. So in cell F3, type the formula =PMT(C3, 60, E3, 0). Obviously if you're really doing a 48 month (4 year) loan then you'll need to change the 60 to 48. You should be able to copy the result from cell F3 to N3 and the formula will update itself. For the 60 months, I'm showing the 12K car/10.8K loan has a pmt of $203.81. The 20K/18K loan has a pmt of 339.68. Interest The easiest way to calculate the interest is as =E3*C3. That's (Outstanding Loan Balance) x (Periodic Interest Rate). Put this in cell G4, since you don't actually owe any interest at Period 0. Principal If you pay PMT each month and X goes to interest, then the amount to principal is "PMT - X". So in H4 type =-F3 - G3. The 'minus' in front of F3 is because excel's PMT function returns a negative amount. If you want to, feel free to type "=-PMT(...)" for the formula that's actually in F3. It's your call. I get 159 for the amount to principal in period 1. Accumulated Equity As I mentioned in the comment, your "Equity" comes from your initial Loan-to-Value and the accumulated principal payments. So the formula in this cell should reflect that. There are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. In cell I3, type =(D3-E3). That's your initial equity in the car before making any payments. Copy that cell and paste it to I4. You'll see it updates to =(D4-E3) automatically. (Right now that is zero... those cells are empty, but we're getting there) The important thing is that as JB King pointed out, your equity is a function of accumulated principal AND equity, which depreciates. This approach handles those both. Finishing up the copy-and-paste formulas I know this is long, but we're almost done. Rate // Period 1 In cell C4 type =C3. Payment // Period 1 In cell F4 type =F3. Loan Balance // Period 1 In cell E4 type =E3-H4. Your loan balance at the end of period is reduced by the principal you paid. I get 10,641. Car Value // Period 1 This will vary depending on how you want to handle depreciation. If you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. But you also don't have to get it scientifically accurate. Go to someplace like edmunds.com and look up a ballpark. I'm using 4% depreciation per year for the old (12K) car and 7% for the newer car. However, I pulled those out of my ass so figure out what's a better ballpark. In G1 type "Depreciation" and then put 4% in H1. In O1 type "Depreciation" and then 7% in P1. Now, in cell D4, put the formula =D3 * (1-(H$1/12)). Paste formulas to flesh out table As a check, your row 4 should read 1 / .0042 / 11,960 / 10,641 / 203.81 / 45 / 159 / 1,319. If so, you're great. Copy cells C4:I4 and paste them into K4:Q4. These will update to be .0042 / 19,883 / 17,735 / 339.68 / 75 / 265 / 2,148. If you've got that, then copy C4:Q4 and paste it to C5:C63. You've built a full amortization table for your two hypothetical loans. Congratulations. Making your decision I'm not going to tell you what to decide, but I'll give you a better idea of what to look at. I would personally make the decision based on total cost to own during that time period, plus a bit of "x-factor" for which car I really liked. Look at Period 24, in columns I and Q. These are your 'equities' in each car. If you built the sheet using my made-up numbers, then you get "Old Car Equity" as 4,276. "New Car Equity" is 6,046. If you're only looking at most equity, you might make a poor financial decision. The real value you should consider is the cost to own the car (not necessarily operate it) during that time... Total Cost = (Ending Equity) - (Payment x 24) - (Upfront Cash). For your 'old' car, that's (4,276) - (203.81 * 24) - (1,200) = -1,815.75 For the 'new' car, that's (6,046) - (339.68 * 24) - (2,000) = -4,106.07. Is one good or bad? Up to you to decide. There are excel formulas like "CUMPRINC" that can consolidate some of the table mechanics, but I assumed that if you're here asking you would have gotten stuck running some of those. Here's the spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0Ah0weE0QX65vdHpCNVpwUzlfYjlTY2VrNllXOS1CWUE#gid=1 |
New 1099 employee with Cobra insurance | For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money. When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance. You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction. However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name. See this question for details, but keep in mind that there are conflicting answers on that question. |
Is this investment opportunity problematic? | Your Spidey senses are good. A good friend would not put you in such a position. It's simple, to skirt some issue (we'll get to that in a second) you are being asked to lie. All for a 15% return on your $$$$. <<< How much is that? You can easily lend him the money, and have a better paper trail. But the bank is not going to like that, and requires this money from friends or family to be a gift. I've heard mortgage guys at the bank say "It's just a formality, we need this paperwork to sell the loan to the investors." These bankers belong in jail, or at least fired and barred from the industry. They broke the economy in 2008, and should be stopped from doing it again. |
What can make a stock price rise without good news or results? | The simple answer could be that one or more "people" decided to buy. By "people," I don't mean individual buyers of 100 shares like you or me, but typically large institutional investors like Fidelity, who might buy millions of shares at a time. Or if you're talking about a human person, perhaps someone like Warren Buffett. In a "thinly" traded small cap stock that typically trades a few hundred shares in a day, an order for "thousands" could significantly move the price. This is one situation where more or less "average" people could move a single stock. |
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