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Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are institutional investors? ### Answer: Professional investors managing large investment portfolios for "institutions" -- a college, a museum, a charitable organization, et cetera. I'm not sure whether those managing investments for a business are considered institutional investors or not. The common factor tends to be large to immense portfolios (let's call it $100M and up, just for discussion) and concern with preserving that wealth. Having that much money to work with allows some investment strategies that don't make sense for smaller investors, and makes some others impractical to impossible. These folks can make mistakes too; Madoff burned a lot of charities when his scam collapsed. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are institutional investors? ### Answer: FINRA defines institutional investors as: Institutional investors include banks, savings and loan associations, insurance companies, registered investment companies, registered investment advisors, a person or entity with assets of at least $50 million, government entities, employee benefit plans and qualified plans with at least 100 participants, FINRA member firms and registered persons, and a person acting solely on behalf of an institutional investor. From: http://www.finra.org/industry/issues/faq-advertising Based on Rules 2210(a)(4) and 4512(c). Institutional investors are expected to understand market risks and as a result, disclosure requirements are much lower (perhaps no SEC filings and no prospectus). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Typically how many digits are in a cheque number? ### Answer: Checks are normally numbered sequentially, to keep them unique for record-keeping purposes. The check number takes as many digits as it takes, depending on how long the account has been open and thus how many checks have been written. The most recent check I looked at had a four-digit number, but as has been pointed out businesses may run through thousands per year. I recommend storing this in an unsigned long or long-long, which will probably be comparable to the bank's own limits. I don't know whether there is an explicit maximum value; we would need to find someone who knows the banking standards to answer that. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I detect potential fraud in a company before investing in them? ### Answer: Given that such activities are criminal and the people committing them have to hide them from the law, it's very unlikely that an investor could detect them, let alone one from a different country. The only things that can realistically help is to keep in mind the adage "If something sounds too good to be true, it probably is", and to stick to relatively large companies, since they have more auditing requirements and fraud is much harder to hide at scale (but not impossible, see Enron). Edit: and, of course, diversify. This kind of thing is rare, and not systematic, so diversification is a very good protection. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I detect potential fraud in a company before investing in them? ### Answer: Most of the information we get about how a company is running its business, in any market, comes from the company. If the information is related to financial statements, it is checked by an external audit, and then provided to the public through official channels. All of these controls are meant to make it very unlikely for a firm to commit fraud or to cook its books. In that sense the controls are successful, very few firms provide fraudulent information to the public compared with the thousands of companies that list in stock markets around the world. Now, there is still a handful of firms that have committed fraud, and it is probable that a few firms are committing fraud right now. But, these companies go to great lengths to keep information about their fraud hidden from both the public and the authorities. All of these factors contribute to such frauds being black swan events to the outside observer. A black swan event is an event that is highly improbable, impossible to foresee with the information available before the event (it can only be analyzed in retrospect), and it has very large impact. The classification of an event as a black swan depends on your perspective. E.g. the Enron collapse was not as unexpected to the Enron executives as it was to its investors. You cannot foresee black swan events, but there are a few strategies that allow you to insure yourself against them. One such strategy is buying out of the money puts in the stocks where you have an investment, the idea being that in the event of a crash - due to fraud or whatever other reason - the profits in your puts would offset the loses on the stock. This strategy however suffers from time and loses a little money every day that the black swan doesn't show up, thanks to theta decay. So while it is not possible to detect fraud before investing, or at least not feasible with the resources and information available to the average investor, it is possible to obtain some degree of protection against it, at a cost. Whether that cost is too high or not, is the million dollar question. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can I detect potential fraud in a company before investing in them? ### Answer: Even without fraud, a company can get into serious trouble overnight, often through no fault of their own. That's part of the hazard of being part owner of a company -- which is what a share of stock is. As a minority owner not involved in actually running the business, there really isn't a lot you can do about that excep to play the odds and think about how that risk compares to the profit you're taking (which is one reason the current emphasis on stock price rather than dividends is considered a departure from traditional investing) and, as everyone else has said, avoid putting too much of your wealth in one place. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Are non-residents or foreigners permitted to buy or own shares of UK companies? ### Answer: Yes it is legal, in fact according to statistics.gov.uk, foreign investors are the largest holders of UK shares (as of 2008). Investors from outside the UK owned 41.5 per cent of shares listed on the London Stock Exchange at the end of 2008, up from 40.0 per cent at end of 2006, according to the latest Office for National Statistics report on share ownership. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Are non-residents or foreigners permitted to buy or own shares of UK companies? ### Answer: It's easy to own many of the larger UK stocks. Companies like British Petroleum, Glaxo, and Royal Dutch Shell, list what they call ADRs (American Depositary Receipts) on the U.S. stock exchanges. That is, they will deposit local shares with Bank of NY Mellon, JP Morgan Chase, or Citicorp (the three banks that do this type of business), and the banks will turn around and issue ADRs equivalent to the number of shares on deposit. This is not true with "small cap" companies. In those cases, a broker like Schwab may occasionally help you, usually not. But you might have difficulty trading U.S. small cap companies as well. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Are non-residents or foreigners permitted to buy or own shares of UK companies? ### Answer: Yes, However if you live in the USA a lot of companies will refuse to sent you any report and will not let you take part in “right issues” as they don’t wish to come under USA investment law. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the fundamental levels that makes a Stock Ideal? (either to sell or buy) ### Answer: for buying: High PE, low debt, discount = win. a company with high debt (in relation to revenues and cash on hand) will have to pay interest and pay off the debt, stunting their growth. and just like a normal person, will barely be able to pay their bills and keep borrowing and might go bankrupt determining discount is just looking for a technical retracement to a support level or lower. (but if you dont enter at the support level, you most likely missed the best entry) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are the fundamental levels that makes a Stock Ideal? (either to sell or buy) ### Answer: I look at the following ratios and how these ratios developed over time, for instance how did valuation come down in a recession, what was the trough multiple during the Lehman crisis in 2008, how did a recession or good economy affect profitability of the company. Valuation metrics: Enterprise value / EBIT (EBIT = operating income) Enterprise value / sales (for fast growing companies as their operating profit is expected to be realized later in time) and P/E Profitability: Operating margin, which is EBIT / sales Cashflow / sales Business model stability and news flow ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is the added advantage of a broker being a member of NFA in addition to IIROC ### Answer: This shows that in each market (US and Canada) the company is registered with the appropriate regulatory organization. OANDA is registered in the US with the National Futures Association which is a "self-regulatory organization for the U.S. derivatives industry". OANDA Canada is registered in Canada with IIROC which is the "Investment Industry Regulatory Organization of Canada". The company does business in both the US and in Canada so the US arm is registered with the US regulatory organization and the Canadian arm is registered with the Canadian regulatory organization. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Am I “cheating the system” by opening up a tiny account with a credit union and then immediately applying for a huge loan? ### Answer: Nope. Credit Unions are for the customers. Since the customers own them, the credit union does what is best for the members. They aren't giving you money, they are loaning it to you for for interest. Furthermore then judged you like any other bank would. High horse moment: I believe the only reason you have to open an account, is because the banking industry didn't want to compete and got legislation to limit the size and reach of a credit union. The credit union wants your business, and they want to work for you, but they are required to have these membership requirements because their lobby isn't as powerful as regular banks. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Am I “cheating the system” by opening up a tiny account with a credit union and then immediately applying for a huge loan? ### Answer: Credit unions require you to open an account because of their history. A credit union is just that: a union. Only instead of a union of workers collectively bargaining for better pay or worker's comp, they are lending each other money. They are chartered to offer their services to members of the union, rather than the public at large. For that reason, credit unions historically had targeted niche memberships (ie, employees at a specific company, or property with a specific hobby such as fishing). Most credit unions these days attempt to skirt the issue, by claiming to serve members of a specific geographic area. Anyway, membership is defined a owning a stake in the union, which is usually termed a share. By opening the account and "purchasing a share," you are becoming both an owner and member of the union, and are eligible for their services. That's why the account is required before you can have a loan. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Am I “cheating the system” by opening up a tiny account with a credit union and then immediately applying for a huge loan? ### Answer: Credit Unions turn a profit by lending money at a higher interest rate than their savings do, just like banks do. It is an amoral feat, completely parallel to any moral weights you have assigned to "the system". If the most favorable circumstance is you receiving access to capital, then you can easily achieve that with zero reservations about the system that granted it to you. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: tax deduction for 30k loan ### Answer: The loan itself is not tax deductible; unless you took it as part of a mortgage, anyway, it's just a regular loan. Mortgage and Student Loan Interest deductions are special cases explicitly given tax-deductible status; other loans are not deductible (unless part of a business expense or other qualifying reason). If this were a short sale (which you note it was not but included for completeness' sake), and some of your debt was cancelled, that may have tax implications. You cannot take a capital loss on your personal residence, so the loss itself is not deductible. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How much life insurance do I need? ### Answer: If I remember the information in "The Wealthy Barber" correctly, he said: And as someone once said to me, "make sure you're worth more alive than dead!" :-) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How much life insurance do I need? ### Answer: After some thought, I follow Dave Ramsey's advice because it's simple and I can do the math in my head - no online calculator needed. :) You need Life Insurance if someone depends on your income. You can replace your income with a single lump sum of 8-10 times your current income where those who need your income, can get roughly your salary each year from the life insurance proceeds. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How much life insurance do I need? ### Answer: Life Insurance can be a difficult decision. We have to first assess the "want" for it vs. the "need" for it, and that differs from person to person. Any Life licensed agent should be happy to do this calculation for you at no cost and no obligation. Just be sure you are well educated in the subject to make sure they are looking after YOUR needs and not their wallets. For the majority of clients, when looking at "needs" we will be sure to look at income coverage (less what the household needs with one less body) as well as debt coverage, education costs etc. More importantly make sure you are buying the RIGHT insurance, as much as the right amount. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How much life insurance do I need? ### Answer: One simple calculation to determine your life insurance need: D.I.M.E. method D: Debt All your car loan balances, credit card balances, student loans, business loans, etc. I: Income Your annual income times 10 (for 10 years of income replacement). M: Mortgage Your home mortgage balance. E: Education Your children's education expenses. You add up all these items, and you'll come up with a proper amount of life insurance coverage. This should be sufficient model for a majority of people. Yes, your life insurance needs will change as you move through life. Therefore you should sit down with your life insurance agent to review your policy every year and adjust it accordingly. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there a catch to offers of $100 when opening up a new checking account? ### Answer: There's no catch. Banks need to acquire customers just like any other business. One common way to acquire new customers is by advertising on the radio, TV, print, etc. Another common way to acquire new customers is by offering incentives like the one you linked to. Basically, PNC is confident that they will make more than $100 in profit over the entire lifetime of a customer. This is a very reasonable assumption, considering that: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is there a catch to offers of $100 when opening up a new checking account? ### Answer: To add in a brief expansion to Portman's complete answer. The payment can also be thought of as compensation for your "switching cost". Obviously it is inconvenient to transfer your account from one bank to another (changing static payments, stationery, that sort of thing). The cash is offered as payment towards that inconvenience. Given the profits that banks make you can think of the $100 in much the same way as a store offering you a 5% discount on your next shopping trip. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is it possible for US retail forex traders to trade exotic currencies? ### Answer: The vast majority of retail Forex brokers are market makers, rather than ECNs. With that said, the one that fits your description mostly closely is Interactive Brokers, is US-based, and well-respected. They have a good amount of exoitcs available. Many ECNs don't carry these because of the mere fact that they make money on transactions, versus market makers who make money on transactions and even more on your losses. So, if the business model is to make money only on transactions, and they are as rarely traded as exotics are, there's no money to be made. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is it possible for US retail forex traders to trade exotic currencies? ### Answer: You are in a difficult situation because of US regulation, that is much more demanding to fulfill than in EU or rest of the world. Second, Interactive Brokers stopped serving FX for US clients. Third, EU brokers - like Saxo Bank - don't accept US clients: Almost any private client can open an account with Saxo Bank, although there are few exceptions. You can’t open an account if you are US, Iranian or North Korean resident - Brokerchooser: Saxo Bank Review Working for Brokerchooser, I would say you are limited to Oanda or Gain Capital. The latter is an ECN broker, and operates through other white label partners, you could try Forex.com also. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are online payment options with no chargeback protection? ### Answer: Generally there's no ultimate protection against charge backs. Some methods are easier to charge back and some harder, and there's always the resort of going to courts. The hardest to contest is, of course, a cash payment or wire transfer. You need to remember that imposing unnecessary/unreasonable difficulties on your customers will drive business away. I can buy diamonds in the nearest mall with my credit card - why would I buy from you if you want cash, BTC, or any other shady way to pay? I'm pretty sure that whatever that is you're selling, anyone can buy elsewhere as well. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Shorting: What if you can't find lenders? ### Answer: If you can't find anyone to lend you the shares, then you can't short. You can attempt to raise the interest rate at which you will borrow at, in order to entice others to lend you their shares. In practice, broadcasting this information is pretty convoluted. If there aren't any stocks for you to buy back, then you have to buy back at a higher price. As in, place a limit buy order higher and higher until someone decides to sell to you. This affects your profit. Regarding the public ledger: This functions different in different markets. United States stock markets have an evolving body of regulations to alleviate the exact concerns you detailed, but Canada's or Dubai's stock markets would have different provisions. You make the assumption that it is an efficient process, but it is not and it is indeed ripe for abuse. In US stocks, the public ledger has a 3 business day delay between showing change of ownership. Many times brokers and clearing firms and other market participants allow a customer to go short with fake shares, with the idea that they will find real shares within the 3 business day time period to cover the position. During the time period that there is no real shares hitting the market, this is called a "naked short". The only legal system that attempts to deter this practice is the "fail to deliver" (FTD) list. If someone fails to deliver, that means there is a short position active with fake shares for which no real shares have been borrowed against. Too many FTD's allow for a short selling restriction to be placed, meaning nobody else can be short, and existing short sellers may be forced to cover. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Shorting: What if you can't find lenders? ### Answer: Your question has 6 questions marks along with comments on what you'd like to know. Yes, there are stocks that are tough to short, a combination of low float, high current short positions, etc. Interest charged on the position rises in a supply/demand fashion. To unwind the position, there's always going to be stock available to buy. A shortage of willing sellers will cause the price to go up, but you'll see a bid/ask and the market will clear, i.e. The buy order fills. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Shorting: What if you can't find lenders? ### Answer: You at least have some understanding of the pitfalls of shorting. You might not be able to borrow stock. You might not be able to buy it back when the time comes. You're moves are monitored, so you can't "run away" because the rules are enforced. (You don't want to find out how, personally.) "Shorting" is a tough, risky business. To answer your implicit question, if you have to ask about it on a public forum like this, you're not good enough to do it. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I get an accountant for my taxes? ### Answer: A reason to get an accountant is to avoid penalties for possible mistakes. That is, if you make a mistake, the IRS can impose penalties on you for negligence. If the professional makes the SAME mistake, the burden of proof for "negligence" shifts to the IRS, which probably means that you'll pay more taxes and interest, but NO penalties; hiring an accountant is prima facie evidence of NOT being negligent. I would get an accountant since this the first time for you in the present situation, when mistakes are most likely. If you feel that s/he did the same for you that you would have done for yourself, then you might go back to doing your own taxes in later years. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I get an accountant for my taxes? ### Answer: I don't know if I would go so far as to hire an accountant. None of those things you listed really complicates your taxes all that much. If you were self-employed, started a business, got a big inheritance, or are claiming unusually large deductions, etc. then maybe. The only thing new from your post seems to be the house and a raise. The 3rd kid doesn't substantially change things on your taxes from the 2nd. I'd suggest just using tax preparation software, or if you are especially nervous a tax-preparation service. An accountant just seems like overkill for an individual. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I get an accountant for my taxes? ### Answer: Let me offer an anecdote to this - I started helping a woman, widowed, retired, who had been paying $500/yr to get her taxes done. As I mentioned in my comment here, she got a checklist each year and provided the info requested. From where I sat, it seemed a clerk entered the info into tax software. As part of the transition to me helping her, I asked the prior guy (very nice guy, really) for a quick consult. She took the standard deduction, but also showed a nice annual donation. Didn't take advantage of the QCD, donate directly from an IRA (she was over 70-1/2) to save on the tax of this sum. That could have saved her $500. She was in the 15% bracket, with some room left for a Roth conversion. Converting just enough to 'fill' that bracket each year seemed a decent strategy as it would avoid the 25% rate as her RMDs rose each year and would push her to 25%. To both items the guy suggested that this was not his area, he was not a financial planner. Yes, I understand different expertise. With how simple her return was, I didn't understand the value he added. If you go with a professional, be sure you have an understanding of what he will and won't do for you. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What's the difference between TaxAct and TurboTax? ### Answer: I prefer TaxAct. I find it simpler to use and more helpful in helping answer the questionnaire. I have a fairly complex tax return and it handles it just fine. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What's the difference between TaxAct and TurboTax? ### Answer: I typed my information into both last year, and while they were not exactly the same, they were within $10 of each other. For my simple 2009 taxes they were not different in any meaningful way. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What's the difference between TaxAct and TurboTax? ### Answer: I have used TurboTax for years with no problems. I clicked on the TaxAct link in an ad and decided to see if there was much different. Using the free version of Taxact, and inputting the exact same information, my federal taxes came out with a $1500 difference while my state taxes (NJ) came out almost identically. I rechecked my inputs twice and could find no typos in either program. While I would make out better with the TaxAct program in my wallet, I find the detailed questioning and directions in TurboTax to be superior. Somehow I am thinking that TaxAct has missed something but I can't figure out what. And the only way to actually print out your forms with TaxAct is to get the paid version, so comparing the final forms side bybside isn't a free option. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What's the difference between TaxAct and TurboTax? ### Answer: Like most software it's about what you put in to them. We use ProSeries software which is like TurboTax but $4500 with no questions. I would do your taxes on online and then have a professional do them. You then can ask any questions you may have to better understanding of what's going on. Only take copies of your documents because some unprofessional places will try to keep them. Do this each time something big changes in your life, you have a baby, buy a house or start a business. May cost more but could save you thousands in the long run. I have been doing taxes professionally for 7 years. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Do I need to pay tax on the amount of savings I have in the bank? ### Answer: In India, assuming that you have already paid relevant [Income/Capital gains] tax and then deposited the funds into your Bank [Savings or Current] Account; there is NO INCOME tax payable for amount. Any interest earned on this amount is taxable as per Income Tax rules and would be taxed at your income slabs. Wealth Tax is exempt from funds in your Savings Account. I am not sure about the funds into Current Account of individual, beyond a limit they may get counted and become part of Wealth Tax. More details here http://timesofindia.indiatimes.com/business/personal-finance/Do-you-have-to-pay-wealth-tax/articleshow/21444111.cms ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Do I need to pay tax on the amount of savings I have in the bank? ### Answer: Not for the amount in the accounts but for the interest you earn per year is taxable. But the sum of your all taxable incomes is under the limit, then you dont need to pay any income tax. The limit is available at wiki here But you should intimate your bank not to deduct TDS (Tax Deducted at Source) by submitting Form 15G/15H (which will be normally available in Bank itself), provided your total interest income for the year will not fall within overall taxable limits. You may calculate your income tax amount at Official website at here ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: When are stock trade fees deducted? ### Answer: Typically the fees are charged when the order is executed. The only catch I have ever ran into is when an order is partially executed. A good-till-cancel order that gets executed in several blocks over multiple days may get charged a separate commission for each day (but typically not each block). If this is a simple brokerage account, you could avoid the whole question by using robinhood.com, which charges no commissions or maintenance fees. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: When are stock trade fees deducted? ### Answer: As others have said, it depends on the brokerage firm. My broker is Scottrade. With Scottrade the commission is assessed and applied the moment the order is filled. If I buy 100 shares of XYZ at $10 a share then Scottrade will immediately deduct $1007.02 out of my account. They add the commission and fees to the buy transaction. On a sale transaction they subtract the commission and fees from the resulting money. So if I sell 100 shares of XYZ at $11 a share I will get 1,092.98 put into my account, which I can use three business days later. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Where to categorize crypto-currencies ### Answer: Forex. I will employ my skill for "suspension of disbelief" and answer with no visceral reaction to Bitcoin itself. The Euro is not an 'investment.' It's a currency. People trade currencies in order to capture relative movements between pairs of currencies. Unlike stocks, that have an underlying business and potential for growth (or failure, of course) a currency trade is a zero sum game, two people on opposite sides of a bet. Bitcoin has no underlying asset either, no stock, no commodity. It trades, de facto, like a currency, and for purposes of objective classification, it would be considered a currency, and held similar to any Forex position. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: but I can't help but feel that these low rates are somehow a gimmick to trick people into taking out loans Let me help you: it's not a feeling. That's exactly what it is. Since the economy is down, people don't want to jeopardize what they have, and keep the cash in their wallets. But, while keeping the money safe in the pocket, it makes the economy even worse. So in order to make people spend some money, the rates go down so that the cost of money is lower. It also means that the inflation will be on the rise, which is again a reason not to keep money uninvested. So yes, the rates are now very low, and the housing market is a buyers' market, so it does make sense to take out a loan at this time (provided of course that you can actually repay it over time, and don't take loans you can't handle). Of course, you shouldn't be taking loans just because the rates are low. But if you were already planning on purchasing a house - now would be a good time to go on with that. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: Yes, it's a buyer's market. If one is looking to buy a house, comparing the cost to rent vs own is a start. Buying a property to rent to a stranger is a different issue altogether, it's a business like any other, it takes time and has risk. If today, one has a decent downpayment (20%) and plans to stay in the house for some time, buying may make economic sense. But it's never a no-brainer. One needs to understand that housing can go down as well as up, and also understand all the expenses of owning which aren't so obvious. Ever increasing property tax, repairs, etc. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: The logic "the interest rate on the mortgage was so low it didn't make sense not to buy" is one reason the housing bubble happened. The logic was that it made the house affordable even at high prices. Once the prices collapsed people still had affordable payments, but were unable to sell because they were upside down on the mortgage. If you can refinance to a 15-year mortgage, or from a adjustable mortgage to a fixed rate mortgage. it can make sense. You can save on the monthly payment, and on the total cost of the mortgage. But don't buy to take advantage of rates; or to save on taxes; or to build a guaranteed equity. These can be false economies or things that can't be gaurenteed. Of course if nobody spends money, the economy will stay poor. As to hidden details. Only purchase housing you want to own for the long haul. If you expect to flip it in a few years, you might not be able to. You might end up stuck as a long distance landlord. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: I think it's smart. It's the same game, just stiffer regulations, so your lender will ask more from you. Buy if you... If someone has been saving for years and years and still can't put 20% down, I think they're taking a significant risk. Buy something where your mortgage payment is around one week's salary at most. Try to buy only what you can afford to live in if you lost your job and couldn't find work for 3-6 months. You might want to do a 30-yr fixed instead of a 15-yr if you're worried about cash-flow. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: Are things getting better yet or are things still a mess? I have heard people say that right now is a 'good' time to take out a loan, and that it is a buyer's market in real estate. Something to consider here is what intentions do you have for the real estate you'd buy. If you intend to sell quickly, then selling into a buyer's market doesn't sound like a great idea. While real estate may be cheap, there can be the question of how long do you think this will last? How much of a burden on time and energy are you expecting to take if you do switch residences or buy an investment property? But more specifically, are there any hidden details that come with taking a loan out when interest rates are low that I should be aware of? I'd be careful to note if the rate is fixed for the entire length of the loan or does it adjust over time. If it can adjust then there is the possibility of those adjustments going up. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: You are not "the economy". The economy is just the aggregate of what is going on with everyone else. You should make the decision based on your own situation now and projected into the future as best you can. Loan rates ARE at historical lows, so it is a great time to take a loan if you actually need one for some reason. However, I wouldn't go looking for a loan just because the rates are low for the same reason it doesn't make sense to buy maternity clothes if you are a single guy just because they are on sale. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it really to take out a loan right now? ### Answer: so this is a loan for a house? a loan on a house? a new mortgage? you shouldn't just get a loan for the hell of it any time. interests rates are low because the yields on US treasuries have been pushed closer to zero, and thats pretty much that. the risk is on the bank that approves the loan, and not you. (your ability to repay should be truthful, but your payments are smaller because the interest is so low) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: This is something you should decide as part of entering a partnership with someone. Ideally before you make the initial purchase you have a detailed contract written up. If you have already bought the house and someone is now ready to move out the easiest thing to do is sell the house. If that is not an option, you'll have to decide on a plan together and then get it in writing. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: I second (or fifth?) the answers of the other users in that this should have been foreseen and discussed prior to entering the partnership. But to offer a potential solution: If the mortgage company allows you to assume the whole mortgage (big if) you could buy the other partner out. To determine what a fair buyout would be, take the current value of the house less the remaining mortgage to get the current equity. Half that is each partner's current gain (or potentially loss), and could be considered a fair buyout. At this point the partner realizes any gains made in the last 5 years, and from now on the whole house (and any future gains or losses) will be yours. Alternatively your partner could remain a full partner (if s/he so desires) until the house sells. You would see the house as a separate business, split the cost as you have, and you would pay fair market rent each month (half of which would come back to you). A third option would be to refinance the house, with you as a sole mortgage holder. To factor in how much your partner should receive out of the transaction, you can take his/her current equity and subtract half of the costs associated with the refi. I would also recommend both of you seek out the help of a real estate lawyer at this point to help you draft an agreement. It sounds like you're still on good terms, so you could see a lawyer together; this would be helpful because they should know all the things you should look out for in a situation like this. Good luck! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: The ownership of the house depends on what the original deed transferring title at the time of purchase says and how this ownership is listed in government records where the title transfer deed is registered. Hopefully the two records are consistent. In legal systems that descended from British common law (including the US), the two most common forms of ownership are tenancy in common meaning that, unless otherwise specified in the title deed, each of the owners has an equal share in the entire property, and can sell or bequeath his/her share without requiring the approval of the others, and joint tenancy with right of survivorship meaning that all owners have equal share, and if one owner dies, the survivors form a new JTWROS. Spouses generally own property, especially the home, in a special kind of JTWROS called tenancy by the entirety. On the other hand, the rule is that unless explicitly specified otherwise, tenancy in common with equal shares is how the owners hold the property. Other countries may have different default assumptions, and/or have multiple other forms of ownership (see e.g. here for the intricate rules applicable in India). Mortgages are a different issue. Most mortgages state that the mortgagees are jointly and severally liable for the mortgage payments meaning that the mortgage holder does not care who makes the payment but only that the mortgage payment is made in full. If one owner refuses to pay his share, the others cannot send in their shares of the mortgage payment due and tell the bank to sue the recalcitrant co-owner for his share of the payment: everybody is liable (and can be sued) for the unpaid amount, and if the bank forecloses, everybody's share in the property is seized, not just the share owned by the recalcitrant person. It is, of course, possible to for different co-owners to have separate mortgages for their individual shares, but the legalities (including questions such as whose lien is primary and whose secondary) are complicated. With regard to who paid what over the years of ownership, it does not matter as far as the ownership is concerned. If it is a tenancy in common with equal shares, the fact that the various owners paid the bills (mortgage payments, property taxes, repairs and maintenance) in unequal amounts does not change the ownership of the property unless a new deed is recorded with the new percentages. Now, the co-owners may decide among themselves as a matter of fairness that any money realized from a sale of the property should be divided up in accordance with the proportion that each contributed during the ownership, but that is a different issue. If I were a buyer of property titled as tenancy in common, I (or the bank who is lending me money to make the purchase) would issue separate checks to each co-seller in proportion to the percentages listed on the deed of ownership, and let them worry about whether they should transfer money among themselves to make it equitable. (Careful here! Gift taxes might well be due if large sums of money change hands). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: The answer is "it depends". What does it depend on? If it's a breakup situation, good luck. Whatever you do, get this issue settled as quickly as possible. In the future, don't make significant purchases with people unless you have a written contract or you are married. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: Both names are on the deed, so the property is jointly owned. You're going to need the second person's signature to be able to sell the property. Ideally the way to know "what happens now" is to consult the written agreement you made before you purchased the house together. The formula for dividing up assets when dissolving your partnership is whatever you agreed to up front. (Your up-front agreement could have said "if you move out, you forfeit any claim to the property".) It sounds like you don't have that, so you'll have to come to some (written) agreement with your partner before you proceed. If you can't come to an agreement, then you'll end up in court, a judge will split up the assets, and the only winners there are the lawyers... ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: Let's look at the logical extreme. Two people get a house, no money down, 10 year mortgage. One moves out the day after the closing, and the gal left pays the full mortgage. Why in the world would the one who left be entitled to a dime? You offer no information about the downpayment or amount paid during the time both lived there. That's the data needed to do any math. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: This is typically an issue for local law and regulation. Once one person moves out, I would recommend one of the following options: Generally speaking, if there are clear records of all of the payments made by both parties, all of the costs associated with the maintenance and who made what use of the place, the final ownership can be resolved fairly even in the absence of a clear agreement. The pain and hassle to do it, though, is generally not worth the effort - even if it's an amicable relationship between the two owners. Your best bet is to agree as early as possible on what you plan to do, and to write it down - if you didn't have a contract before moving in together, write one up now. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? ### Answer: Market value and assessments are two different things. No matter how amical the agreement seems on buying and selling, the future could result in damaged relationships without an absolute sale. I would strongly recommend getting into an agreement to split the purchase of a house as a means to save money. If it's too late, sell immediately. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: Mainly because they can. Yes, there is a cost for banks to execute such transactions, and yes, there is a cost to cover the implied risks, but it is far from 3 or 4%. There are banks that charge a flat rate of less than 30$ (and no percentage), so for larger amounts, it is worth shopping around. Note that for smaller amounts, which are the majority of personal transactions, that is probably about as, if not more expensive, than paying 3% - below 1000$, 3% is less than 30$. So charging a percentage is actually better for people that want to transfer smaller amounts. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: All institutions, financial or otherwise, seek to maximize profits. In a free market, each bank would price its services to be competitive with the current state of the market. Since the currency conversion fee is generally a small part of the decision as to which bank to choose, banks can be non-competitive in this area. If this is an important consideration for you then you would need to find a bank with a lower conversion fee, but be prepared to have higher fees in other areas. TL;DR: The market bears it. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: Why do these fees exist? From a Banks point of view, they are operating in Currency A; Currency B is a commodity [similar to Oil, Grains, Goods, etc]. So they will only buy if they can sell it at a margin. Currency Conversion have inherent risks, on small amount, the Bank generally does not hedge these risks as it is expensive; but balances the position end of day or if the exposure becomes large. The rate they may get then may be different and the margin covers it. Hence on highly traded currency pairs; the spread is less. Are there back-end processes and requirements that require financial institutions to pass off the loss to consumers as a fee? The processes are to ensure bank does not make loss. is it just to make money on the convenience of international transactions? Banks do make money on such transactions; however they also take some risks. The Forex market is not single market, but is a collective hybrid market place. There are costs a bank incurs to carry and square off positions and some of it is reflected in fees. If you see some of the remittance corridors, banks have optimized a remittance service; say USD to INR, there is a huge flow often in small amounts. The remittance service aggregates such amounts to make it a large amount to get a better deal for themselves and passes on the benefits to individuals. Such volume of scale is not available for other pairs / corridors. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: In my experience working at a currency exchange money service business in the US: Flat fees are the "because we can" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled. If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real "fee" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee "hidden" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: Banks do of course incur costs on currency transactions. But they're not as high as the fee charged to the customer. Most banks in most places lose a lot of money on operating bank accounts for customers, and make the money back by charging more than their costs for services like currency exchange. If you don't choose to pay those fees, use an online service instead. But bear in mind that if everyone does so then banks will be forced to charge higher fees for current accounts. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: Is there not some central service that tracks current currency rates that banks can use to get currency data? Sure. But this doesn't matter. All the central service can tell you is how much the rate was historically. But the banks/PayPal don't care about the historical value. They want to know the price that they'll pay when they get around to switching, not the last price before the switch. Beyond that, there is a transaction cost to switching. They have to pay the clearinghouse for managing the transaction. The banks can choose to act as a clearinghouse, but that increases their risk. If the bank has a large balance of US dollars but dollars are falling, then they end up eating that cost. They'll only take that risk if they think that they'll make more money that way. And in the end, they may have to go on the currency market anyway. If a European bank runs out of US dollars, they have to buy them on the open market. Or a US bank might run out of Euros. Or Yen. Etc. Another problem is that many of the currency transactions are small, but the overhead is fixed. If the bank has to pay $5 for every currency transaction, they won't even break even charging 3% on a $100 transaction. So they delay the actual transaction so that they can make more than one at a time. But then they have the risk that the currency value might change in the meantime. If they credit you with $97 in your account ($100 minus the 3% fee) but the price actually drops from $100 to $99, they're out the $1. They could do it the other way as well. You ask for a $100 transaction. They perform a $1000 transaction, of which they give you $97. Now they have $898 ($1000 minus the $5 they paid for the transaction plus the $3 they charged you for the transaction). If there's a 1% drop, they're out $10.98 ($8.98 in currency loss plus a net $2 in fees). This is why banks have money market accounts. So they have someone to manage these problems working twenty-four hours a day. But then they have to pay interest on those accounts, further eating into their profits. Along with paying a staff to monitor the currency markets and things that may affect them. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: Perhaps it's the terminology "fee" that makes it a little confusing. I'm not sure whether it's due legislation or if it's tradition but banks and money changers in my country don't charge "fees". Instead they advertise separate prices for buying and selling money. For example they'd normally advertise: USD, we buy: 4.50, we sell: 4.65. It's a business. Just like selling cars or lemonade selling money only makes sense if you sell it at a higher price than what you bought it for. Regardless of what you call it it's the profit margin for the seller. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: Echoing that bank fees are mostly "because they can", although partly this is because simply holding onto the money doesn't really pay enough for the physical infrastructure of branches, ATMs and staff. So like a budget airline they make it up on additional fees. But that document doesn't actually say they charge 3% for currency conversion! It's "0.20% of transaction amount" for currency conversion, which is not bad (although watch out for the "spread" between buying and selling rates). I see "International POS/ATM Transaction Fee 3% of transaction amount", which is very different. That's a card fee. The big issue with these is fraud - your card number suddenly being used in a different country will nearly always trigger extra fraud checks. It also involves a much more complicated settlement process. I'm more unimpressed with the monthly service charges and the huge $85 fee for international wire transfers. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why do financial institutions charge so much to convert currency? ### Answer: As mentioned in several other answers, the main reason for high rates is to maximize profit. However, here is another, smaller effect: The typical flow of getting money from an ATM: Suppose you have a minute to consider the offer, then in that time the currency may drop or rise (which you can see from an external source of information). Therefore this opens a window for abuse. For real major currencies these huge switches are rare, but they do happen. And when 1 or 2 minor currencies are involved these switches are more common. Just looking at a random pair for today (Botswana Pula to Haitian Gourde) I immediately spotted a moment where the exchange rate jumped by more than 2 %. This may not be the best example, but it shows why a large margin is desirable. Note that this argument only holds for when the customer knows in advance what the exchange rate would be, for cases where it is calculated afterwards I have not found any valid excuse for such large margins (except that it allows them to offer other services at a lower price because these transaction). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is meant by “unexpected expenses” in my 401k plan? ### Answer: IANAL, but it sounds like indemnification language. They are saying they have the option to charge expenses to participants if they would like. It should say explicitly (you mention that it does) who the 'default payer' is. Unexpected expenses could be anything that's not in the normal course of business. I know that doesn't help much, but some examples may be plan document restatements or admin expenses from plan failures/corrections. We have language in some of our PFDs that say in the absence of revenue-sharing a participants' share of expenses may be higher. Yes, 'from participant accounts' means they have the authority to deduct from your 401k account. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Stopping Payment on a Check--How Long Does it Take? ### Answer: Is this a USA bank to a USA bank transaction? If so, it will clear in one to two business days. Once cleared, the landlord cannot stop pay it. He can, however, dishonestly claim it was a fraudulent check and attempt a chargeback. If you want absolute certainty the money will not be recalled, go to the landlord's bank and cash the check as a non-customer. You will have to pay a small fee, but you will walk out with cash. I suggest you take a photocopy of the check, and staple your receipt to it as evidence that the check was cashed for any impending legal proceedings. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Earning salary from USA remotely from New Zealand? ### Answer: Can the companies from USA give job to me (I am from New Zealand)? Job as being employee - may be tricky. This depends on the labor laws in New Zealand, but most likely will trigger "nexus" clause and will force the employer to register in the country, which most won't want to do. Instead you can be hired as a contractor (i.e.: being self-employed, from NZ legal perspective). If so, what are the legal documents i have to provide to the USA for any taxes? If you're employed as a contractor, you'll need to provide form W8-BEN to your US employer on which you'll have to certify your tax status. Unless you're a US citizen/green card holder, you're probably a non-US person for tax purposes, and as such will not be paying any tax in the US as long as you work in New Zealand. If you travel to the US for work, things may become tricky, and tax treaties may be needed. Will I have to pay tax to New Zealand Government? Most likely, as a self-employed. Check how this works locally. As for recommendations, since these are highly subjective opinions that may change over time, they're considered off-topic here. Check on Yelp, Google, or any local NZ professional review site. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Earning salary from USA remotely from New Zealand? ### Answer: Yes. You must register for GST as well, if you will be making over the threshold (currently $60,000). That's probably a bonus for you, as your home office expenses will mostly include GST, but your income will most likely be zero-rated. Check with an accountant or with the IRD directly. Just be certain to put aside enough money from each payment to cover income tax, GST and ACC. You will get a very large bill in your second year of business. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Live in Oregon and work in Washington: Do I need to file Oregon state taxes? ### Answer: Yes. Here's the answer to this question from oregon.gov: 3. I am moving into Oregon. What income will be taxed by Oregon? As an Oregon resident, you are taxed on ALL income regardless of the source of the income. This includes, but is not limited to: You may need to pay estimated taxes if you don't have Oregon withholding on your income. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Live in Oregon and work in Washington: Do I need to file Oregon state taxes? ### Answer: Unfortunately, you are required, but most states do have agreements with neighboring states that let the states share the collected taxes without the person having to pay double taxes. So being as this is your first tax return in your current situation, you might be wise to have a professional fill it out for you this year and then next year you can use it as a template. Additionally, I really would like to see someone challenge this across state lines taxation in court. It sure seems to me that it is a inter-state tariff/duty, which the state's are expressly forbidden from doing in the constitution. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: If you can borrow for an asset that gives you income that's more than the cost of carrying the debt, then go for it. But the kinds of debts you have now aren't those kinds of debt, so get rid of them. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Debt increases your exposure to risk. What happens if you lose your job, or a major expense comes up and you have to make a hard decision about skipping a loan payment? Being debt free means you aren't paying money to the bank in interest, and that's money that can go into your pocket. Debt can be a useful tool, however. It's all about what you do with the money you borrow. Will you be able to get something back that is worth more than the interest of the loan? A good example is your education. How much more money will you make with a college degree? Is it more than you will be paying in interest over the life of the loan? Then it was probably worth it. Instead of paying down your loans, can you invest that money into something with a better rate of rate of return than the interest rate of the loan? For example, why pay off your 3% student loan if you can invest in a stock with a 6% return? The money goes to better use if it is invested. (Note that most investments count as taxable income, so you have to factor taxes into your effective rate of return.) The caveat to this is that most investments have at least some risk associated with them. (Stocks don't always go up.) You have to weigh this when deciding to invest vs pay down debts. Paying down the debt is more of a "sure thing". Another thing to consider: If you have a long-term loan (several years), paying extra principal on a loan early on can turn into a huge savings over the life of the loan, due to power of compound interest. Extra payments on a mortgage or student loan can be a wise move. Just make sure you are paying down the principal, not the interest! (And check for early repayment penalties.) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: The responses here are excellent. I'd add just a couple points. Debt is not generic. It ranges from low (my HELOC is 2.5%) to insane (24% credit card, anyone?). When I read about the obsession to be completely debt free, I ask questions. Are you saving in your 401(k) at least up to the match? I disagree with the "debt is evil" people who advise to ignore retirement savings while paying off every last debt. My company offers a dollar for dollar match on the first 5% of income deposited. So a $60K earner will see a $3000 deposit doubled. 5 years of this, and he has 1/2 a year's income in his retirement account, more with positive returns. (note - for those so fearful of losses, all 401(k) accounts have to offer a fixed income, low risk choice. currently 1% or less, but the opposite of "I can lose it all".) After that, paying off the higher debt is great. When it's time to hack away at student debt and mortgage, I am concerned that if it's at the risk of having no savings, I'd hold off. Consider - Two people in homes worth $250K. One has a mortgage of $250K and $100K in the bank. The other has his mortgage paid down to $150K. When they lose their jobs, the guy with the $100K in the bank has the funds to float himself through a period of unemployment as well as a house the bank is less likely to foreclose on. The guy with no money is in deep trouble, and the bank can sell his house for $150K and run away (after proper foreclosure proceedings of course.) My mortgage is one bill, like any other, and only a bit more than my property tax. I don't lose sleep over it. It will be paid before I retire, and before my 11yr old is off to college. I don't think you stupid for paying your low interest debt at your own pace. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: You might miss an opportunity or three by strictly avoiding debt, but I can't think of a problem you will create by being debt free. So maybe it isn't the absolutely smartest thing to avoid debt on principle*, but it certainly is pretty smart at the very least. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Keep in mind that you NEED to have a cash reserve. Blindly applying all stray cash to debt reduction is a bad idea. Your lenders do not care about your balance. All they care about is your NEXT payment. It is therefore imperative that you have a cash reserve that can carry these payments for several months. Having zero cash reserves puts you at high risk for such simple things as the payroll clerk at work missing the monthly deposit (Rare, but it happens.) I've also been in situations where a major client had a cash flow issue and delayed payment, and our company had to borrow to meet payroll that month. Fortunately, we were in good standing with the bank and had low debt, but it could have been catastrophic for any employees living paycheque to paycheque. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: No matter what, it is never a bad decision to go 100% debt free. However, you can make debt work in your favor in some cases (investments, education, etc.), but you need to approach it with a plan and long term strategy. Interest, fees, and loss of value can quickly eat up any gains. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: I think about debt as a good option for capital investments that offer a return. In my opinion, a house and clothes you need for that new job are good things to borrow for. School is ok, depending on the amount. Car is ok, if it's a 3 year loan. The rest is not good. You should try to carry as little debt as possible, but don't let it dominate your life. If faced between the choice of paying ahead on your student loan and blowing $300 on an XBox, you should pay the loan. If the choice is between taking your kid to the zoo and paying the loan, have fun at the zoo. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: When you're debt free everything you own feels different. The lack of financial stress in your life goes away. BUT! before you do go gung-ho on paying down debt think through these steps (and no I did not come up with them. Dave Ramsey did and others). Truncated from - http://www.daveramsey.com/new/baby-steps/ I have 1 credit card. Only use it for business/travel but pay it off every month (yay for auto-draft). Everthing else is cash/debit and we live by a budget. If it's not in the budget we don't buy it. Easy as pie. The hard part is disciplining yourself to wait. Our society is gear for BUY NOW! PAY LATER! and well you can see where that has taken our country and families. And celebrate the small victories. Pay off 1 debt then go have a nice dinner. Things like that help keep you motivated and pursuing the end goal. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: The day I paid my last student loan payment and my last car payment was (January 4, 2000) a very happy day for me, being then 100% debt free. It is a very good feeling, especially since I was saving cash as well. It's a great thing to know that no-one "owns" you. Many others here have provided useful information about debt, and I know that paying off your existing loans will improve your credit rating, in case you want to go back into debt (which I did later in 2000, by buying a house). For most people, borrowing money to invest it is complicated (make sure you're not paying more on your borrowed $ than you make on your investment) due to the fact that most investments have risk involved. I would say that being debt-free is a very good goal, and there's a level of freedom it gives you. Just make sure you have your "rainy day" fund building while you're on your way to getting there. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Would you run a marathon with ankle weights on? It starts off as ankle weights, but then grows into a ball and chain as you dig yourself a little deeper each time you use your credit card (and then don't payoff the balance because "something more important came up"). I would love for my wife to be able to be home and raise our son, but we simply can't afford to do that with the amount of debt we have. We are clawing our way out, and will pay off one student loan and a car loan, then start saving for a house and once we have that, we'll get back to debt reduction. Get debt free. That's where we are headed. Most of it is student loans at this point, but debt will take away your freedom to do whatever you like down the line. It just increases your overhead in the long run. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: 100% debt free is an objective. Being there is good, but as long as you have a plan to get there, are sticking to it and it's moving you towards it at a reasonable rate (e.g. "I will be debt free by the end of 2011."), you should be in good shape. It's when you don't ever expect to be debt free that you have a problem. Going into debt is one question and a very situation dependent one. Getting back out is another and a very easy one: pay off all debts as a fast as you reasonably can, starting with the highest interest ones. OTOH this doesn't imply that you should forgo every optional expense (including things like savings and entertainment) to pay off debts, that would be unreasonable, but just that paying down debts should always be considered when thinking about what to do with money. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: This is a "stress" period, much like the 1930s and 1970s. At a time like this, it is smart to be debt free, and to have money saved for the likely emergencies. There are growth periods like those of the 1980s and 1990s, probably returning in the 2020s and 2030s. At such times, it makes sense to play it a little "looser" and borrow money for investments. But the first order of business in answering this question is to look around you and figure out what is going on in the world (stress or growth). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: As others mentioned, the only clear reason to remain in debt is if you can find an investment that yields more than what you're paying to maintain the debt. This can happen if a debt was established during low-rate period and you're in a high-rate period (not what is happening now.) A speculative reason to keep debt is as an inflation bet. If you believe money will shortly lose value, you are better off postponing repayment until the drop occurs. However you're not likely to be able to make these bets successfully. Hope this helps ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Having no debt should be the ultimate goal for every household, IMHO, but at what cost? As an example, I had some clients (before they started working with me) that had outstanding debt when they retired and were gung-ho to pay it off. They opted to take it out of their retirement accounts. They didn't set aside enough for taxes which was their first mistake. After a few years, they now have realized they should not have paid off everything as now they have other medical issues that have arisen and not enough in their retirement accounts to satisfy their monthly requirement. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: A Simple Rule to discern between good and bad debt: Does this mean you should never buy a house or car? Of course not. But if you accrue bad debt, make sure that you can handle it and understand the costs and repercussions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: My take is that there are many factors to consider when deciding whether to accelerate payment of a debt beyond the require minimum. Ideally you would want to be debt-free with a home owned outright, a pension big enough to lead a nice life for the rest of your days and plenty of savings to cover any unexpected expenses. Being debt-free is not a bad thing but it should not come at the expense of your overall financial health. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Very smart. Let other people pay you interest. Don't pay other people interest. And, yes, I know it's possible to borrow money from one place and lend it to another place at a slightly higher rate, but why bother. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Considering that we are in a low-interest rate period (the lowest in history), it's smart to loan money from the bank to reinvest in property or other investments as far as you get a better yield (ROI) than the interest. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How smart is it to really be 100% debt free? ### Answer: Around 3 months back, I paid back my last loan from my father which he gave for the car. Now I am totally debt free from 2 months. I have paid back following loans, 1. Education loan. 2. Car loan. I don't have my own property yet. I have a 3 months emergency fund saved which helps me overcome if there is a sudden expense. Overall, its a great idea to be debt free. I used to get extreme thoughts while I had a loan. I paid back and now I am doing good. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: Yes, and there are almost no checks (no pun intended) on people pulling money from your account using a routing number. It is an EXTREMELY insecure system. If you want a real Halloween scare, read this article: Easy Check Fraud Technique Draws Scrutiny. Unfortunately you just have to live with it. If you are curious why this loophole is allowed to continue, consider how hard it is to close it without undermining the convenience of checks. Short of you going to the bank with each person you write a check to and showing ID to validate the transaction, I don't see how you could continue to use a negotiable instrument like this without such a security hole. The ultimate answer is going to have to be replacing checks with other means of payment. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: Yes, those numbers are all that is needed to withdraw funds, or at least set online payment of bills which you don't owe. Donald Knuth also faced this problem, leading him to cease sending checks as payment for finding errors in his writings. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: The bottom line is to keep most of your money in accounts with no check privileges and to not give the account numbers for these accounts to anyone. Keep just enough in your checking account for the checks you are going to write. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: That's accurate. Here is another risk with the current checking system, which many people are not aware of: Anyone who knows your checking account number can learn what your balance in that account is. (This is bank-specific, but it is possible at the major banks I've checked.) How does that work? Many banks have a phone line where you can dial up and interact with an automated voice response system, for various customer service tasks. One of the options is something like "merchant check verification". That option is intended to help a merchant who receives a check to verify whether the person writing the check has enough money in their account for the check to clear. If you select that option in the phone tree, it will prompt you to enter in the account number on the check and the amount of the check, and then it will respond by telling you either "there are currently sufficient funds in the account to cash this check" or "there are not sufficient funds; this check would bounce". Here's how you can abuse this system to learn how much someone has in their bank account, if you know their account number. You call up and check whether they've enough money to cash a $10,000 check (note that you don't actually have to have a check for $10,000 in your hands; you just need to know the account number). If the system says "nope, it'd bounce", then you call again and try $5,000. If the system says "yup, sufficient funds for a $5,000 check", then you try $7,500. If it says "nope, not enough for that", you try $6,250. Etcetera. At each step, you narrow the range of possible account balances by a factor of two. Consequently, after about a dozen or so steps, you will likely know their balance to within a few dollars. (Computer scientists know this procedure by the name "binary search". The rest of us may recognize it as akin to a game of "20 questions".) If this bothers you, you may be able to protect your self by calling up your bank and asking them how to prevent it. When I talked to my bank (Bank of America), they told me they could put a fraud alert flag on your account, which would disable the merchant check verification service for my account. It does mean that I have to provide a 3-digit PIN any time I phone up my bank, but that's fine with me. I realize many folks may terribly not be concerned about revealing their bank account balance, so in the grand scheme of things, this risk may be relatively minor. However, I thought I'd document it here for others to be aware of. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: When an someone as esteemed and smart as Donald Knuth tells you the chequing system is busted it's time to close your cheque account, or I guess live with the associated risk. Answer to question, yes your account information can be used to commit fraud on you via your bank. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: I was a victim of this. I'm not sure who got my routing and account number off my check, but someone subscribed to Playboy.com using my bank account information. Luckily it was only for about $30 and the bank refunded my money. However, it was a mess in that I had to open a new checking account and keep the other one open until all checks cleared. The bank was extremely helpful and monitored the account to make sure only the checks I told them about were processed. I then had to close the old account. This is why I believe checks are much less secure than credit cards or debit cards. A paper check can lay on someone's desk for anyone to pick up or write the information down off of it. I avoid checks if at all possible. For things like Craig's list, I would try to use PayPal or some other intermediate processing service. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can't the account information on my checks be easily used for fraud? ### Answer: Yes this is a huge security loophole and many banks will do nothing to refund if you are scammed. For example for business accounts some Wells Fargo branches say you must notify within 24 hours of any check withdrawal or the loss is yours. Basically banks don't care - they are a monopoly system and you are stuck with them. When the losses and complaints get too great they will eventually implement the European system of electronic transfers - but the banks don't want to be bothered with that expense yet. Sure you can use paypal - another overpriced monopoly - or much better try Dwolla or bitcoin. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to share income after marriage and kids? ### Answer: My suggestion would be that you're looking at this the wrong way, though for good reasons. Once you are a family, you should - and, in most cases I've seen, will - think of things differently than you do now. Right now, your post above is written from a selfish perspective. Not to be insulting, and not implying selfish is a bad thing - I don't mean it negatively. But it is how you're defining this problem: from a self-interested, selfish point of view. "Fair" and "unfair" only have meaning from this point of view; something can only be unfair to you if you come from a self-centered viewpoint. Try to think of this from a family-centric viewpoint, and from your significant other's point of view. You're absolutely right to want both of you to be independent financially as far as is possible; but think about what that means from all three points of view (your family's, yours, and hers)? Exactly what it means will depend on the two of you separately and together, but I would encourage you to start with a few basics that make it likely you'll find a common ground: First of all, ensure your significant other has a retirement account of her own that is funded as well as yours is. This will both make life easier if you split up, and give her a safety net if something happens to you than if you have all of the retirement savings. I don't know how your country manages pensions or retirement accounts, but figure out how to get her into something that is as close to equal to yours as possible. Make sure both of you have similar quality credit histories. You should both have credit cards in your own names (or be true joint owners of the accounts, not just authorized users, where that is possible), and both be on the mortgage/etc. when possible. This is a common issue for women whose spouse dies young and who have no credit history. (Thanks @KateGregory for reminding me on this one) Beyond that, work out how much your budget allows for in spending money for the two of you, and split that equally. This spending money (i.e., "fun money" or money you can do whatever you like with) is what is fundamentally important in terms of financial independence: if you control most of the extra money, then you're the one who ultimately has control over much (vacations, eating out, etc.) and things will be strained. This money should be equal - whether it is literally apportioned directly (each of you has 200 a month in an account) or simply budgeted for with a common account is up to you, whatever works best for your personal habits; separate accounts works well for many here to keep things honest. When that money is accounted for, whatever it is, split the rest of the bills up so that she pays some of them from her income. If she wants to be independent, some of that is being in the habit of paying bills on time. One of you paying all of the bills is not optimal since it means the other will not build good habits. For example, my wife pays the warehouse club credit card and the cell phone bill, while I pay the gas/electric utilities. Whatever doesn't go to spending money and doesn't go to the bills she's personally responsible for or you're responsible for (from your paycheck) should go to a joint account. That joint account should pay the larger bills - mortgage/rent, in particular - and common household expenses, and both of you should have visibility on it. For example, our mortgage, day-care costs, major credit card (which includes most of our groceries and other household expenses) come from that joint account. This kind of system, where you each have equal money to spend and each have some household responsibilities, seems the most reasonable to me: it incurs the least friction over money, assuming everyone sticks to their budgeted amounts, and prevents one party from being able to hold power over another. It's a system that seems likely to be best for the family as a unit. It's not "fair" from a self-centered point of view, but is quite fair from a family-centered point of view, and that is the right point of view when you are a family, in my opinion. I'll emphasize here also that it is important that no one party hold the power, and this is set up to avoid that, but it's also important that you not use your earning power as a major arguing point in this system. You're not "funding her lifestyle" or anything like that: you're supporting your family, just as she is. If she were earning more than you, would you cut your hours and stay at home? Trick question, as it happens; regardless of your answer to that question, you're still at the same point: both of you are doing the thing you're best suited for (or, the thing you prefer). You're both supporting the family, just in different ways, and suggesting that your contribution is more valuable than hers is a great way to head down the road to divorce: it's also just plain incorrect. My wife and I are in almost the identical situation - 2 kids, she works part time in the biological sciences while spending plenty of time with the kids, I'm a programmer outearning her significantly - and I can tell you that I'd more than happily switch roles if she were the bread earner, and would feel just as satisfied if not more doing so. And, I can imagine myself in that position, so I can also imagine how I'd feel in that position as far as how I value my contribution. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to share income after marriage and kids? ### Answer: You remind me a lot of myself as I was thinking about marriage. Luckily for me, my wife was much smarter about all this than I was. Hopefully, I can pass along some of her wisdom. Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. In marriage, there is no more financial independence. Do not think in those terms. Life can throw so many curve balls that you will regret it. Imagine sitting down with your new bride and running through the math. She is to contribute $X to the family each month and you are to contribute $Y. Then next thing you know, 6 months later, she has cancer and has to undergo expensive and debilitating treatment. There is no way she can contribute her $X anymore. You tell her that is okay and that you understand, but the pressure weighs down on her every day because she feels like she is not meeting your expectations. Or alternatively, everything goes great with your $X, $Y plan. A few years down the road your wife is pregnant, so you revisit the plan, readjust, etc. Everything seems great. When your child is born, however, the baby has a severe physical or mental handicap. You and your wife decide that she will quit her job to raise your beautiful child. But, the whole time, in the back of her mind she can't get out of her head that she is no longer financially independent and not living up to your expectations. These stresses are not what you want in your marriage. Here is what we do in my family. Hopefully, some of this will be helpful to you. Every year my wife and I sit down and determine what our financial goals are for the year. How much do we want to be putting in retirement? How much do we want to give to charity? Do we want to take any family vacations? We set goals together on what we want to achieve with our money. There is no my money or her money, just ours. Doesn't matter where it comes from. At the beginning of every month, we create a budget in a spreadsheet. It has categories like (food, mortgage or rent, transportation, clothing, utilities) and we put down how much we expect to spend on each of those. It also has categories for entertainment, retirement, charity, cell phones, internet, and so on. Again, we put down how much we expect to spend on each of those. In the spreadsheet, we also track how much income we expect that month and our totals (income minus expenses). If that value is positive, we determine what to do with the remainder. Maybe we save some for a rainy day or for car repairs. Maybe we treat ourselves to an extra fancy dinner. The point is, every dollar should be accounted for. If she wants to go to dinner with some friends, we put that in the budget. If I want a new video game, we put that in the budget. Once a week, we take all our receipts and tally up where we spent our money. We then see how we are doing on our budget. Maybe we were a little high in one category and lower than expected in another. We adjust. We are flexible. But, we go over our finances often to make sure we are achieving our goals. Some specific goals I'd recommend that the two of you consider in your first such yearly meeting: You get out of life what you put into it, and you will get out of your finances what the two of you put into them. By being on the same page, your marriage will be much happier. Money/finances are one of the top causes of divorce. If you two are working together on this, you are much more likely to succeed. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to share income after marriage and kids? ### Answer: I started out thinking like you but I quickly realised this was a bad approach. You are a team, aren't you? Are you equals or is one of you an inferior of lower value? I think you'll generate more shared happiness by acting as a team of equals. I'd pool your resources and share them as equals. I'd open a joint account and pay both your incomes directly into it. I'd pay all household bills from this. If you feel the need, have separate personal savings accounts paid into (equally) from the joint account. Major assets should be in joint names. This usually means the house. In my experience, it is a good idea to each have a small amount of individual savings that you jointly agree each can spend without consulting the other, even if the other thinks it is a shocking waste of money. However, spending of joint savings should only be by mutual agreement. I would stop worrying about who is bringing in the most income. Are you planning to gestate your children? How much is that worth? - My advice is to put all this aside, stop trying to track who adds what value to the joint venture and make it a partnership of equals where each contributes whatever they can. Suppose you fell ill and were unable to earn. Should you wife then retain all her income and keep you in poverty? I really believe life is simpler and happier without adding complex and stressful financial issues to the relationship. Of course, everyone is different. The main thing is to agree this between the two of you and be open to change and compromise. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to share income after marriage and kids? ### Answer: I haven't seen this addressed anywhere else, so I'll make a small answer to add on to the great ones already here. Money isn't the only way a person can contribute to a relationship. Time and effort are valuable contributions. Who runs the household? Who cooks, cleans, does laundry? How will you share these duties? My husband and I have a couple of rules. One of which is that we don't keep count. "I did dishes, so you do laundry". "I made coffee last time, so now it's your turn". "I paid this, so you pay that". That's not allowed. I happen to make ~4x as much as my husband, but I work 4x the hours (he's part time at the moment). So, he does the dishes, he cooks, he does laundry, he runs the household. Do I value him less? No! I value him more, because he is part of the team, and he feeds me coffee while I work (we have our own business). Even though I make so much more than him, we still split everything down the middle. Because his contribution to this relationship, to this household, is so much more than just money. And I value him. I value his contribution. At the end of the day, you are a team - and if you split hairs over finances, you'll find yourself splitting hairs over everything. ###end

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