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Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | If you have a mortgage backed by FHA, Fannie, or Freddie I would hold off. There is talk of a new plan that would allow refi's on mortages that were underwater. I would expect rates to stay about the same for the forseeable future. Take that money you would spend each month on the personal loan and stick it into you... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | Does it cost money to refi? I know there are quite a few deals out there, I refi'd in June for $500, not bad. But sometimes can cost couple grand. If so, you have up front costs, plus the cost of the personal loan, that probably would break even at some point after your refi, but at what point? Will you sell before the... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | What evidence is there that rising interest rates causes Canadian condo prices to go down? | Yes, it's unreasonable to think the prices will drop 10-20% in that time frame. Housing prices are not an equation that can can be solved to "home prices are X% overvalued." You have 3 answers so far, Quanty's "prices are inversely proportional to rates," Rob's "there's no strong correlation between interest rates and... |
Share your insights or perspective on the financial matter presented in the input. | What evidence is there that rising interest rates causes Canadian condo prices to go down? | If money is more expensive (costs more to borrow) then fewer people will be able to qualify to make the payments for a particular size of mortgage. This reduces the number of potential buyers for property at that price. As sellers still want to sell, they will move their prices down to where more people can afford to... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What evidence is there that rising interest rates causes Canadian condo prices to go down? | In the US market at least, there is long-term evidence that there's no strong correlation between interest rates and house prices. A less detailed Canadian study found that house prices tended to increase when rates increase. One possible reason: interest rates can increase when the economy is doing well (needs less h... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | What evidence is there that rising interest rates causes Canadian condo prices to go down? | In general, prices are inversely proportional to rates; however, accurate interest rate prediction would make one worthy of managing a large credit derivative hedge fund. This is not to say that interest rates cannot go up in Canada since the world is currently undergoing a resource bust, and the United States has begu... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | How to invest in a currency increasing in value relative to another? | What you're looking for are either FX Forwards or FX Futures. These products are traded differently but they are basically the same thing -- agreements to deliver currency at a defined exchange rate at a future time. Almost every large venue or bank will transact forwards, when the counterparty (you or your broker)... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | How to invest in a currency increasing in value relative to another? | On international stock exchanges, they trade Puts and Calls, typically also for currencies. If for example 1 NOK is worth 1 $ now, and you buy Calls for 10000 NOK at 1.05 $ each, and in a year the NOK is worth 1.20 $ (which is what you predict), you can execute the Call, meaning 'buying' the 10000 NOK for the contracte... |
Share your insights or perspective on the financial matter presented in the input. | How to invest in a currency increasing in value relative to another? | Forex trading contracts are generally fairly short dated as you mention. Months to weeks. Professional forex traders often extend the length of their bet by rolling monthly or quarterly contracts. Closing a contract out a few days before it would expire and reopening a new contract for the next quarter/month. This ... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How to invest in a currency increasing in value relative to another? | The increase of currency value in relation to another is a critical determinant of the economic health. It plays an important part in the level of trade and affects the world’s free market economy. But, they also effect on smaller scale as they create an impact on the portfolio of investors. So, it is suggested that th... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | How to trade “exotic” currencies? | Use a currency ETF. there are many. Specific to your question there is WisdomTree Dreyfus Brazilian Real Fund (BZF) I don't happen to find a currency ETF for Thailand, so the closest you could come to a Thai currency fund would be something that's an Index fund ETF that is based on an index in the Thai Market such as... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | How to trade “exotic” currencies? | There are firms that let you do this. I believe that Saxo Bank is one such firm (note that I'm not endorsing the company at all, and have no experience with it) Keep in mind that the reason that these currencies are "exotic" is because the markets for trading are small. Small markets are generally really bad for retail... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | How to trade “exotic” currencies? | Keep in mind that not every currency is "tradeable", i.e.: convertible. In fact, neither the Brazilian nor the Thai currencies are fully convertible, and the trading with them may be limited. There are 17 fully convertible currencies currently in the word, you can find the list here. |
Share your insights or perspective on the financial matter presented in the input. | Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY? | Diversification and convenience: Is .15-0.35% fee worth it? It depends on your net worth, amount you invest and value of your time (if you have high net worth and low cost of your time the fee is highier then in case when you have low net worth but high cost of time - so Betterment seems to be a better option to young ... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY? | The reason diversification in general is a benefit is easily seen in your first graph. While the purple line (Betterment 100% Stock) is always below the blue line (S&P), and the blue line is the superior return over the entire period, it's a bit different if you retired in 2009, isn't it? In that case the orange line... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY? | What is the advantage of something like Betterment -- which diversifies my investments for me but also charges a fee -- if I can just buy SPY on Robinhood for no fees and do better? Because Betterment is more diversified than the S&P, glaringly when it comes to non-US investments. The US's economy is huge. It represe... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY? | This is Ellie Lan, investment analyst at Betterment. To answer your question, American investors are drawn to use the S&P 500 (SPY) as a benchmark to measure the performance of Betterment portfolios, particularly because it’s familiar and it’s the index always reported in the news. However, going all in to invest in SP... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY? | Good for lazy investors, time-restricted investors, investors with little knowledge, investors who want a hybrid of advice and tools without paying the crazy fees of mutual funds or an advisor. The biggest advantage, is that it is easy, quick and convenient If you have the time and knowledge, this might not be for you |
Share your insights or perspective on the financial matter presented in the input. | 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... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why does a stock's price fluctuate so often, even when fresh news isn't available? | In addition to what @George Marian said, a very large portion of trades are from computer programs trained to make trades when certain apparent patterns are observed. Since these programs are not all designed in the same way, much of the supply and demand is a result of different algorithms with different "opinions" o... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Why does a stock's price fluctuate so often, even when fresh news isn't available? | It's the buying and selling of the stock that causes the fluctuation in prices, not the news. People buy and sell all the time, and not just for newsworthy reasons. They may have to send a child to college, or fix a roof, etc. Or they may be technical traders looking for signals. All kinds of reasons. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Why does a stock's price fluctuate so often, even when fresh news isn't available? | Investors are "forever" comparing the prices of stocks to other stocks. As others have pointed out, this is done faster and more frequently nowadays with high-speed computer programs. There may be no "fresh" news on stock A, but if there is fresh news on stock B (as there usually is), the news on B affects the COMPARIS... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Why does a stock's price fluctuate so often, even when fresh news isn't available? | according to me it's the news about a particular stock which makes people to buy or sell it mostly thus creates a fluctuation in price . It also dependents on the major stock holder. |
Share your insights or perspective on the financial matter presented in the input. | If USA defaults on its debt, will the T bond holder get back his money | The only party that can pay back a government bond is the government that issued it itself. In the case of Argentina, US vulture funds have won cases against it, but it has yet to pay. The best one can do to collect is to sue in a jurisdiction that permits and hope to seize the defaulted government's assets held in su... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | If USA defaults on its debt, will the T bond holder get back his money | There is no situation one can imagine in which the US defaults (beyond a day or three) on its obligations. The treasury can print money, and while it would be disastrous, 'monetizing' the debt would simply eliminate all outstanding debt at the risk of devaluing the dollar to hyperinflation levels. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | How can I predict which way mortgage rates are moving? | Obviously you can't predict the future too much, but it's not too hard to figure out what is going to happen to mortgage rates in the short term. Mortgage rates are heavily influenced by 10 year treasury yields. You can find the daily 10 year rates here. It's easy to see the direction they've been moving recently. I... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | How can I predict which way mortgage rates are moving? | Mortgage rates generally consist of two factors: The risk premium is relatively constant for a particular individual / house combination, so most of the changes in your mortgage rate will be associated with changes in the price of money in the world economy at large. Interest rates in the overall economy are usually ti... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | How can I predict which way mortgage rates are moving? | If economic conditions are weakening, i.e. unemployment rising, business and consummer confidence dropping, etc., you can expect interest rates and thus mortgage rates to drop. If economic conditions are strengthening you can expect interest rates and thus mortgage rates to start rising. As you are in the US, and with ... |
Share your insights or perspective on the financial matter presented in the input. | What is the cause of sudden price spikes in the FOREX market? | If you do not understand the volatility of the fx market, you need to stop trading it, immediately. There are many reasons that fx is riskier than other types of investing, and you bear those risks whether you understand them or not. Below are a number of reasons why fx trading has high levels of risk: 1) FX trades on ... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What is the cause of sudden price spikes in the FOREX market? | It depends on the currency pair since it is much harder to move a liquid market like Fiber (EURUSD) or Cable (GBPUSD) than it is to move illiquid markets such as USDTRY, however, it will mostly be big banks and big hedge funds adjusting their positions or speculating (not just on the currency or market making but also ... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | What is the cause of sudden price spikes in the FOREX market? | Forex is really not that volatile compared to other major asset classes like stocks and commodities. But still markets are generally unencumbered in the major pairs and therefore spikes in volatility can happen. Take what happened with the Swiss Franc a few years ago for example, or GBPUSD recently with news of Brexit.... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | What is a good way to save money on car expenses? | Apparently, if you keep your tires' air filled to the recommended level, your car will burn less gas. I loved this article at WikiHow, which confirmed what I had heard about air in tires, and had others to suggest, such as removing unnecessary items from inside and on your car (such as bike racks, trailer balls) as t... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | What is a good way to save money on car expenses? | Ride a bicycle or walk for short trips (< 5mi–10mi, depending on your level of comfort). Nothing saves as much on car expenses as simply driving less. |
Share your insights or perspective on the financial matter presented in the input. | What is a good way to save money on car expenses? | It is almost always cheaper to do regular maintenance then to fix problems because you didn't change the oil or check the transmission fluid. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What is a good way to save money on car expenses? | Do your own oil change! If you are a hands-on person, you could also avoid the cost of the semi-annual oil change, by doing it yourself. Edmunds.com has a great how-to to help you accomplish this. Be prepared for dirty fingernails! But savings, you will realize, as an oil change will run you anywhere from $20 - $200... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | 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 s... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | What is a good way to save money on car expenses? | Can you tell I'm having fun with this question? Here's another great list, from Finally Frugal, which includes the above items, but also these gems: Avoid idling. Now, this just annoys me. Walking past a line of idling cars at the transit center waiting for their human 'pickup', makes me crazy! It makes me want to kno... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | What is a good way to save money on car expenses? | Manage the fuel consumption price: check the pattern of fuel prices if you can for your area. Some areas have weekly changes which are somewhat predictable and some sites will even predict the minimum price for the next day. Some other areas will have a discount fuel day. Switch to diesel: fuel consumption by diesel... |
Share your insights or perspective on the financial matter presented in the input. | What is a good way to save money on car expenses? | Don't buy the first model year of a new model unless the fuel economy is much better in the latest model. Buying a car in later years just before the changeover will result in a slightly higher quality vehicle or in some cases dramatically higher quality. Find the best forum for your make/model/year of car. Join the ... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What is a good way to save money on car expenses? | The obvious answer for savings costs with a car is not to have a car. Of course that must be balanced against other expenses (bicycle, taxi, public transport) to do things. Generally speaking, if you need a car, ways to contain expense are to buy the least expensive vehicle with the most economical engine that meets ... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | What is a good way to save money on car expenses? | Replace your own brake pads Disc brake pads are usually snap-in replacement parts. YouTube has tons of videos showing how to do it. Find one with a car similar to your own. And it cannot be over-emphasized... Keep up on the routine maintenance. You can look up the schedule on your car manufacturer's website. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | What is a good way to save money on car expenses? | These cars are generally considered out of date and are less prone to be victims of car theft while being reasonably safe. Make sure you pick a model with a good reliability reputation, see what comes up at your local junk yard (the common old models have survived long enough to not end up there until now). Servicing y... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | What is the US Fair Tax? | The fair tax is a proposal to replace the US income tax with a sales tax. Pros of Fair Tax: It's a large change to the way the United States currently does things. The "Fair Tax Act of 2011" is H.R.25 in the US House and S.13 in the Senate. The full text of the bill is available at the links provided. There are some f... |
Share your insights or perspective on the financial matter presented in the input. | What is the US Fair Tax? | You asked about the challenges. The transition itself is the biggest one. For people to get used to the tax at the register vs at their paycheck. For a great number of people to find new work. I don't know the numbers, but anyone involved with personal income taxes would be out of work. Sales tax is already part of the... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What is the US Fair Tax? | In a nutshell - Value Added Tax. America, as usual, discovers what others have known and used for years. The idea of not taxing income that's tied to it is ridiculous. If you're only taxing spending but not income, people will just take spending elsewhere (Canada, Mexico, further away), and the economy will go down the... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | What is the US Fair Tax? | Its a new way of computing sales tax. Wikipedia has a nice article on this http://en.wikipedia.org/wiki/FairTax |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Fractional Reserve Banking and Insolvency | You bet if it was so simple. This is when financial acumen comes into its true form. The bank would never ever want to go insolvent. What it does is, take insurance against the borrower defaulting. Remember the financial crisis of 2008 which was the outcome of borrowers defaulting. The banks had created derivatives ba... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Fractional Reserve Banking and Insolvency | It certainly is possible for a run on the bank to drive it into insolvency. And yes, if the bank makes some bad loans, it can magnify the problem. Generally, this does not happen, though. Remember that banks usually have lots of customers, and people are depositing money and making mortgage payments every day, so the... |
Share your insights or perspective on the financial matter presented in the input. | Fractional Reserve Banking and Insolvency | A bank is insolvent when it can no longer meet its short-term obligations. In this example, the bank is insolvent when depositors withdraw more cash than the bank can pay out. In this case, it's probably something in the range of $600-700k, because the bank can borrow money from other banks using assets as collateral.... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Fractional Reserve Banking and Insolvency | Your question points out how most fractional reserve banks are only a couple of defaults away from insolvency. The problem arises because of the terms around the depositors' money. When a customer deposits money into a bank they are loaning their money to the bank (and the bank takes ownership of the money). Deposit ... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | When is it better to rent and when is better buy in a certain property market? | Besides the long-term concern about which is cheaper, which has already been addressed by other answers, consider your risk exposure. Owning property has financial risks associated with it, just like owning stocks or bonds. The risk-related downsides of owning a home as an asset include: The risk-related upsides of own... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | When is it better to rent and when is better buy in a certain property market? | For US punters, the Centre for Economic and Policy Research has a Housing Cost Calculator you can play with. The BBC provides this one for the UK. For everyone else, there are a few rules of thumb (use with discretion and only as a ball-park guide): Your example of a Gross Rental Yield of 5% would have to be weighed u... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | When is it better to rent and when is better buy in a certain property market? | The Motley Fool suggested a good rule of thumb in one of their articles that may be able to help you determine if the market is overheating. Determine the entire cost of rent for a piece of property. So if rent is $300/month, total cost over a year is $3600. Compare that to the cost of buying a similar piece of propert... |
Share your insights or perspective on the financial matter presented in the input. | When is it better to rent and when is better buy in a certain property market? | The first question is low long will you wish to stray there? It costs of lot in legal changes other changes plus taxes to buy and sell, so if you are not going to wish to live somewhere for at least 5 years, then I would say that renting was better. Do you wish to be able to make changes? When you rent, you can... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | When is it better to rent and when is better buy in a certain property market? | No magic answers here. Housing is a market, and the conditions in each local market vary. I think impact on cash flow is the best way to evaluate housing prices. In general, I consider a "cheap" home to cost 20% or less of your income, "affordable" between 20-30% and "not affordable" over 30%. When you start comparing ... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | What could happen to Detroit Municipal bonds because of Detroit's filing for bankruptcy? | What could happen to bonds such as these because of Detroit filing for bankruptcy? Depending on how the courts process Detroit's situation, there could be that some bonds become worthless since they are so low and the city can't pay anything on those low priority debts. Others may get pennies on the dollar. There c... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | What could happen to Detroit Municipal bonds because of Detroit's filing for bankruptcy? | Since the bondholders have voted to reject the emergency manager's plan, which would have paid them pennies on the dollar, the city is now attempting to discharge its short-term and long-term debt. If they get what they want in court, it is likely these bonds will become worthless. Even if they are only able to restruc... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | What traditionally happens to bonds when the stock market crashes? | The short answer is if you own a representative index of global bonds (say AGG) and global stocks (say ACWI) the bonds will generally only suffer minimally in even the medium large market crashes you describe. However, there are some caveats. Not all bonds will tend to react the same way. Bonds that are considered hi... |
Share your insights or perspective on the financial matter presented in the input. | What traditionally happens to bonds when the stock market crashes? | It depends. Very generally when yields go up stocks go down and when yields go down stocks go up (as has been happening lately). If we look at the yield of the 10 year bond it reflects future expectations for interest rates. If the rate today is very low but expectations are that the short term rates will go up that ... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What traditionally happens to bonds when the stock market crashes? | It depends on why the stocks crashed. If this happened because interest rates shot up, bonds will suffer also. On the other hand, stocks could be crashing because economic growth (and hence earnings) are disappointing. This pulls down interest rates and lifts bonds. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Is there any way to know how much new money the US is printing? | The Fed doesn't exactly have a specific schedule when they decide to create a new dollar. Instead, they engage in open market operations, creating and destroying money as is necessary to preserve a certain interest rate for lending and borrowing. It's an ongoing process. When the Fed meets periodically and they see tha... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Is there any way to know how much new money the US is printing? | The Federal Reserve is not the only way that money can be "printed." Every bank does fractional reserve banking, thereby increasing the money supply every time they make a new loan. There's a number called the reserve requirement which limits how much money each bank can create. Lowering the reserve requirement allows ... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Is there any way to know how much new money the US is printing? | This chart summarizes the FED's balance sheet (things the FED has purchased - US treasuries, mortgage backed securities, etc.) nicely. It shows the massive level of "printing" the FED has done in the past two years. The FED "prints" new money to buy these assets. As lucius has pointed out the fractional reserve banki... |
Share your insights or perspective on the financial matter presented in the input. | Is there a general guideline for what percentage of a portfolio should be in gold? | I think most financial planners or advisors would allocate zero to a gold-only fund. That's probably the mainstream view. Metals investments have a lot of issues, more elaboration here: What would be the signs of a bubble in silver? Also consider that metals (and commodities, despite a recent drop) are on a big run-up ... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Is there a general guideline for what percentage of a portfolio should be in gold? | It depends on what your goals are, your age, how much debt you have, etc. Assuming -- and we all know what happens when you assume -- that your financial life is otherwise in order, the 5% to 10% range you're talking about isn't overinvesting. You won't have a lot of company; most people don't own any. One comment on ... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Is there a general guideline for what percentage of a portfolio should be in gold? | My personal gold/metals target is 5.0% of my retirement portfolio. Right now I'm underweight because of the run up in gold/metals prices. (I haven't been selling, but as I add to retirement accounts, I haven't been buying gold so it is going below the 5% mark.) I arrived at this number after reading a lot of different ... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Is there a general guideline for what percentage of a portfolio should be in gold? | By mentioning GLD, I presume therefore you are referring to the SPRD Gold Exchange Traded Fund that is intended to mirror the price of gold without you having to personally hold bullion, or even gold certificates. While how much is a distinctly personal choice, there are seemingly (at least) three camps of people in th... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Is there a general guideline for what percentage of a portfolio should be in gold? | 10% is way high unless you really dedicate time to managing your investments. Commodities should be a part of the speculative/aggressive portion of your portfolio, and you should be prepared to lose most or all of that portion of your portfolio. Metals aren't unique enough to justify a specific allocation -- they tend ... |
Share your insights or perspective on the financial matter presented in the input. | Is there a general guideline for what percentage of a portfolio should be in gold? | Gold's valuation is so stratospheric right now that I wonder if negative numbers (as in, you should short it) are acceptable in the short run. In the long run I'd say the answer is zero. The problem with gold is that its only major fundamental value is for making jewelry and the vast majority is just being hoarded in... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Is there a general guideline for what percentage of a portfolio should be in gold? | The "conventional wisdom" is that you should have about 5% of your portfolio in gold. But that's an AVERAGE. Meaning that you might want to have 10% at some times (like now) and 0% in the 1980s. Right now, the price of gold has been rising, because of fears of "easing" Fed monetary policy (for the past decade), culmina... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Does the common advice about diversification still hold in times of distress | The common advice you mentioned is just a guideline and has little to do with how your portfolio would look like when you construct it. In order to diversify you would be using correlations and some common sense. Recall the recent global financial crisis, ones of the first to crash were AAA-rated CDO's, stocks and so o... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Is keeping old credit cards and opening new credit cards with high limits and never using an ideal way to boost credit scores? | Problems with your plan (in no particular order) there is a limit, once they have decided that you have enough credit they won't offer any more. If the economy changes (like it did in 2008) they can reduce the limit on existing accounts. If you don't use them, they may decide to close them. Using existing cards will en... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Is keeping old credit cards and opening new credit cards with high limits and never using an ideal way to boost credit scores? | I disagree with the reply. Your both impressions are correct. - Do not close old credit cards because they keep your credit rating high (fico score) - Also low utilization that credit cards report to credit rating companies, improves your rating. |
Share your insights or perspective on the financial matter presented in the input. | Is keeping old credit cards and opening new credit cards with high limits and never using an ideal way to boost credit scores? | Your plan will work to increase your total credit capacity (good for your credit score) and reduce your utilization (also good). As mentioned, you will need to be careful to use these cards periodically or they will get closed, but it will work. The question is whether this will help you or not. In addition to credit... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | Good job. Assuming that you are also contributing to retirement, you are bound to be a wealthy person. I'm not really sure how Australia works as far as retirement, but I am pretty sure you are taking care of that too. Given your time frame (more than 5 years) I would consider investing at least a portion of the m... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | The big question is whether you will be flexible about when you'll get that house. The overall best investment (in terms of yielding a good risk/return ratio and requiring little effort) is a broad index fund (mutual or ETF), especially if you're contributing continuously and thereby take advantage of cost averaging. B... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | You should never take advice from someone else in relation to a question like this. Who would you blame if things go wrong and you lose money or make less than your savings account. For this reason I will give you the same answer I gave to one of your previous similar questions: If you want higher returns you may have ... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | The highest growth for an investment has historically been in stocks. Investing in mature companies that offer dividends is great for you since it is compound growth. Many oil and gas companies provide dividends. |
Share your insights or perspective on the financial matter presented in the input. | Why do stock prices of retailers not surge during the holidays? | Systemic and well know patterns in sales are priced in to the security. Typically companies with very cyclical earnings like this will issue guidance of earnings per share within a range. These expected earnings are priced in before the earnings are actually booked. If a company meets these expectations the stock wi... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why do stock prices of retailers not surge during the holidays? | The expected holiday sales are "known" or actually guessed at beforehand, and stock prices move in line with these expectations before the holiday. If the actual post holiday sales are more or less in line with the "guess," little stock price movement takes place. It's when the actual sales differ (materially) from the... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Why do stock prices of retailers not surge during the holidays? | I think the question can be answered by realizing that whoever is buying the stock is buying it from someone who can do the same mathematics. Ask your son to imagine that everyone planned to buy the stock exactly one week before Christmas. Would the price still be cheap? The problem is that if everyone knows the pric... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Why do stock prices of retailers not surge during the holidays? | If you look at S&P 500's closing price for the first trading day on December and January for the last 20 years, you will see that for 10 of these years, stocks did better overall and for 10 others they did worse. Thus you can see that the price of stocks do no necessarily increase. You can play around with the data her... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | Why do stock prices of retailers not surge during the holidays? | That's a pretty good question for a six-year-old! In addition to the good answers which point out that expectations are priced in, let's deny the premises of the question: Sales do not increase the value of a company; a company could be, for example, losing money on every sale. Share prices are (at least in theory) cor... |
Share your insights or perspective on the financial matter presented in the input. | Why do stock prices of retailers not surge during the holidays? | Your explanation is nearly perfect and not "hand wavy" at all. Stock prices reflect the collective wisdom of all participating investors. Investors value stocks based on how much value they expect the stock to produce now and in the future. So, the stability of the stock prices is a reflection of the accuracy of the in... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why do stock prices of retailers not surge during the holidays? | I used to be in research department for big financial data company. Tell your son that there are three factors: Most people think that net sales vs. expectations is the only factor. It might not even be the biggest. It is simply how much money did company make. Note that this is not how many units they sold. For ... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | Why do stock prices of retailers not surge during the holidays? | Excellent question for a six year old! Actually, a good question for a 20 year old! One explanation is a bit more complicated. Your son thinks that after the Christmas season the company is worth more. For example, they might have turned $10 million of goods into $20 million of cash, which increases their assets by $1... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | Why do stock prices of retailers not surge during the holidays? | While there are lots of really plausible explanations for why the market moves a certain way on a certain day, no one really knows for sure. In order to do that, you would need to understand the 'minds' of all the market players. These days many of these players are secret proprietary algorithms. I'm not quibbling w... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | How could the 14th amendment relate to the US gov't debt ceiling crisis? | It's a disturbing development -- someone is floating the idea that the executive has the ability to issue debt without the consent of congress to measure the public's reaction. Why disturbing? Because people are using language like this: The president, moreover, can move quickly, but court cases take time. “At the poin... |
Share your insights or perspective on the financial matter presented in the input. | How could the 14th amendment relate to the US gov't debt ceiling crisis? | Section Four of the amendment reads: The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. In other words, if President Obama wants to, he could unilaterally... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | I have an extra 1000€ per month, what should I do with it? | I'm almost in the same situation as you. Here is what I'm doing. Buy ETFs each time you have above 3000€ saved up. I buy these: HSBC S+P 500 C.S.-MSCI PACIFIC UBS-ETF-MSCI EMERGING MARKETS ISH.STOX.EUROPE 600 They are taxable under Abgeltungssteuer, so no hassle with that, are cheap and cover almost the entire world e... |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | 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/thes... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | I have an extra 1000€ per month, what should I do with it? | Lots of good advice on investing already. You may also want to think about two things: A Bausparvertrag. You can set this up for different monthly saving rates. You'll get a modest interest payment, and once you have saved up enough (the contract is zuteilungsreif), you will be eligible for a loan at a low rate. Howeve... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | I have an extra 1000€ per month, what should I do with it? | Congratulations on getting started in life! John Malloy's (American) research suggests that you should take some time to get used to living on your own, make some friends, and settle into your community. During this time, you can build up an emergency fund. If/when the stock markets do not seem to be in a bear market... |
Share your insights or perspective on the financial matter presented in the input. | I have an extra 1000€ per month, what should I do with it? | First check: Do you have all the insurances you need? The two insurances everyone should have are: Another insurance you might want to get is a contents insurance ("Hausratsversicherung"). But if you don't own any super-expensive furniture or artworks, you might also opt to self-insure and cover it with: Priority 2: Em... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | I have an extra 1000€ per month, what should I do with it? | What about getting the saving account - "Bausparen" (~100EUR/month) which you can later use for credit to get better mortgage deal and to buy a flat for renting to others (Anlegerwohnung)? |
Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited. | I have an extra 1000€ per month, what should I do with it? | As many before me said but will say again for the sake of completeness of an answer: First off provision to have an emergency fund of 6 months living expenses to cover loss of employment, unforeseen medical issues etc. When that is done you re free to start investing. Do remember that putting all your eggs in one bas... |
Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering | I have an extra 1000€ per month, what should I do with it? | If I were you, I would save 200 euros for retirement each month and another 800 I would stash away with the hope to start investing soon. I think you have to invest a bigger lump sum, then 1000 euros. It makes sense to invest at least 30K to see any tangible results. My acquaintances started from 50K and now see pretty... |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open. | What does bank do with “Repaid Principal”? | Does it add to their lending reserves or is it utilized in other ways? It depends on how the economy and the bank in particular are doing. To simplify things greatly, banks get deposits and lend (or otherwise invest) the majority of those deposits. They must keep some percentage in reserve in case depositors want to ma... |
Share your insights or perspective on the financial matter presented in the input. | Should I pay off investment property mortgage | I don't think it's all or none. First, 15 year mortgages are sub-3% right now, even for an investment property you'd get under 4%. shop around, do the math, a 1% drop is $1000 a year to start, nothing to sneeze at. Don't let the tax tail wag the decision dog. If you could invest the $100K at a taxable 5.5% in this eco... |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Should I pay off investment property mortgage | I would not recommend using your own money to pay off something that is not a strong asset. Use the savings where it will have the maximum return. Why not put (some of) the savings into another investment mortgage? Thanks to the leverage your return would be much higher than 5.5%, plus you would have more income. |
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