Split (1)

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Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: On reflection there are financial products that do what you want, whole-life insurance policies that guarantee an annual dividend calculation on some index with a ceiling and floor. So you will have a return within a defined minimum and maximum range. There are a lot of opinions on the internet on this. This Consumer Reports article is balanced These have a reputation for being bad for the consumer compared to buying term life and investing in a mutual fund separately, but if you want the guarantee (or are a "moral hazard" for a life insurance policy, closer to death than you appear on paper) it may be a product for you. If you're very wealthy, there is an estate tax exploit in insurance death benefits that can make this an exceptional shield on assets for your heirs, with the market return just the gravy. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: What you are looking for is a pretty terrible deal for you, so I'd say it doesn't exist because there isn't a market for it, or nobody has noticed there is a market for it. In principle I would happily take the deal you offer from as many people as would let me, put the money into treasury bills, and take half the profits while doing pretty much nothing. If I had more risk tolerance I would be pretty happy to have half the value of my "fund" as zero cost investment capital for more aggressive investments. My business would then be a lot like an insurance company without the hassle of selling insurance to get hold of float to invest. Also, most insurance companies actually lose money on policies, but come out ahead by investing the float, so an insurance company with zero cost float is quite a good business. Another answer mentions Berkshire Hathaway. If you read one of the famous Berkshire Hathaway annual letters to shareholders and read the section about insurance you'll see that very low cost float has a large role in that company's success. So, back to your end of the deal: if the deal is that good for me, how good is it for you? I'd have to double market returns just for you to break even. If you're smart enough to pick a financial adviser that can beat the market by that much, how come you aren't able to pick an investment strategy that ties the market? ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: Give me your money. I will invest it as I see fit. A year later I will return the capital to you, plus half of any profits or losses. This means that if your capital under my management ends up turning a profit, I will keep half of those profits, but if I lose you money, I will cover half those losses. Think about incentives. If you wanted an investment where your losses were only half as bad, but your gains were only half as good, then you could just invest half your assets in a risk-free investment. So if you want this hypothetical instrument because you want a different risk profile, you don't actually need anything new to get it. And what does the fund manager get out of this arrangement? She doesn't get anything you don't: she just gets half your gains, most of which she needs to set aside to be able to pay half your losses. The discrepancy between the gains and losses she gets to keep, which is exactly equal to your gain or loss. She could just invest her own money to get the same thing. But wait -- the fund manager didn't need to provide any capital. She got to play with your money (for free!) and keep half the profits. Not a bad deal, for her, perhaps... Here's the problem: No one cares about your thousands of dollars. The costs of dealing with you: accounting for your share, talking to you on the phone, legal expenses when you get angry, the paperwork when you need to make a withdrawal for some dental work, mailing statements and so on will exceed the returns that could be earned with your thousands of dollars. And then the SEC would probably get involved with all kinds of regulations so you, with your humble means and limited experience, isn't constantly getting screwed over by the big fund. Complying with the SEC is going to cost the fund manager something. The fund manager would have to charge a small "administrative fee" to make it worthwhile. And that's called a mutual fund. But if you have millions of free capital willing to give out, people take notice. Is there an instrument where a bunch of people give a manager capital for free, and then the investors and the manager share in the gains and losses? Yes, hedge funds! And this is why only the rich and powerful can participate in them: only they have enough capital to make this arrangement beneficial for the fund manager. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: At this point the cost of borrowing money is very low. For the sake of argument, say it is 1% per year for a large institution. I can either go out and find a client to invest 100,000$ and split profit and loss with them. Or, I could borrow 50,000$, pay 500$/year in interest, and get the same return and loss, while moving the market half as much (which would let me double my position!) In both cases the company is responsible for covering all fixed costs, like paying for traders, trades, office space, branding, management, regulatory compliance, etc. For your system to work, the cost to gather clients and interact with them has to be significantly less than 1% of the capital they provide you per year. At the 50% level, that might actually be worth it for the company in question. Except at the 50% level you'd have really horrible returns even when the market went up. So suppose a more reasonable level is the client keeps 75% of the returns (which compares to existing companies which offer larger investors an 80% cut on profits, but no coverage on losses). Now the cost to gather and interact with clients has to be lower than 2500$ per million dollars provided to beat out a simple loan arrangement. A single sales employee with 100% overhead (office, all marketing, support, benefits) earning 40,000$/year has to bring in 32 million dollar-years worth of investment every year to break even. Cash is cheap. Investment houses sell cash management, and charge for it. They don't sell shared investment risk (at least not to retail investors), because it would take a lot of cash for it to be worth their bother. More explicitly, for this to be viable, they'd basically have to constantly arrange large hedges against the market going down to cover any losses. That is the kind of thing that some margin loans may require. That would all by itself lower their profits significantly, and they would be exposed to counter-party risk on top of that. It is much harder to come up with a pile of cash when the markets go down significantly. If you are large enough to be worthwhile, finding a safe counterparty may be nearly impossible. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: because the market price for good investment advice isn't that low. investment advice is subject to market pricing just like any other good or service. if you are good enough at investing that you seek increased volatility opportunities, you will have no trouble finding investors willing to give you a share of the upside without any of the downside risk. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: I'm answering this from a slightly different angle, but there are people (individuals) who will do this for you. I know private Forex traders who are 'employed' to manage Forex trading accounts for wealthy individuals. The trader takes a percentage of the wins but is also responsible for a percentage of the loss (if there is a loss in a particular month). However the fact that the trader is able to prove that they have a consistent enough trading history to be trusted with the large accounts generally means that losses are rare (one would hope!). Obviously they have contracts in place (and the terms of the contract are crucial to the responsibility of losses) etc. but I don't know what the legalities are of offering or using this kind of service. I just wanted to mention it, while perhaps not being the best option for you personally, it does exist and matches your requirements. You would just have to be extremely careful to choose someone respectable and responsible, as it would be much easier to get ripped off while looking for a respected individual to trade your account than it would be while looking for a respected firm (I would imagine). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: Written with some mild snark , but no insult intended, because financial stuff can be ridiculously confusing... Looked at another way, you're basically asking if the Biblical "Parable of the Talents" can be implemented as a business model. You as the investor wish to be the "master", with the entity doing the investing playing the part of the "servant". Since the law prohibits actual servitude as described in scripture, the model must substitute a contractual profit- and loss-sharing scheme. OK, based on what you've proposed, and by way of example, let's say you invested a thousand dollars. You give the investment service your money. At the end of a year, they give you back - Your capital ($1000) - Plus 1/2 of any profits OR - Less 1/2 of any losses So let's say the worst happens and they lose ALL of it. According to your proposal, they have to cover 1/2 of the loss. You end up with $500...but they end up with LESS than nothing. They will be in a deficit situation because all the expense was theirs. They don't just fail to make a profit. They go in the hole. It doesn't matter what percentages you use. Regardless of how the loss is shared, you've only guaranteed YOU can't lose all your money. The company CAN. Given a large enough investment, or enough market fluctuation, a big shared loss could shut down a smaller firm. To summarize: - You want a service that charges you nothing - Does all the work of expertly managing and investing your capital - Takes on part of the risk you would normally bear - (on top of their usual risk and liability) - Agrees to do so solely for a percentage of any return (where higher returns will likely involve a higher degree of risk) - AND that guarantees, after just 1 year, you'll get X% of your capital back, no matter what. Win or lose. - Even if the market crashes and all your capital, and theirs, is wiped out Superbest, um, to be serious briefly: what you're proposing is, if nothing else, inherently unfair and inequitable. I believe you intended it as a mutually beneficial scenario, but the real-world imbalance in risk and reward prevents it being so. Any financial service that would accept those terms along with the extra degree of risk would be fiscally irresponsible. From a business standpoint it's an untenable model, and no company would build on it. It would be tantamount to corporate suicide. The requirement that a service promise to give you back X% of your money, no matter how great the loss, makes your proposal impossible. You need to think about how much all this costs, realistically, as well what kind of returns you can actually expect. And that more risk for higher return is exactly what a service could NOT take a chance on if it had to "share" investors' losses. Besides, it's not really sharing, now is it? They will always lose more than you, always end up in a negative situation, unable even to recoup costs. Circumstances beyond their control could result in a drop in the value that not only wipes out any profit, but requires them to pay YOU for work performed and expenses incurred on your behalf. Why would they let anyon double-dip like that? Yeah, we all prefer getting something for nothing...but you want valuable services and for them to pay you money for the privilege of providing them? I totally agree that would be fantastic, but in this world even "free" doesn't come cheap anymore. And getting back to costs: Without consistent income the service would have nowhere to work and no resources to work with. No office, computer, phone, electricity, Internet, insurance, payroll, licensing, training, maintenance, security, lobbying, etc., etc., etc. Why do people always forget overhead? There's a reason these services operate the way they do. Even the best are working with fairly slim margins in a volatile sector. They're not into 1-year gambles unlikely to cover their cost of doing business, or having to pay for a negative return out of their own pocket. Look, if you're the Biblical master asking your servant to manage things, overhead is built-in. You're taking all the risk as well. You're paying for all three servants' food, home, clothing, etc, plus you had to buy the servants themselves. So its reasonable that you reap the reward of their labor. You paid for it, and you didn't even punish the servant who buried your money in a hole. The two good servants may have done the legwork, but you took on the burden of everything else. In your proposed service, however, contrary to the servant's usual role, the servant - i.e., the company - would be assuming a portion of your risk on top of their own, yet without any guarantee of profit, income, or even coverage of costs. They're also subject to regulations, fees, liability, legal stuff, etc. that you're not, against most of which you are indemnified and held harmless. If they agree to cover a share of your loss, it exposes to greater liability and more related risk. It robs them of resources they need to invest in their own business, while at the same time forcing them to do all the work. As a result, your model doesn't give such a service a fighting chance. Getting it off the ground and lasting past the first-year payouts would require more luck than skill. They'd be better off heading to Vegas and the blackjack table, where the only overhead is a cheap flight and room, where the odds and rules don't change overnight, and they at least get free drinks. If none of the equivalents satisfies, then the Biblical parable appears to describe your only option for obtaining exactly what you want: Move to a country where slavery is legal and buy an investor :-) Cheers, c ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: 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. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why can't you just have someone invest for you and split the profits (and losses) with him? ### Answer: Such an offer has negative value, so it's hard to see how it would make sense to accept it. The offer has two components, one part that you gain and one part that you lose. The gain is that half your losses are covered. The cost is that half your profits are lost. For that to be a net benefit to you, you would have to expect that you will gain more from this than you will lose from it. That is, you must expect that the investment has negative value. But if you expect that the investment has negative value, why are you investing? This also doesn't really align incentives between the two parties. The person choosing the investment is not incurring opportunity cost (because they have no funds locked up) while you are. So they have an incentive to be conservative that you do not. For example, say I could make 1% in an ultra low risk CD. The person choosing the investments has an incentive to put me in something that he only expects to make around 0.5% (because he gets to keep half the profits and it costs him nothing). Whereas I'd rather just put the money in a CD (because I get to keep 1% instead just half of 0.5%). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: Have her chip in for the regular expenses, utilities, food, etc., and a bit for "rent." Then tell her to be sure to deposit to her retirement account, preferably a matched 401(k). It's admirable to want her to build 'equity' but it's pretty convoluted. You can't actually give her ownership, and in the event you break up (I know you won't, but this is to help other readers) you'll have to pay her back a lump sum when she moves out. That might not be so easy. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: Equity means having ownership, and I think that's a REALLY bad idea in the scenario that you described. If you stay together, there's really no upside to either of you in this scheme. If you break-up then you'll have a terrible mess, especially if the break-up goes badly. If she's really building equity, you're going to be faced with several hard questions: If this went bad at the end, it might be worse than a divorce in some sense since at least in the divorce you have established law to sort out the issues. You'll be on your own here without a formal contract. (Marriage being a special case of a contract for our purposes here.) If she wants to share costs (which seems perfectly fair) then agree to rent and a split on utilities. If you really insist on going down the path that you described, I think that you'll need some sort of contract, which probably involves a lawyer. Anything short of that could not be considered having equity at all and will be completely unenforceable in the event of a bad break-up. (There is some notion of a verbal contract, but that's very hard to prove and subject to misunderstanding and misremembering.) Aside from all of these potential problems in event of a break-up, you would probably also be violating the terms of your mortgage, if you have one. From the bank's perspective, you are selling the property that is the collateral for that loan, which you're almost surely not allowed to do. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: There is no simple, legally reasonable, way for her to build equity by helping out with your mortgage, without her having a claim to your mortgage. The only 'equitable' thing she can do is rent from you. If you want her to be building equity, have her start and fund a brokerage account for herself. If you have an affinity for real estate, have her buy REITs in said investment account. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: I agree with everyone who has simply told you 'Dont' and 'You can't' and add a few more considerations that you don't want to deal with: What you want to do is admirable but very complicated from a financial and legal perspective. If this is really a route that you want to go down you should give up on the 'simple' and consider hiring a lawyer. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: all the other answers are spot on, but look at it this way. really all you mean when you say "building equity" is "accumulating wealth". if that is the goal, then having her invest the money in a brokerage (e.g. ira) account makes a lot more sense. if you can't afford the apartment without her, then you can't afford to pay out her portion of the equity in the future. which means she is not building equity, you are just borrowing money from her. the safest and simplest thing for you to do is to agree on a number that does not include "equity". to be really safe, you might want to both sign something in writing that says she will never have an equity stake unless you agree to it in writing. it doesn't have to be anything fancy. in fact, the shorter the better. i am thinking about 3 sentences should do the trick. if you feel you absolutely have to borrow money from her on a monthly basis to afford your mortgage, then i recommend you make it an unsecured loan. just be sure to specify the interest rate (even if it is zero), and the repayment terms (and ideally, late payment penalties). again, nothing fancy, 10 sentences maybe. e.g. "john doe will borrow x$ per month, until jane doe vacates the apartment. after such time, john doe will begin repaying the loan at y$ per month...." that said, borrowing money from friends and family almost never turns out well. at the very least, you need to save up a few months of rent so that if you do break up, you have time to find another roommate. disclaimer: i do not have any state-issued professional licenses. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: I'm glad that you feel like being fair and equitable to your party. Other answerers are, of course, correct that being fair and equitable to your girlfriend is not in your best interests but that's not what you're trying to do here and I commend you for it. There is nothing that stops you drawing up a simple legal contract giving your girlfriend a share of the value of your house in return for her payments. Just get it signed and witnessed and checked over by a legal representative. You can include reasonable terms for the money to be paid back if you separate - perhaps when you sell the property or within two years of the breakup - that don't put you in immediate danger of losing the property. Just make clear that this contract is between you and her for a sum of money linked to the value of your house; it does not establish any legal claim on your house itself. A reasonable level for her to claim the property would be one half of the change in equity between when you start joint paying and when you separate - should that happen. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: Have her pay something like a friendly monthly rent. This should be less than half of the monthly mortgage cost, since you are assuming the risk (and benefits) of a mortgage and closer to the rent of similar places near you. For when you get married and she is to have half the apartment, have a pre-agreed way to calculate a lump-sum that she needs to provide to match your own contributions up to that time, as if you two had equal contributions from the beginning. The financially precise way to do it would be to have her pay more than the mere sum of the amount (since she will be providing the amount at a later time than you), but I would be generous and skip this in your place if the difference is not too big. If you break up, she will have payed what would be a fair amount of rent, as if you two were renting, so, in this sense, it is fair that she would not have a claim on the apartment. In case that you two would like that she keeps the apartment, you can just sell it to her, having her pay this same amount as above and assume responsibility for the rest of the mortgage. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: There is no issue - and no question - if you get married. The question is only relevant in the event that you go separate ways. Should that happen, you imply that you would want to refund whatever amount your girlfriend has paid toward the mortgage. The solution, then, would seem to be to exempt her from any payments, as you will either give that money back to her (if you break up) or make her a co-owner of the condo (if you get married). If you actually need her contributions to the monthly nut, you could give her a written agreement whereby you would refund her money (plus interest) at her discretion. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: A 30-yr mortgage IS a committment. So, you are willing to commit to a place, but not your long-term girlfriend??? Either you don't do this "cheap" scheme idea, or you set up as a business arrangement, or you get married. This is quite a laissez-faire statement you make... "Maybe we will eventually get married, maybe we will eventually break up, who knows." Anything or anyone that is a "who knows" is not what you make a 30-yr committment on. I mean, unless you just want to risk throwing your money away. Now, man up, hire the lawyer to do official paperwork or else get a legal certificate of civil union or marriage or whatever you want to call it. If you try to do your cockamamie scheme "on the cheap" now, it will most surely cost you dearly in the future! Mixing money (particulary huge sums of 200,000 $!) when there is no legal obligation like marriage or a business contract, is a fool's errand! Now, grow up and do it the right way if you want to help her - and yourself too. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here. We've chosen to hold this as "tenants in common" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc. We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person. Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: This is fine, just have a plan before you go into it. Look up a co-ownership agreement contract off LegalZoom, they are like $15, or get a lawyer if you want. Decide if you want to be "Joint tenants" or "Tenants in common". You probably want to be joint tenants so that if one of you dies the property goes to the other person. Go through the agreement, make any changes you want, and then both sign it. These documents outline what happens if someone dies, or if you break up, or if you are allowed to sell your ownership, and anything else. Keep a record of who has paid what % of equity towards the house. Also look into tax laws, if the mortgage or house is only truly in 1 person's name they may get a tax break that the other person will not get. The co-ownership agreement is essentially the same agreement that happens when you're married, the only difference is that it happens automatically and implicitly when you're married. It's interesting that some people are saying this is a horrible idea when it's practically the same as the agreement you'd have if you were married. Whether you're single or married, if you own a house with another person and you break up, it's going to be a bit complicated. Get a contract in place beforehand so that things go as smoothly as possible. If you are both rational adults you shouldn't have any problems. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? ### Answer: I'm looking for something simple, legal, reasonably formal, easy to setup and tax efficient. You just described marriage. Get married. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Money limit to pay tax for Patreon ### Answer: If you are in the US, you legally must file taxes on any income whatsoever. How much you will pay in taxes, if any, will depend on your total taxable income. Now, for small transactions, the payments are often not reported to the IRS so some people do not file or pay. The threshold at which they payer is required to send a 1099 to the IRS is $600. Patreon considers each donation a separate transaction and therefore does not send a 1099 to the IRS unless you make more than $20,000 in a calendar year. If they do not report it, the IRS will not know about it unless they audit you or something. However, you are technically and legally responsible to report income whether the IRS knows about it or not. -------- EDIT ------- Note that the payer files a 1099, not the recipient. In order to report your patreon income you will either use schedule C or add it to the amount on 1040 line 21 ("other income") depending on whether you consider this a business or a hobby. If it's a business and it's a lot of money you should consider sending in quarterly payments using a 1040-ES in order to avoid a penalty for too little withholding. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? ### Answer: As a Canadian resident, the simple answer to your question is "yes" Having worked as a tax auditor and as a Certified Financial Planner, you are required to file an income tax return because you have taxable employment income. All the employer is doing is deducting it at source and remitting it on your behalf. That does not alleviate your need to file. In fact, if you don't file you will be subject to a no filing penalty. The one aspect you are missing is that taxpayers may be entitled to tax credits that may result in a refund to you depending on your personal situation (e.g spousal or minor dependents). I hope this helps. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? ### Answer: 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. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? ### Answer: Yes, you have to file a tax return in Canada. Non residents that have earned employment income in Canada are required to file a Canadian personal income tax return. Usually, your employer will have deducted sufficient taxes from your pay-cheques, resulting in a tax refund upon filing your Canadian tax return. You will also receive a tax credit on your US tax return for taxes paid in Canada. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? ### Answer: In many cases, you are required to file your taxes by law even if you won't owe. If it's anything like in the US, it's quite possible your employer is not taking the right amount and you may owe more or may even be in line for a return. http://www.usatax.ca/Pages/filing_requirement_taxes_canada.html ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? ### Answer: If you took advantage of options like a home buyers plan (HBP) you definitely need to file since you must designate how much of the plan to repay. Your employer does not know about what you do with your money so cannot take this into account for the withheld taxes. If you do not report repayment of the HBP it will be treated as a withdrawal from your RRSP i.e. additional income for that tax year. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? ### Answer: You are not required to file a tax return in Canada if you have no taxable income. If you do not file a return you may be requested to by Canada Revenue Agency, and then you'll need to file one. There are hundreds of thousands of Canadian residents who do not file tax returns. The Minister who overlooks the CRA may assess any amount of taxes on any resident whether they file a return or not. There are penalties for failing to file a return or filing late. The penalties are based on a percentage of the taxes owed. If you owe no taxes, then the penalties are meaningless. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Are there guidelines for whom you should trust for financial advice (online, peer, experts, only myself, etc) ### Answer: You need to understand how various entities make their money. Once you know that, you can determine whether their interests are aligned with yours. For example, a full-service broker makes money when you buy and sell stocks. They therefore have in interest in you doing lots of buying, and selling, not in making you money. Or, no-fee financial advisors make their money through commissions on what they sell you, which means their interests are served by selling you those investments with high commissions, not the investments that would serve you best. Financial media makes their money through attracting viewers/readers and selling advertising. That is their business, and they are not in the business of giving good advice. There are lots of good investments - index funds are a great example - that don't get much attention because there isn't any money in them. In fact, the majority of "wall street" is not aligned with your interests, so be skeptical of the financial industry in general. There are "for fee" financial advisors who you pay directly; their interests are fairly well aligned with yours. There is a fair amount of good information at The Motley Fool ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Are there guidelines for whom you should trust for financial advice (online, peer, experts, only myself, etc) ### Answer: Nothing beats statistics like that found on Morning Star, Yahoo or Google Finance. When you are starting out, there is no need to reinvent the wheel. Pick a couple of mutual funds with good track records and start there. Keep in mind the financial press, to some degree, has a vested interest in having their readership chase the next hot thing. So while sites like Seeking Alpha, Kiplingers, or Money do provide some good advice, there is also an element that placates their advertisers. The only peer-to-peer lending I would consider is Lending Club. However, you are probably better off in the long run investing in mutual funds. One way to get involved in individual stocks without getting burned is to participate in Dividend Reinvestment Plans (DRIPs). Companies that have them tend to be very well established, and they are structured to discourage trading. Buying is easy, dividend reinvestment is easy, dividend payouts are easy; but, starting and selling is kind of a pain. That is a good thing. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Including the region where you live in your investment portfolio? ### Answer: Diversification is a risk-mitigation strategy. When you invest in equities, you generally get a higher rate of return than a fixed income investment. But you have risks... a single company's market value can decline for all sorts of reasons, including factors outside of the control of management. Diversification lets you spread risk and concentrate on sectors that you feel offer the best value. Investing outside of your currency zone allows you to diversify more, but also introduces currency risks, which require a whole other level of understanding. Today, investing in emerging markets is very popular for US investors because these economies are booming and US monetary policy has been weakening the dollar for some time. A major bank failure in China or a flip to a strong dollar policy could literally implode those investments overnight. At the end of the day, invest in what you understand. Know the factors that can lower your investment value. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Including the region where you live in your investment portfolio? ### Answer: The problem is aggregating information from so many sources, countries, and economies. You are probably more aware of local laws, local tax changes, local economic performance, etc, so it makes sense that you'd be more in tune with your own country. If your intent is to be fully diversified, then buy a total world fund. A lot of hedge funds do what you are suggesting, but I think it requires either some serious math or some serious research. Note: I'm invested in emerging markets (EEM) for exactly the reason you suggest... diversification. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Including the region where you live in your investment portfolio? ### Answer: Diversification is just one aspect in an investment portfolio. The other aspects in Investment are Risk Taking Ability, Liquidity, Local Regulations, Tax benefits, Ease & Convenience, Cost of carrying out transactions etc. Investing in other regions is prone FX risk and other risks depending on the region of investment. For example investing in Emerging markets there is a risk of Local Regulations being changed, additional tax being levied, or Political instability and host of such risks. Investing in local markets give you better understanding of such changes and the risk associated is less plus the Ease of carrying out transactions is great, less expensive compared to cost of transactions in other markets. Diversification in Investment should also be looked upon how much you invest in; Equities Debt Bullion Real Estate Once you have a sizeable amount of investment in Equities or Debt, it would then make more sense to diversify this portion more to include funds from other regions. Unless you are an Running your own business, it makes sense to invest in your line of business if that is performing well. The reason being that the benefit / returns from the equities is much greater than the salary rise / bonus. For example I am in Information Technology and yet invest in all leading IT companies because the returns from companies in these segments have been good. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Interest on security deposits paid to landlords, in Michigan? ### Answer: NO. The legislation requires the landlord to deposit it in a bank. Check out pages 7-10 of the linked document. There is no mention of interest. The second clause, I believe, is probably for large landlords who hold hundreds of thousands of dollars of security. http://www.legislature.mi.gov/documents/publications/tenantlandlord.pdf Q4 Once collected, what must the landlord do with the security deposit? The landlord must either: a) Deposit the money with a regulated financial institution (e.g., bank), OR b) Deposit a cash bond or surety bond, to secure the entire deposit, with the Secretary of State. ( Note: If the landlord does this, he or she may use the money at any time, for any purpose.) The bond ensures that there is money available to repay the tenant’s security deposit ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Interest on security deposits paid to landlords, in Michigan? ### Answer: No. The full text of the Landlord-Tenant Act (specifically, section 554.614 of Act 348 of the year 1972) makes no mention of this. Searching the law for "interest" doesn't yield anything of interest (pardon the pun). Specifically, section 554.604 of the same law states that: (1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond. (2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond. While it does sound like the landlord is required to deposit the money in a bank or other secured form, e.g. the Secretary of State, he/she isn't required to place it in an account that will earn interest. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Bank of the Sierra: Are they legit? How can the checking interest APY be so high? ### Answer: The FDIC is pretty confident about them being legit. http://www2.fdic.gov/idasp/main_bankfind.asp (type in Bank Of The Sierra in the name field and search on that) You got to realize how much money they will make if you use them per the agreement. Every credit card / debit transaction gets them some cash. Businesses get between 1 and 5% of each transaction even on debit cards. Then there is a flat fee the merchant pays for accepting the credit card between .25 and .50 per transaction. Even at 12 transactions a month, the bank is looking at making around $6/month. Probably more because who uses a debit card just 12 times a month. It would be convenient for most people to juse use it all the time. Does 4.09% APY beat $6/month? You would have to keep a balance of $2000 plus to cost more than you earn. And if you keep more than $2k in the account, they have other ways to make money off of you. I would also assume they make money on the bill pay and direct deposit side of things, but I can't speak for certain about that. Bottom line is this seems like a good deal to attract customers, they would rather make a bit less profit then BofA to grow their business. They are betting their offer restrictions will change your habits and make you more profitable to them. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Bank of the Sierra: Are they legit? How can the checking interest APY be so high? ### Answer: I believe MrChrister's answer is correct: Since they're FDIC insured, they are "legit." Second, on the seemingly too-good-to-be-true rate: They're basically making up the difference on other fees (not necessarily paid by you) in order to offer you the higher-than-market rate. I'd like to point out two things not mentioned about the current rate offer, though: The high 4.09% APY advertised is only on balances up to $25,000; anything over that threshold is at a lower 1.01% APY. The offer also states in the footnotes: "Rates may change after the account is opened." You might want to see if they have a good history of paying higher than average interest rates. You wouldn't want to switch only to find out the promotional rate was a teaser that soon gets reduced. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How does historical data get adjusted for dividends, exactly? ### Answer: Various types of corporate actions will precipitate a price adjustment. In the case of dividends, the cash that will be paid out as a dividend to share holders forms part of a company's equity. Once the company pays a dividend, that cash is no longer part of the company's equity and the share price is adjusted accordingly. For example, if Apple is trading at $101 per share at the close of business on the day prior to going ex-dividend, and a dividend of $1 per share has been declared, then the closing price will be adjusted by $1 to give a closing quote of $100. Although the dividend is not paid out until the dividend pay date, the share price is adjusted at the close of business on the day prior to the ex-dividend date since any new purchases on or after the ex-dividend date are not entitled to receive the dividend distribution, so in effect new purchases are buying on the basis of a reduced equity. It will be the exchange providing the quote that performs the price adjustment, not Google or Yahoo. The exchange will perform the adjustment at the close prior to each ex-dividend date, so when you are looking at historical data you are looking at price data that includes each adjustment. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How does historical data get adjusted for dividends, exactly? ### Answer: If you download the historical data from Yahoo, you will see two different close prices. The one labeled 'Close' is simply the price that was quoted on that particular day. The one labeled 'Adj Close' is the close price that has been adjusted for any splits and dividends that have occurred after that date. For example, if a stock splits 10:1 on a particular date, then the adjusted close for all dates prior to that split will have been divided by 10. If a dividend is paid, then all dates prior will have that amount subtracted from their adjusted quote. Using the adjusted close allows you to compare any two dates and see the true relative return. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How does historical data get adjusted for dividends, exactly? ### Answer: According to Active Equity Management by Zhou and Jain: When a stock pays dividend, the adjusted price in Yahoo makes the following adjustment: Let T be the ex-dividend date (the first date that the buyers of a stock will not receive the dividend) and T-1 be the last trading day before T. All prices before T are adjusted by a multiplier (C_{T-1} - d_T)/C_{T-1}, where C_{T-1} is the close price at T-1 and d_T is the dividend per share. This, of course means that the price before T decreases. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How does historical data get adjusted for dividends, exactly? ### Answer: I had both closing price and adjusted price of Apple showing the same amount after "download data" csv file was opened in excel. https://finance.yahoo.com/quote/AAPL/history?period1=1463599361&period2=1495135361&interval=div%7Csplit&filter=split&frequency=1d Its frustrating. My last option was to get the dividends history of the stock and add back to the adjusted price to compute the total return for a select stock for the period. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What economic, political and other factors influence mortgage rates (and how)? ### Answer: If you owned a bank how would you invest the bank's money? Typically banks are involved in loaning out money to businesses, people, and government at a higher interest rate then what they are paying to depositors. This is the spread and how they make money. If the bank determines that the yields on government bonds is more attractive then loaning the money out to businesses and people then the bank will purchase government bonds. It can also decide the other way. In this manner the mortgage and bond markets are always competing for capital and tend to offer very similar yields. Certain banks have the unique privilege of being able to borrow money from the FED at the Federal Funds rate and use this money to purchase government debt or loan it out to other banks or purchase other debt products. In this manner you see a high correlation between the FED funds rate, mortgage rates, and treasury yields. Other political factors include legislation that encourages mortgage lending (see Community Reinvestment Act) where banks may not have made the loans without said legislation. In short, keep your eye on the FED and ask yourself: "Does the FED want rates to rise?" and "Can the US government afford rising rates?" The answer to these two questions is no. However, the FED may be pressured to "stop the presses" if inflation becomes unwieldy and the FED actually starts to care about food and energy prices. So far this hasn't been the case. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What economic, political and other factors influence mortgage rates (and how)? ### Answer: Without commenting on whether or not it's needed I don't think we are going to see a QE3 and all the political pressure is for some reason to start raising rates. Regardless of how it plays out it's safe to say that the Fed Rate isn't going any lower. You should also watch closely what happens to Fannie and Freddie. If they are dismantled and government backed mortgages become a thing of the past then I think it'll become impossible for a consumer to find a 30 year fixed rate mortgage. Even if they are kept alive, they will be put on a short leash and that will serve to further depress the mortgage market. Long story short, I'd lock your rate in. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do US retirement funds typically have way more US assets than international assets? ### Answer: There are a few main economic reasons given why investors show a strong home bias: Interestingly, though if you ask investors about the future of their home country compared with other countries they will generally (though not always) significantly overestimate the future of their own country. It is difficult to definitively say what drives investors but this psychological home bias could be one of the larger factors. Edit in response to the bounty: Maybe this Vanguard article on their recommended international exposure is what you are looking for though they only briefly speculate about why people so consistently show a home bias in investing. The Wikipedia article mentioned above has some very good references and while there may be no complete answer with the certainty that you seek (as there are as many reasons as there are investors) a combination of the above list seems to capture much of what is going on across different countries. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do US retirement funds typically have way more US assets than international assets? ### Answer: It's likely that the main reason is the additional currency risk for non-USD investments. A wider diversification in general lowers risk, but that has to be balanced by the risk incurred when investing abroad. This implies that the key factor isn't so much the country of residence, but the currency of the listing. Euro funds can invest across the whole Euro zone. Things become more complex when you consider countries whose currency is less trusted and whose economy is less diversified. In those cases, the "currency risk" may be more due to the national currency, which justifies a more global investment strategy. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do US retirement funds typically have way more US assets than international assets? ### Answer: To expand a bit on @MSalters's answer ... When I read your question title I assumed that by "retirement funds" you meant target-date funds that are close to their target dates (say, the 2015 target fund). When I saw that you were referring to all target-date funds, it occurred to me that examining how such funds modify their portfolios over time would actually help answer your question. If you look at a near-term target fund you can see that a smaller percent is invested internationally, the same way a smaller percent is invested in stocks. It's because of risk. Since it's more likely that you will need some of the money soon, and since you'll be cashing out said money in US Dollars, it's risky to have too much invested in foreign currencies. If you need money that's currently invested in a foreign currency and that currency happens to be doing poorly against USD at the moment, then you'll lose money simply because you need it now. This is the same rationale that goes into target-date funds' moving from stocks to bonds over time. Since the value of a stock portfolio has a lot more natural volatility than the value of a bond portfolio, if you're heavily invested in stocks when you need to withdraw money, there's a higher probability that you'll need to cash out just when stocks happen to be doing relatively poorly. Being invested more in bonds around when you'll need your money is less risky. Similarly, being more invested in US dollars than in foreign currencies around when you'll need your money is also less risky. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do US retirement funds typically have way more US assets than international assets? ### Answer: You need growth in your retirement fund. Sad to say but the broad U.S. marks still has better growth perspective than the emerging markets. Look at China they are only at 6.7% growth for next year the same as this year. Russia's economy is shrinking. These are the other two super powers of 2015. The USA is still the best market to invest in historically and in the present. That's why the USA market tends to be overweight in most retirement portfolios. Now by only investing in the USA market do you miss out on trends internationally? Well you do a bit but not entirely. Many USA companies are highly international in regards to their growth. Here are some: So in short the USA market still seems to be the best growth market and you still get some international exposure. Also by investing in USA companies they sometimes are more ethical in their book keeping as opposed to some other markets. I don't think I'm the only one that is skeptical of the numbers China's government reports. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do US retirement funds typically have way more US assets than international assets? ### Answer: nan ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Do I need to file taxes when selling on eBay or Amazon? ### Answer: In simple terms, it is a business operation when it becomes a profit-making enterprise. It is a grey area, but there is a difference between selling occasional personal items on eBay and selling for profit. I would imagine the sort of considerations HM Revenue & Customs would take into account are the size of your turnover, the extent to which you are both buying and selling, and whether you are clearly specialising in one particular commodity as opposed of disposing of unwanted presents or clearing the loft. http://www.ebay.co.uk/gds/When-does-eBay-selling-become-taxable-/10000000004494855/g.html I don't believe that you selling your personal camera gear will be taxable, but as the link says, it is a grey area. They also recommend to do this It's far better than having to deal with an investigation a few years down the line. When it comes to completing your tax return, there is a section which is headed "other income", and it is here where you will enter the net earnings from the web business. "Net" here means your additional income, less all expenses associated with it. If you are still worried I would always encourage people to take a cautious approach and discuss their position with HMRC via its helpline on 08454 915 4515. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Making your first million… is easy! (??) ### Answer: It is difficult to become a millionaire in the short term (a few years) working at a 9-to-5 job, unless you get lucky (win the lottery, inheritance, gambling at a casino, etc). However, if you max out your employer's Retirement Plan (401k, 403b) for the next 30 years, and you average a 5% rate of return on your investment, you will reach millionaire status. Many people would consider this "easy" and "automatic". Of course, this assumes you are able to max our your retirement savings at the start of your career, and keep it going. The idea is that if you get in the habit of saving early in your career and live modestly, it becomes an automatic thing. Unfortunately, the value of $1 million after 30 years of inflation will be eroded somewhat. (Sorry.) If you don't want to wait 30 years, then you need to look at a different strategy. Work harder or take risks. Some options: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Making your first million… is easy! (??) ### Answer: I realize that "a million dollars" is a completely arbitrary figure, but it's one people fixate on. Perhaps folks just meant it's getting easier because inflation has made it a far less lofty sum than when the word "millionaire" was coined. Your point is correct - it' relatively easier as the 1 million dollar nowadays is no where as valuable as compared in the old days after the inflation adjustment. However the way to achieve that is easier said than done: The most possible way is to run your own business (assuming you will make profit). For most of the people running a job to earn a living - the job income is the biggest factor. Being extremely frugal wouldn't help much if you don't maximize your income potential. Earning a million dollar through investment? How much capitals are you able to invest in? 5k? 50k? 500k? I see no way to earn 1 million with 5k from investment, I wouldn't call it easy. This again depends on your income. With better income of course you could dedicate a larger portion to investment, without exposing too much risk and having to affect your way of life. (3) Invest some part of your income over a long period of time and let the stock market do the work I'd say this is more geared towards beating the inflation and earn a few extra bucks instead of getting very rich (this is being very relative). Just a word of cautions, the mindset of investment being the shortcut to wealth is very dangerous and often leads to speculative behavior. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Making your first million… is easy! (??) ### Answer: Easy. Start with 2 millions and lose only one. Jokes aside, if you want a million USD, you should be asking yourself how you can produce products or services worth $5 millions. (expect the extra to be eaten up by taxes, marketing, sales, workforce...) If by investment you mean making risky bets on the stock market, you might have a better time going to Las Vegas. On the other hand, if by investment you mean finding something that will produce $$$ and getting involved, it's a different matter. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Making your first million… is easy! (??) ### Answer: I think there's a measure of confirmation bias here. If you talk to somebody that started a successful business and got a million out of it, he'd say "it's easy, just do this and that, like I did". If you consider this as isolated incident, you would ignore thousands of others that did exactly the same and still struggle to break even, or are earning much less, or just went broke and moved on long time ago. You will almost never hear about these as books titled "How I tried to start a business and failed" sell much worse than success stories. So I do not think there's a guaranteed easy way - otherwise we'd have much more millionaires than we do now :) However, it does not mean any of those ways is not worth trying - whatever failure rate there is, it's less than 100% failure rate of not trying anything. You have to choose what fits your abilities and personality best - frugality, risk, inventiveness? Then hope you get as lucky as those "it's easy" people are, I guess. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the risks of Dividend-yielding stocks? ### Answer: Yep, there just is no free lunch. So called high dividend stocks are usually from companies that have stable cash flows but relatively little or moderate growth potential. Utility companies come to mind, let's take telecommunications as an example. Such stocks, usually, indeed are considered more conservative. In a bull market, they won't make high jumps, and in a bear market they shouldn't experience deep falls. I mean, just because the stock market fell by 10%, you're not going to stop using your phone. The stock might suffer a bit but the divided is still yielding you the same. However, fundamental data can have a significant impact. Let's say a recession hits the country of the telco. People might not get the newest iPhone and lock in to an expensive contract anymore, they might use cheaper forms of communication, they might stop paying bills, go bankrupt etc. This will have a severe impact on the company's cash flow and thus hit the stock in a double whammy: One, the dividend is gone. Two, the price will fall even further. There are basically two scenarios after that. Either the recession is temporary and your stock became a regular growth stock that at some point might bounce back and re-establish at the previous levels. Or the economy has contracted permanently but regained stability in which case you will again have a stock with a high dividend yield but based on a lower price. In conclusion: High dividend stocks make sense in a portfolio. But never consider their income to be safe. Reduce your risk by diversifying. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the risks of Dividend-yielding stocks? ### Answer: Dividend Stocks like any stock carry risk and go both up and down. It is important to choose a stock based on the company's potential and performance. And, if they pay a dividend it does help. -RobF ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the risks of Dividend-yielding stocks? ### Answer: The risk in a divident paying stock can come from 2 sources. The business of the company, or the valuation of the stock at the time you buy. The business of the company relates to how they are running things, the risks they are taking with the company, innovations in their pipeline, and their competitive landscape. You can find all sorts of examples of companies that paid nice dividends but didn't end so well... Eastman Kodak, Enron, Lehman brothers, all used to pay very nice dividends at some point... On the other hand you have the valuation. The company is running great, but the market has unrealistic expectations about it. Think Amazon and Yahoo back in 2001... the price was way too high for the company's worth. As the price of a stock goes up, the return that you get from its future cash flows (dividends) goes down (and viceversa). If you want to go deep into the subject, check out this course from Chicago U they spend a lot of time talking about dividends, future returns from stocks and the risk rewards of finding stocks by methods such as these. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the risks of Dividend-yielding stocks? ### Answer: Having a good dividend yield doesn't guarantee that a stock is safe. In the future, the company may run into financial trouble, stop paying dividends, or even go bankrupt. For this reason, you should never buy a stock just because it has a high dividend yield. You also need some criteria to determine whether that stock is safe to buy. Personally, I consider a stock is reasonably safe if it meets the following criteria: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the risks of Dividend-yielding stocks? ### Answer: No stock is risk-free. Some of the biggest companies in the country, that seemed incredibly stable and secure, have suffered severe downturns or gone out of business. Twenty or thirty years ago Kodak ruled the camera film market. But they didn't react quickly enough when digital cameras came along and today they're a shadow of their former self. Forty years ago IBM owned like 90% of the computer market -- many people used "IBM" as another word for computer. Sears used to dominate the retail department store market. Etc. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the risks of Dividend-yielding stocks? ### Answer: One strategy to consider is a well-diversified index fund of equities. These have historically averaged 7-8% real growth. So withdrawing 3% or 4% yearly under that growth should allow you to withdraw 30+ years with little risk of drawing down all your capital. As a bonus you're savings target would come down from $10 million to $2.5 million to a little under $3.5 million. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Where to deduct gambling losses? ### Answer: 1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: are there any special procedures for managing non-petty cash? ### Answer: You manage this account just as any other account. "Petty cash" refers to accounts where the cash money is intended for ad-hoc purchases, where you store an amount of cash in your drawer and take it out as needed. However, other than naming it "petty cash", there's nothing petty about it - it's an account just as any other. Many choose to just "deduct" the amount transferred to "Petty Cash" account and not manage it at all. Here the amount matters - some smaller amounts can fall under "de minimis" rules of the appropriate regulatory authority. Since you told nothing about where you are and what your business is - we can't tell you what the rules are in your case. If you track the usage of this account (and from your description it sounds like you are) - then the name "Petty Cash" is meaningless. It's an account just like any other. Since you have an employee dealing with this cash you should establish some internal audit procedures to ensure that there's no embezzlement and everything is accounted for. You will probably want to reconcile this account more often than others and check more thoroughly on what's going on with it. Since its a "personal finance" forum, I'm assuming you're a sole proprietor or a very small business, and SEC/SOX rules don't apply to you. If they do - you should have a licensed accountant (CPA or whatever public accountancy designation is regulated in your area) to help you with this. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: are there any special procedures for managing non-petty cash? ### Answer: After talking to two CPAs it seems like managing it using an imprest system is the best idea. The base characteristic of an imprest system is that a fixed amount is reserved and later replenished as it runs low. This replenishment will come from another account source, e.g., petty cash will be replenished by cashing a cheque drawn on a bank account. Petty cash imprest system allows only the replenishment of the spend made. So, if you start the month with €100 in your petty cash float and spend €90 of that cash in the month, an amount of €90 will be then placed in your petty cash float to bring the balance of your petty cash float back to €100. The replenishment is credited to the primary cash account, usually a bank account (Dr - Petty Cash a/c, Cr - Bank a/c) and the debits will go to the respective expense accounts, based on the petty cash receipt dockets (Dr- Expense a/c, Cr - Petty Cash a/c). In a non imprest system where a fixed amount is issued every month, e.g., €100 every time cash is required, there is no incentive to ensure all money issued has been documented because when money is all spent a check for a fixed amount is issued. It is much more difficult to reconcile a non imprest system as you never know how much exactly should be in the float. In an imprest system the amount requested is documented, the documentation being the petty cash dockets and their associated receipts or invoices. So at all times you can check how much should be left in the petty cash float by deducting the amount spent from the opening petty cash float. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is sales tax for online purchases based on billing- or shipping address? ### Answer: From Amazon's Site: "If an item is subject to sales tax in the state to which the order is shipped, tax is generally calculated on the total selling price of each individual item." I'm going to trust a company of this size has this correct. Shipping address. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is sales tax for online purchases based on billing- or shipping address? ### Answer: Apparently it's based on either the address of the seller or vendor or your shipping address; from the AccurateTax.com blog post Destination and Origin Based Sales Tax: ... a few states have laws that are origin-based, where products that are shipped to the customer are taxed based on the location of the business itself. As of this writing, these states are Most states use destination-based sales tax, which defines the source of the transaction to be the destination at which the product will eventually be used, or the address to which the product is shipped. ... The following states [and districts] operate on a destination-based model at the time of this writing: The page Do I Charge Sales Tax or Not? from about.com seems to (somewhat) clarify that if the business is located in a state (or other jurisdiction) with an origin-based sales tax, then they will charge you the sales tax for their state and, presumably, not the sales tax for the state of the shipping address. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is sales tax for online purchases based on billing- or shipping address? ### Answer: The technical answer is defined by the laws of state you live in but most (all?) states with a sales tax have some form of use tax. Where if you buy something in another state for use in your home state you are technically liable for sales tax on it regardless of whether the merchant charged you tax on it or not. I don't think many people actually pay the use taxes, and enforcement generally seems rare. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is sales tax for online purchases based on billing- or shipping address? ### Answer: From my understanding as a seller, and having read through Amazon's 8 page calculation methodology document, the default is the ship to address, however the seller still has the option to charge the tax or not, only charge the state rate and local (city, county, district, etc.) rate(s), or even set their own self-determined default tax rate. In other words, the seller has a lot of control in determining what rate they use and the billing and shipping addresses may not even matter. Just remember that whatever tax you pay to Amazon, your state will probably still hold you responsible for calculating and reporting any additional use tax, based on your location. And if the seller does overcharge for tax you may have a right to request a refund from them. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Single employee - paying for health insurance premiums with pre-tax money ### Answer: The answer likely depends a bit on which state you are in, but this should be true for most states. I don't know anything about Pennsylvania specifically unfortunately. The Affordable Care Act created the SHOP marketplace, which allows small businesses to effectively form larger groups for group coverage purposes. SHOP stands for Small Business Health Options Program, and requires only one common-law employee on payroll. This would effectively allow you to offer group coverage without having a group. Talk to your tax accountant for more details, as this is still very new and not necessarily well understood. There are some other options, all of which I would highly suggest talking to a tax accountant about as well. HRAs (health reimbursement accounts) allow the employer to set aside pre-tax funds for the employee to use for approved medical expenses; they're often managed by a benefits company (say, Wageworks, Conexis, etc.). That would allow your employee to potentially pick a higher deductible health plan which offers poorer coverage on the individual marketplace (with after-tax dollars) and then supplement with your HRA. There are also the concept of Employer Payment Plans, where the employer reimburses the employee for their insurance premiums, but those are not compatible with the ACA for the most part - although there seems to be a lot of disagreement as to whether it's possible to have something effectively the same work, see for example this page versus this for example. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Single employee - paying for health insurance premiums with pre-tax money ### Answer: Pre tax insurance is not possible unless the emplyer provides hsa and do a payroll deduction. Obamacare is all post tax and you can do deduction if your expenses exceeds 10%of your income ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Everyone got a raise to them same amount, lost my higher pay than the newer employees ### Answer: Why do you think you are entitled to "fairness"? In this world you get what you get. I am pretty sure your employer is not paying you for how you "feel" either. And by-the-way turning up on time and not leaving early is not exceptional behaviour; it is expected behaviour. Bottom line: do you add more value to your employer's business then the new hires? If so, ask for a raise, if not find a way to add more value and then ask for a raise or keep doing what you're doing and accept what you get. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Everyone got a raise to them same amount, lost my higher pay than the newer employees ### Answer: This is one effect of rising minimum wages: compression of lower pay tiers. The new employees might have been offered a lower starting rate than the result of your raise, but your employer did not have that option as a matter of law. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Everyone got a raise to them same amount, lost my higher pay than the newer employees ### Answer: The same thing happened to me when I worked retail during my college years. I agree that it is unfair however, it is what it is. With that being said, there may be several factors that you should consider: the new employees might have more experience or qualifications then you, your work performance based on your manager's perspective, and like in my situation when I worked retail, I started out as a cashier which get paid less than sales associates but when I moved to a sales associate position I still got paid less and when I got my raise I got the same pay a new sales associate would get. I suggest you suck it up and ride it through until you get a real job because in retail, in my opinion, you are expendable, if you don't like their pay they will find someone else. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Everyone got a raise to them same amount, lost my higher pay than the newer employees ### Answer: This question is largely opinion based but I wanted to balance out the people jumping on you. There are lots of factors that go into salary/pay, such as what you contribute to the company and whather you go above or beyond whats expected of you. I would say seniority is one factor, or at least there is a case to be made that it is important. If someone has worked 5 years for me, that is five years that I have not had to search, interview, and train a replacement. I am not a business owner but I do employ people and when someone quits its an extremely stressful process. Not having to go through that, again in my opinion, is worth a small bump in pay. I cant comment on if its fair or not. That is opinion. What is fact is that whenever a broad group of people are given a pay raise for arbitrary reasons and other employees arent, its creates discontent, it hurts morale, employees leave, and in severe cases the business becomes crippled. So Im not sure if its fair, but is it a bad idea? Generally. See here and I highly recommend going here for anyone who thinks dramatically raising pay 'because its the right thing to do' is a good idea ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Everyone got a raise to them same amount, lost my higher pay than the newer employees ### Answer: You didn't get laid off or have your hours cut back when the minimum wage was raised? I guess you have much to be grateful for, including a higher hourly rate. An excellent record is its own reward. When you finish your degree you will be grateful for the good habits you have established. You won't ever lose a nights sleep looking back and thinking "I wish I didn't do the right thing." It's sad that there isn't a more immediate reward for doing more than average, but that's life, doing the right thing over a long period of time does eventually lead to the reward you're looking for. Sometimes those rewards aren't tangible. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: FHA Reduction Notices From Third-Party Companies - Scam? Or Something To Consider? ### Answer: This is obviously a spam mail. Your mortgage is a public record, and mortgage brokers and insurance agents were, are and will be soliciting your business, as long as they feel they have a chance of getting it. Nothing that that particular company offers is unique to them, nothing they can offer you cannot be done by anyone else. It is my personal belief that we should not do business with spammers, and that is why I suggest you to remember the company name and never deal with them. However, it is up to you if you want to follow that advice or not. What they're offering is called refinance. Any bank, credit union or mortgage broker does that. The rates are more or less the same everywhere, but the closing fees and application fees is where the small brokers are making their money. Big banks get their money from also servicing the loans, so they're more flexible on fees. All of them can do "streamline" refinance if your mortgage is eligible. None if it isn't. Note that the ones who service your current mortgage might not be the ones who own it, thus "renegotiating the rate" is most likely not an option (FHA backed loans are sold to Fannie and Freddie, the original lenders continue servicing them - but don't own them). Refinancing - is a more likely option, and in this case the lender will not care about your rate on the old mortgage. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: This is known as "Zone Pricing" or "Geographical Pricing". http://articles.latimes.com/2005/jun/19/business/fi-calprice19 Such price variations may seem odd, but they are not unique to Anaheim. On any given day, in any major U.S. city, a single brand of gasoline will sell for a wide range of prices even when the cost to make and deliver the fuel is the same. The primary culprit is zone pricing, a secret and pervasive oil company strategy to boost profits by charging dealers different amounts for fuel based on traffic volume, station amenities, nearby household incomes, the strength of competitors and other factors. It's a controversial strategy, but the courts have thus far deemed it legal, and the Federal Trade Commission recently said the effect on consumers was ambiguous because some customers got hurt by higher prices while others benefited from lower ones. http://en.wikipedia.org/wiki/Geographical_pricing Zone pricing, as practiced in the gasoline industry in the United States, is the pricing of gasoline based on a complex and secret weighting of factors, such as the number of competing stations, number of vehicles, average traffic flow, population density, and geographic characteristics. This can result in two branded gas stations only a few miles apart selling gasoline at a price differential of as much as $0.50 per gallon. But the short answer is "because they can". It's legal, provided that some people are paying less while others are paying more. Essentially the larger, richer audience is subsidizing the product for other areas. It's not terribly different than the way most drugs are priced in the world. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: Location, Location, Location. The closer to the highway, the more they can charge. People want to go less than a mile from the exit to get gas. Therefore they save time, but spend more money. That is understandable, so the gas station takes advantage of the situation. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: There are many factors. Most gas stations price their gas based on what it will cost them to replace it. So when their supplier raises the price that it charges the station the station typically raises its prices proportionality. The suppliers tend to have their own rates. The business needs to make a profit so the business sets the price where it feels it will make the most money. Some stations buy bargain gas. Many people say they find this gas to be just fine. Personally some stations gas seems to make my cars run much worse. I can say that my mileage can vary by as much as 4 miles to the gallon based on where I get my gas. So I pay more to go to those stations that consistently have provided me good gasoline. However higher prices do not necessarily mean better gas. We have a BP just down the street that seems to have bad gas while one about a half a mile away that I prefer because I have never had a bad tank of gas. Both are priced about the same. Also some localities have special tax zones. These are local taxes levied based on the location. We have 4 different zones here in Peoria IL (150k pop). That does not take into account the smaller cities around us. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: I only have anecdotal evidence here as members of my family used to own a grocery store / gas station, but they were often time charged much more to have the gasoline delivered to than many gas stations which were just a mile or two away (up to 15% more). Also depending upon the branding of the gas station, they are required to use certain distributors (i.e. if you are an Exxon gas station you can only use a few select vendors) which gave them less control of their final cost. All in all the gasoline often had smaller margins than items in the grocery store, which are already extremely low. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: When I ran a gas station, our price was largely set by our neighbors-- the other gas stations in the area. We couldn't go below the current cost of replacement gas, but other than that we wanted to be at .05 over the average. (We got away with charging more because we were the last station on a major road.) Everybody else did the same thing. Also, we only set prices once a day, early in the morning before the commuter rush. Changing prices while somebody is pumping gas Was Not Done, for fairly obvious reasons. So, you'd get these ripples of price-changing, as one station changed its price, and then all its neighbors would react to that the next day, and then THEIR neighbors would change the day after that, and so on. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: One factor I haven't seen mentioned is volume. Suppliers will charge a slightly lower price to the station if they buy in full tanker truck loads instead of smaller quantities. Where I am this is probably still the largest factor in price spread with all newer bigger stations being 20-30 cents cheaper than the old small ones (often a repair shop with 2 pumps out front); the only reason it's slowly becoming less pronounced is that the old small stations are steadily closing up as their tanks fail leak inspections because they don't sell enough gas to justify repair and replacement. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: Some of this is demand management. The local BJ's wholesale club sells gas $0.10-0.15/gallon less than the prevailing rate. Typically there are lines of 3-5 cars waiting for a pump during busy periods. People are price-conscious when buying gas, which draws crowds and the retailer actually wants a line -- the whole point of the gas station is to draw traffic to the warehouse club. Other gas stations have the opposite problem -- big crowds lead to fewer people buying food and drinks in the convenience store, which is where the business actually makes its money. They want a steady stream of people. In my area, there is a gas station that is on a busy intersection right off the highway ramp going to the airport. Their problem is that people returning rental cars used to swarm the gas station and cause traffic tie-ups on the road -- a problem averted by marking up the gas $0.30. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do gas stations charge different amounts in the same local area? ### Answer: I'll echo: many factors. Brand: There are generally two levels of pricing: "major brand" and "discount brand". You can generally expect the "discount brand" to cost about 5-10 cents less per gallon in the same neighborhood as "major brand" gas. This is for a number of sub-factors; chief among them is that not all gasolines are created equal. A lot of the major brands (Shell, Texaco, Chevron, BP, Exxon) have proprietary detergents and cleaning agents that the discount brands do not. They're also generally closer to the real octane rating of the gas, have less ethanol (you'll see the sign that says "contains up to 10% ethanol"; the bargain brands are right up at that limit while the top-tier brands keep it lower) and have stricter requirements about storage tank maintenance. Anyone who tells you that all gas is the same, send em my way; I tried to save a few bux buying the cheaper stuff and now my car needs an engine overhaul because of fouling causing premature wear. A couple of my co-workers got a fuel system overhaul free from the local supermarket because the storage tank wasn't properly purged, and they got water into their gas tanks. Market Price: Yes, this is of course a factor. Generally, gas prices at the pump rise very quickly when the market price of crude or gasoline goes up, then fall more slowly than the market price, because the margins on gas sales for a C-store are very slim. When prices change, the C-stores lose either way; when prices rise they have to pay more than they got from the last tankful to buy the next one, and when prices fall they don't recoup the cost of their current tank. By quickly increasing the price to match commodities market prices, then gradually lowering them over time even if the market collapses, they mitigate the losses both ways. Overhead: A gas station right next to a highway probably had to pay more for that land, both to buy/lease it and in property taxes. Nicer (newer, cleaner) stations generally have to pay more to stay that way. The higher your operating costs, the more you'll have to charge for your gas. You can usually do so because the nicer station will attract customers willing to pay a few cents more for the nicer facilities. Taxation: Most States charge a tax on gasoline, in addition to a Federal tax on gas. That revenue either goes into the State's general fund, or is earmarked for transportation costs like road maintenance. California's gas prices are sky-high across the state, because they have the highest gas tax. I'm not sure Colorado, Wyoming and Montana have gas taxes at all. Proximity to other stations: No matter what you have to pay for the land and facilities, if there's another station across the street, you have to be within a penny of their price or people will vote with their feet. While "predatory pricing" (taking a loss on sales in one area, buffered by profits elsewhere, in order to drive out competition) is technically illegal, you see it all the time in the C-store industry and it is very difficult to prove. This is a primary cause of neighborhood-to-neighborhood changes; a C-store will look around the other stations on their street corner, and the ones down the road a block or two each direction, when determining what they can sell gas for that day. The guy five blocks down has a completely different pool of competing stations. Population Distribution: With a lot of people in a particular area, there's a big "pie" of customer dollars for C-stores to compete for. This generally leads to increased prices because the stations don't have to be AS cutthroat; regardless of how good your price is, you have only so many pumps, and at some point people will pay more to use the open pump than wait for the cheaper one. The reverse is true in rural areas; with only two stations in an entire small town, those two stations will become extremely cutthroat. However, rural prices also vary more; with only one station in easy walking distance from where you ran out of gas, they can charge you $6 to fill that gallon gas can if they want, and you'll pay it because the next gas station's another 20 miles down the road and probably has even higher prices. This, along with overhead, is generally why the Rockies states have the lowest average prices; land's cheap and people are scarce in Wyoming. But, the "price-gouging" can be seen in the rural Southwest, where there's a LOT of ground to cover between gas stations, and so the "last chance gas" along major highways just outside of town, each a nickel to a dime more than the previous station, is a common stereotype. Transportation costs: Prices are higher on the East and West Coasts than in the Gulf States for a very simple reason; the bulk of the U.S. refinery capacity is along the Gulf Coast between Galveston and the Florida border. The further you are from there, the more it costs to get the fuel from the refinery to the gas station, and that cost is reflected at the pump. In fact, the East Coast imports gasoline by tanker even though the United States is now a net exporter of gasoline, because it's cheaper to buy it from foreign sources than it would be to watch it drip through the limited pipeline capacity that exists between the Gulf states and the Eastern Seaboard. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: No you can't buy direct from Toyota. Largely because of many states' laws (assuming you're in the US) requiring a dealer relationship for car purchasing, read about Tesla's struggles with direct to customer sales. Secondly because Toyota corporate simply isn't set up to sell a car directly to a customer. I know there are services that help people through the buying process. If you're finding Toyota dealerships to be this difficult you may consider just buying something from someone who wants to sell to you. If the buying process is this difficult imagine the service relationship. Edit: Additionally, it's important to remember when financing a car that there are essentially two transactions taking place. First you're negotiating the price of the car. Then you negotiate the price of the money (the interest rate). The money does not need to come from the dealership, you can secure your financing rate from a separate bank or local credit union. You should definitely pursue alternate financing if they're quoting you 7.99% with a FICO of 710. But don't tell the dealership you've already got your financing lined up until you're happy with the price of the car. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: I feel your pain. It probably depends on your state, but two things we've tried with some benefit: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: You could consider buying a fairly recent used car from CarMax. They have fixed pricing, and you'd save a good amount of money on the car (since cars lose tons of value in their first year or so). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: Any car manufacturer that undercuts their own dealer network would have that network fall apart quickly. Tesla is using a dealer-free distribution model from the start, so they don't have that problem. Toyota doesn't work that way, though. GM imposed a uniform no-haggling policy with their Saturn brand, but that policy was coupled with local monopolies for dealers to make it work. Lexus has also experimented with no-haggling and online ordering (with delivery still taking place at a dealership). The rest of Toyota doesn't work that way, though. Some car manufacturers, such as BMW and Audi, allow you to take delivery of your new car at the factory for a discount. But even then, the transaction still takes place through a dealer. Toyota doesn't work that way, though. For one thing, they work at a different scale. If you buy a Camry in the US, it might be produced in Kentucky, Indiana, or Aichi, depending on business conditions. You say that you want to cut out the middleman, but the fact is that you do require someone to deliver a Toyota to you, like it or not. If you're interested in saving money, consider trying various well documented tips, such as negotiating by e-mail before showing up, pitting dealerships against each other. If you don't want to negotiate, you might be able to take advantage of pre-negotiated dealer prices through Costco. You mentioned that the dealership offered you a 7.99% interest rate for your 710 FICO score. That sounds insanely high — I'd expect deals more like 2% advertised by buyatoyota.com. (Remember, Toyota Motor Credit Corporation exists to help Toyota Motor Corporation sell more cars cheaply.) You can also seek alternate financing online (example) or through your own bank. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: If there's one reasonably close to you, you could go to a no-haggle dealership. Instead of making you haggle the price downward, they just give a theoretically fixed price that's roughly what the average customer could negotiate down to at a conventional dealer. Then just do your best broken record impression if they still try to sell you dubious addons: "No. No. No. No. No..." The last time I bought a new car (06), a no haggle dealer offered the second best deal I got out of 4 dealerships visited. The one I ended up buying with made an exceptional offer on my trade (comparable to 3rd party sale bluebook value). - My guess is they had a potential customer looking for something like my old car and were hoping to resell it directly instead of flipping it via auction. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: sadly, it is illegal in most states to buy a car directly from the manufacturer. as such, most manufacturers do not offer the option even where it is legal. if you really do know exactly what you want (model, color, options, etc.) i recommend you write down your requirements and send it to every dealer in town (via email or fax). include instructions that if they want your business, they are to reply via email (or fax) with a price within 7 days. at least one dealer will reply, and you can deal with whoever has the best price. notes: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: You can buy a new Toyota from a non-dealer, but not from Toyota directly as they have no retail distribution capability. There is no need to buy directly from Toyota if you want to get a new car without going through a dealer. In many cases people buy new cars but have to sell them immediately for one reason or another. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: As someone who was just recently a salesman at Honda, I'd recommend buying a Honda instead :). If you really prefer your Toyota, I always found quote-aggregation services (Truecar, I'm blanking on others) very competitive in their pricing. Alternatively, you could email several dealerships requesting a final sale price inclusive of taxes and tags with the make, model, and accessories you'd wish to purchase, and buy the vehicle from them if your local dealership won't match that price. Please keep in mind this is only persuasive to your local dealership if said competitors are in the same market area (nobody will care if you have a quote from out-of-state). As many other commenters noted, you should arrange your own financing. A staple of the sales process is switching a customer to in-house financing, but this occurs when the dealership offers you better terms than you are getting on your own. So allow them the chance to earn the financing, but don't feel obligated to take it if it doesn't make sense fiscally. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: As others have addressed the legality in their answers, I want to address the idea of the dealership being 'a middleman'. A dealership serves more of a purpose than just 'middlemanning' a car to a consumer. Actually, they consume a great deal of risk. Let's remember that a dealership is really an extension of the OEM, albeit independently owned and operated, the dealership must still answer to the brand they represent, if people have a bad experience with a dealership, a customer might go to another of the same brand, but more often than not they will go to the competition out of spite. Therefore, it's in the dealership's best interest to represent the brand as best as possible, but unfortunately that doesn't always happen. While the internet has made a certain part of a salesman's role null and void, and since this is a finance (read money) Q/A site let's take a moment to consider the risk assume and therefore the value added by a dealership: Test Drive. A car is a huge purchase, and while it's okay to buy a pair of shoes online without trying them on, a car is a bit different of course, we want to make sure it 'fits' before we shell out several thousand dollars. Yes, you (meaning consumers) can look at car pictures and specs online, but if you want to see how that vehicle handles on your town's roads, if it fits in your garage and/or driveway, then you need to take it for a test drive. It's not feasible for OEMs to have millions of people showing up to car plants for a test drive, right? Scalability aside, some business that is handled in automotive plants are confidential and not for the general public to know about. A dealership provides an opportunity for those who live locally to see and experience the car without flying or driving wherever the car was assembled. They provide this at a risk, banking on the fact that a good experience with the vehicle will lead to a sale. Service. A car is a machine, and no machine is perfect, neither will it last forever without proper service. A dealership provides a place for people to bring their vehicles when they need to be serviced. Let's set aside the fact that the service prices are higher than we'd like, because the fact remains most of it is skilled (and warrantied) labor that the majority of people don't want to do themselves. Trade Ins. It is not in an OEMs best interest to accept a vehicle just to sell you another vehicle, especially if that vehicle is from another brand. Dealership's assume this risk, and often offer incentives to do so, hoping it will lead to a sale. That trade in was an asset to you, but is a liability to them, because they now have to liquidate that trade in, just so that you can purchase a car. Sure, you could sell your car yourself, and now you would assume that risk: What if your car is not in perfect shape, or has a lot of miles for it's age? Would it do well in the used car market? What if it takes too long to sell and you miss that Memorial Day car sale at the dealer? This might be okay for some, but generally speaking most people would rather avoid the risk and trade it in at the dealer toward the purchase of a new car rather than the headache of selling it themselves. I'm sure there are more, but those are the one's that immediately sprung to mind. Just like Starbucks, there are terrible dealerships out there and there are great ones, and very few of us venture to farms and jungles just for fresh coffee beans :-) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: nan ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: You already got good answers on why you can't buy a Toyota from the factory, but my answer is regarding to the implied second part of your question: how to avoid haggling. I found a good way to avoid the haggling at a car dealership can be simply to not haggle. Go in with a different attitude. The main reason car dealers list inflated prices and then haggle is that they expect the customers to haggle. It is fundamentally based on distrust on both sides. Treat the sales person as your advisor, your business partner, as somebody you trust as an expert in his field, and you'll be surprised how the experience changes. Of course, make sure that the trust is justified. Sales reps have a fine line to walk. Of course they like to sell a car for more money, but they also do not want a reputation of overcharging customers. They'd rather you recommend them to your friends and post good reviews on Yelp. In the end, all reputable dealers effectively have a fixed-price policy, or close to it, even those who don't advertise it, and even for used cars. Haggling just prolongs the process to get there. And sales reps are people. Often people who hate the haggling part of their job as much as you do. I was in the market for a new (used) car a few months ago. In the end, it was between two cars (one of them a Toyota), both from the brand-name dealer's respective used car lots. In both cases, I went in knowing in advance what the car's fair market value was and what I was willing to pay (as well as details about the car, mileage, condition etc. - thanks to the Internet). Both cars were marked significantly higher. As soon as the sales rep realized that I wasn't even trying to haggle - the price dropped to the fair value. I didn't even have to ask for it. The rep even offered some extras thrown into the deal, things I hadn't even asked for (things like towing my old car to the junk yard). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there any way to buy a new car directly from Toyota without going through a dealership? ### Answer: Yes, nothing is impossible! :) You can buy it directly from the factory of manufacturer, but then you will have to pay for sea shipping of this car. E.g. you can buy it directly from Japanese Toyota but then you will have to pay to sea cargo ship to deliver your car in container from Japan. Since this car is already your property, before importing to US, I doubt that you would need to pay any custom fees. In the end, the total payment might be a lot cheaper that you can buy there, but you need to be prepared to all this hassle ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should a high-school student invest their (relative meager) savings? ### Answer: You should invest in that with the best possible outcome. Right now that is in yourself. Your greatest wealth building tool, at this point, is your future income. As such anything you can do to increase your earnings potential. For some that might mean getting an engineering degree, for others it might mean starting a small business. For some it is both obtaining a college degree and learning about business. A secondary thing to learn about would be personal finance. I would hold off on stocks, at this time, until you get your first real job and you have an emergency fund in place. Penny stocks are worthless, forget about them. Bonds have their place, but not at this point in your life. Saving up for college and obtaining a quality education, debt free, should be your top priority. Saving up for emergencies is a secondary priority, but only after you have more than enough money to fund your college education. You can start thinking about retirement, but you need a career to help fund your savings plan. Put that off until you have such a career. Investing in stocks, at this juncture, is a bit foolish. Start a career first. Any job you take now should be seen as a step towards a larger goal and should not define who you are. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should a high-school student invest their (relative meager) savings? ### Answer: You have a few correlated questions here: Yes you can. There are only a few investment strategies that require a minimum contribution and those aren't ones that would get a blanket recommendation anyway. Investing in bonds or stocks is perfectly possible with limited funds. You're never too young to start. The power of interest means that the more time you give your money to grow, the larger your eventual gains will be (provided your investment is beating inflation). If your financial situation allows it, it makes sense to invest money you don't need immediately, which brings us to: This is the one you have to look at most. You're young but have a nice chunk of cash in a savings account. That money won't grow much and you could be losing purchasing power to inflation but on the other hand that money also isn't at risk. While there are dozens of investment options1 the two main ones to look at are: bonds: these are fixed income, which means they're fairly safe, but the downside is that you need to lock up your money for a long time to get a better interest rate than a savings account index funds that track the market: these are basically another form of stock where each share represents fractions of shares of other companies that are tracked on an index such as the S&P 500 or Nasdaq. These are much riskier and more volatile, which is why you should look at this as a long-term investment as well because given enough time these are expected to trend upwards. Look into index funds further to understand why. But this isn't so much about what you should invest in, but more about the fact that an investment, almost by definition, means putting money away for a long period of time. So the real question remains: how much can you afford to put away? For that you need to look at your individual situation and your plans for the future. Do you need that money to pay for expenses in the coming years? Do you want to save it up for college? Do you want to invest and leave it untouched to inspire you to keep saving? Do you want to save for retirement? (I'm not sure if you can start saving via IRAs and the like at your age but it's worth looking into.) Or do you want to spend it on a dream holiday or a car? There are arguments to be made for every one of those. Most people will tell you to keep such a "low" sum in a savings account as an emergency fund but that also depends on whether you have a safety net (i.e. parents) and how reliable they are. Most people will also tell you that your long-term money should be in the stock market in the form of a balanced portfolio of index funds. But I won't tell you what to do since you need to look at your own options and decide for yourself what makes sense for you. You're off to a great start if you're thinking about this at your age and I'd encourage you to take that interest further and look into educating yourself on the investments options and funds that are available to you and decide on a financial plan. Involving your parents in that is sensible, not in the least because your post-high school plans will be the most important variable in said plan. To recap my first point and answer your main question, if you've decided that you want to invest and you've established a specific budget, the size of that investment budget should not factor into what you invest it in. 1 - For the record: penny stocks are not an investment. They're an expensive form of gambling. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should a high-school student invest their (relative meager) savings? ### Answer: At your age (heck, at MY age :-)) I would not think about doing any of those types of investments (not savings) on your own, unless you are really interested in the investment process for its own sake, and are willing to devote a lot of time to investigating companies in order to try to pick good investments. Instead, find a good mutual fund from say Vanguard or TRP, put your money in there, and relax. Depending on your short-term goals (e.g. will you expect to need the money for college?) you could pick either an index fund, or a low-risk, mostly bond fund. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should a high-school student invest their (relative meager) savings? ### Answer: IMHO It is definitively not too early to start learning and thinking about personal finances and also about investing. If you like to try stock market games, make sure to use one that includes a realistic fee structure simulation as well - otherwise there'll be a very unpleasant awakening when switching to reality... I'd like to stress the need for low fees with the brokerage account! Sit down and calculate how much fees different brokers take for a "portfolio" of say, 1 ETF, 1 bond, 1 share of about $500 or $1000 each (e.g. order fee, annual fee, fee for paying out interest/dividend). In my experience, it is good if you can manage to make the first small investing steps before starting your career. Real jobs tend to need lots of time (particularly at the beginning), so time to learn investing is extremely scarce right at the time when you for the first time in your life earn money that could/should be invested. I'm talking of very slowly starting with a single purchase of say an ETF, a single bond next time you have saved up a suitable amount of toy money, then maybe a single share (and essentially not doing anything with them in order to avoid further fees). While such a "portfolio" is terrible with respect to diversification and relative fees, this gives you the possibility to learn the procedures, to see how the fees cut in, what to do wrt taxes etc. This is why I speak about toy money and why I consider this money an investment in education. An order fee of, say, $10 on a $500 position are terrible 4% (2 x $10) for buying + selling - depending on your local taxes, that would be several years of dividend yield for say some arbitrary Dow Jones ETF. Nevertheless, purchase + sale together are less than 3 cinema tickets. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should a high-school student invest their (relative meager) savings? ### Answer: The advice to invest in yourself is good advice. But the stock market can be very rewarding over the long pull. You have about 45 years to retirement now and that is plenty long enough that each dollar put into the market now will be many dollars then. A simple way to do this might be to open a brokerage account at a reputable broker and put a grand into a very broad based all market ETF and then doing nothing with it. The price of the ETF will go up and down with the usual market gyrations, but over the decades it will grow nicely. Make sure the ETF has low fees so that you aren't being overcharged. It's good that you are thinking about investing at a young age. A rational and consistent investment strategy will lead to wealth over the long pull. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should a high-school student invest their (relative meager) savings? ### Answer: Is investing a good idea with a low amount of money? Yes. I'll take the angle that you CAN invest in penny stocks. There's nothing wrong with that. The (oversimplified) suggestion I would make is to answer the question about your risk aversion. This is the four quadrant (e.g., http://njaes.rutgers.edu:8080/money/riskquiz/) you are introduced to when you first sit down to open your brokerage (stocks) or employer retirement account (401K). Along with a release of liability in the language of "past performance is not an indicator..." (which you will not truly understand until you experience a market crash). The reason I say this is because if you are 100% risk averse, then it is clear which vehicles you want to have in your tool belt; t-bills, CDs, money market, and plain vanilla savings. Absolutely nothing wrong with this. Don't let anyone make you feel otherwise with remarks like "your money is not working for you sitting there". It's extremely important to be absolutely honest with yourself in doing this assessment, too. For example, I thought I was a risk taker except when the market tumbled, I reacted exactly how a knee-jerk investor would. Also, I feel it's not easy to know just how honest you are with yourself as we are humans, and not impartial machines. So the recommendation I would give is to make a strong correlation to casino gambling. In other words, conventional advice is to only take "play money" to the casino. This because you assume you WILL lose it. Then you can enjoy yourself at the casino knowing this is capital that you are okay throwing in the trash. I would strongly caution you to only ever invest capital in the stock market that you characterize as play money. I'm convinced financial advisors, fund managers, friends will disagree. Still, I feel this is the only way you will be completely okay when the market fluctuates -- you won't lose sleep. IF you choose this approach, then you can start investing any time. That five drachma you were going to throw away on lottery tickets? transfer it into your Roth IRA. That twenty yen that you were going to ante in your weekly poker night? transfer it into your index fund. You already got past the investors remorse of (losing) that money. IF you truly accept that amount as play money, then you CAN put it into penny stocks. I'll get lots of criticism here. However, I maintain that once you are truly okay with throwing that cash away (like you would drop it into a slot machine), then it's the same whether you lose it one way or in another investment vehicle. ###end

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