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Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Can this year's free extension-to-pay be filed electronically? IRS Form 1127 | Form 1127 (updated link) should be filed in paper (with the supporting documents) to the IRS office that has jurisdiction in the area where you live. From the instructions (see the link above): File Form 1127 with the Internal Revenue Service (Attn: Advisory Group Manager), for the area where you maintain your legal residence or principal place of business. See Pub. 4235, Collection Advisory Group Addresses, to find the address for your local advisory group. However, if the tax due is a gift tax reportable on Form 709, send Form 1127 to: Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999 |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Why credit cards are sold through banks and not from Visa or MasterCard directly | Visa and Mastercard are not consumer-oriented companies. They do not consider individual consumers as their direct clients, and do not sell directly to them. Instead, their clients are financial institutions who participate in their networks (which is what they're selling). The institutions target the individual consumers (merchants and credit card holders). American Express, for example, has a different business model. AX doesn't only sell network services to financial institutions, but also services to individual consumers. You can get a AX credit card/merchant account directly with AX, or through their client bank. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | In a competitive market, why is movie theater popcorn expensive? | One explanation is that movie patrons are considering their total willingness to pay for the movie experience so that if the ticket price plus the market price of popcorn is less than their willingness to pay (WTP), the theater has an opportunity to extract more consumer surplus by charging higher than market prices for the popcorn (that is, price discrimination). There is a working paper on the subject by Gill and Hartmann (2008), the abstract of which reads: Prices for goods such as blades for razors, ink for printers and concessions at movies are often set well above cost. Theory has shown that this could yield a profitable price discrimination strategy often termed “metering.” The idea is that a customer’s intensity of demand for aftermarket goods (e.g. the concessions) provides a meter of how much the customer is willing to pay for the primary good (e.g. admission). If this correlation in tastes for the two goods is positive, a high price on the aftermarket good allows firms to extract a greater total price (admissions plus concessions) from higher type customers. This paper develops a simple aggregate model of discrete-continuous demand to motivate how this correlation can be tested using simple regression techniques and readily available firm data. Model simulations illustrate that the regressions can be used to predict whether aftermarket prices should be above, below or equal to their marginal cost. We then apply the approach to box-office and concession data from a chain of Spanish theaters and find that high priced concessions do extract more surplus from customers with a greater willingness to pay for the admission ticket. Locay and Rodriquez (1992) make a similar argument in a JPE article. They essentially argue that purchases of things like movie tickets are made by groups; once individuals are constrained by the group's choice, the firm has additional market power: We present models in which price discrimination in the context of a two-part price can occur in some competitive markets. Purchases take place in groups, which choose which firms to patronize. While firms are perfectly competitive with respect to groups, they have some market power over individual consumers, who are constrained by their groups' choices. We find that firms will charge an entry fee that is below marginal cost, and the second part of the price is marked up above marginal cost. The markup not only is positive but increases with the quality of the product. The quote you are looking for is similar, and again attributes the discrepancy to price discrimination. From the Armchair Economist (p. 159): The purpose of expensive popcorn is not to extract a lot of money from customers. That purpose would be better served by cheap popcorn and expensive movie tickets. Instead, the purpose of expensive popcorn is to extract different sums from different customers. Popcorn lovers, who have more fun at the movies, pay more for their additional pleasure. That is, some people like popcorn more than others. The latter idea is that the movie experience for popcorn lovers is worth more than the sum of its parts: that a movie ticket + popcorn is worth more than either of them separately for some people. |
Share your insights or perspective on the financial matter presented in the input. | Why isn't money spent on necessities deductible from your taxes? | "Law is a mass of special cases, informed by but not driven by some general principles. Tax law likewise. Don't try to make it make sense; you will only confuse yourself. Not all ""necessities"" are deductable, only those which someone has explicitly passed a law to make deductable." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | My account's been labeled as “day trader” and I got a big margin call. What should I do? What trades can I place in the blocked period? | The SEC considers a day trade to be any trade that is opened and closed within the same trading day, and considers a day trader to be any trader that completes 4 or more day trades within 5 business days. If so they would label you day trader and in the US you are required to have at least $25K in your account. Maybe that's why they require you to add more money to your account? See more at Day trading restriction on US stocks and Wikipedia - Pattern day trader. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | using credit card and paying back quickly | Yes, however you would have to wait for the $900 to actually be available in your credit card account if making the transaction from an account from another bank or provider, as it usually might take one to two business days for this to happen. If both the chequing account and credit card account are with the same bank, then usually this will go through straight away, and you will be able to make your next purchase on the same day, but I would check your credit card balance first before making that purchase. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Can I do periodic rollovers from my low-perfoming 401k to an IRA? | "There are certain allowable reasons to withdraw money from a 401K. The desire to free your money from a ""bad"" plan is not one of them. A rollover is a special type of withdrawal that is only available after one leaves their current employer. So as long as you stay with your current company, you cannot rollover. [Exception: if you are over age 59.5] One option is to talk to HR, see if they can get a expansion of offerings. You might have some suggestions for mutual funds that you would like to see. The smaller the company the more likely you will have success here. That being said, there is some research to support having few choices. Too many choices intimidates people. It's quite popular to have ""target funds"" That is funds that target a certain retirement year. Being that I will be 50 in 2016, I should invest in either a 2030 or 2035 fund. These are a collection of funds that rebalances the investment as they age. The closer one gets to retirement the more goes into bonds and less into stocks. However, I think such rebalancing is not as smart as the experts say. IMHO is almost always better off heavily invested in equity funds. So this becomes a second option. Invest in a Target fund that is meant for younger people. In my case I would put into a 2060 or even 2065 target. As JoeTaxpayer pointed out, even in a plan that has high fees and poor choices one is often better off contributing up to the match. Then one would go outside and contribute to an individual ROTH or IRA (income restrictions may apply), then back into the 401K until the desired amount is invested. You could always move on to a different employer and ask some really good questions about their 401K. Which leads me back to talking with HR. With the current technology shortage, making a few tweaks to the 401K, is a very cheap way to make their employees happy. If you can score a 1099 contracting gig, you can do a SEP which allows up to a whopping 53K per year. No match but with typically higher pay, sometimes overtime, and a high contribution limit you can easily make up for it." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | As an American working in the UK, do I have to pay taxes on foreign income? | Short answer: it's complicated. The UK govt pages on foreign income are probably your best starting point: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10027480 As you can see, it depends on your precise residence status here. (There is a tax treaty between the UK and the US so you wouldn't be double taxed on the income either way. But there might still be reporting obligations). |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How can I find out what category a merchant falls into for my credit card's cashback program? [duplicate] | Not clear what you're asking. Are you trying to figure out their SIC/NAISC classification? That tells you the business category they fall into, but there's no simple, instant way to find that out. Much also depends on how the credit card issuer has classified them and how they arrived at that information. They may have a different means of classifying merchants, so you might try to call your bank and ask them, if they're able/willing to tell you. That'll give you a starting point to figure it out, anyway. |
Share your insights or perspective on the financial matter presented in the input. | Gift card fraud: To whom to report? How to recover funds? Is the party which issued me the card liable? | Citibank just sent me a $100 check. Here's how I got it: |
Share your insights or perspective on the financial matter presented in the input. | How does on-demand insurance company Trov prevent insurance fraud or high prices? | Anything can be insured for the right price... this product is offered for devices at higher risk, which would be logical purpose of owner needing coverage for a specific length of time. Typically this would be a type of adverse selection, but TROV targets customers that typically would not require insurance on their device, but as you said they may be traveling and putting their devices at added risk. Like all insurance companies, their Loss Ratio (Losses/Premiums) will depend on the law of large numbers and spread of risk. As we know, the majority of the time trips are taken, electronics make it back home safely. Like many tech companies, their advantage over conventional insurers is likely low overhead costs. Being on a mobile platform, they likely have a fraction of the claims handling cost of a conventional insurer. Payments are likely automated by linking bank accounts, so there is little transaction cost burden on this company. In short, their operation is likely highly automated with few staff and low expenses, allowing them to take on a higher loss ratio than conventional insurers and still leave room for profit. Without having ever used this service, I can tell you they likely price in anticipated fraud, the same way Walmart prices in inventory loss (shoplifting) into their prices. I personally would share your concern that it'd be difficult to combat fraud on such a platform, especially with no claims adjusters whom are typically the first line of defense. Again, I answer this never having used their service, but I work as an Analyst at a large insurer and these would be my assumptions based on what I know of TROV. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Personal Tax Deduction for written work to a recognized 501c3 | "If it's work you'd be producing specifically for this organization, that would not be deductable. Per Publication 526, Charitable Deductions, ""You can't deduct the value of your time or services, including: … The value of income lost while you work as an unpaid volunteer for a qualified organization."" On the other hand, if you were say an author of a published book or something (not specifically written for this organization), you could donate a copy of the book and probably deduct its fair market value (or perhaps only your basis, if it's your business's inventory)." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | I'm currently unemployed and have been offered a contract position. Do I need to incorporate myself? How do I do it? | In short - if you can't get the job without incorporating, then incorporate! Some clients will require you to be incorporated (which is why I did it 10 years ago). Essentially, for them, it's a way of distancing themselves from you to ensure they are not responsible for any monies if you don't pay your taxes. For you, there is also this idea of distancing company assets from your personal assets. If they are not requiring you to incorporate, you can simply act as a sole proprietorship. A good place to start reading up could be the sites below (for Canada/Ontario): Canada Business http://sbinfocanada.about.com/ http://sbinfocanada.about.com/od/incorporation/Incorporating_A_Business_In_Canada.htm http://sbinfocanada.about.com/cs/startup/a/incorporatadv.htm When I registered, I simply bought a book at Grand&Toy, with all the required forms for Ontario. These forms would also be available at a local Government service centre. You walk in, give the government money, and shortly thereafter you are incorporated. There are a number of others things that are required (having a minutes book, writing resolutions, creating shares, setting up a bank account, etc) - all discussed in the guide For Ontario you can start here: http://www.ontario.ca/en/services_for_business/index.htm At a high level, there are some costs for being incorporated, and some tax savings. At a minimum, costs would include: You may need the help of an account to help set things up, but it's quite easy to maintain all the records, etc that are required. Some other minor things I enjoy are writing myself expense cheques so that I get money back immediately (and effectively only pay 60% of the cost after writing it off in the company). I can decide how much to pay myself and push income from year to year. |
Share your insights or perspective on the financial matter presented in the input. | Working in Iran for foreign company | You should talk to a lawyer who's familiar with the matter. I'm not such a lawyer. For the best of my understanding, at least with regards to the US, the answer to all three of your questions is no. Legally, a US company cannot employ Iranian residents and transfer money to Iran. However, I know of Iranians working in the US. So if you manage to secure a H1b visa and move to the US - you can work and earn money here. What you do with it after you earned it - is your business. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How can I estimate the value of private stock behind employee stock options? | "Okay, I'm going to give you my opinion based on experience; not any technical understanding. The options - by themselves - are pretty meaningless in terms of determining their value. The business plan going forward, their growth expectations, the additional options to be authorized, the additional preferred stock offers they anticipate, even current estimated value of the company are some of the pieces of data you will be needing. I also want to say something cynical, like ""to hell with the stock options give me cold hard"" but that's just me. (My experience two-times so far has shown stock options to be worth very very little.)" |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | understand taxes when geting money from a project built long time ago plus my full time job | You need to register as self-employed with HMRC (it is perfectly fine to be self-employed and employed by an employer at the same time, in exactly your kind of situation). Then, when the income arrives you will need to declare it on your yearly tax return. HMRC information about registering for self-employment and declaring the income is here: https://www.gov.uk/working-for-yourself/overview There's a few extra hoops if your clients are outside the UK; the detail depends on whether they are in the EU or not. More details about this are here: https://www.gov.uk/online-and-distance-selling-for-businesses/selling-overseas . |
Share your insights or perspective on the financial matter presented in the input. | Filing 1040-NR when I have been outside the US the entire year? | Yes, you can still file a 1040nr. You are a nonresident alien and were: engaged in a trade or business in the United States Normally, assuming your withholding was correct, you would get a minimal amount back. Income earned in the US is definitely Effectively Connected Income and is taxed at the graduated rates that apply to U.S. citizens and resident aliens. However, there is a tax treaty between US and India, and it suggests that you would be taxed on the entirety of the income by India. This suggests to me that you would get everything that was withheld back. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Is buying a lottery ticket considered an investment? | There is a clear difference between investing and gambling. When you invest, you are purchasing an asset that has value. It is purchased in the hopes that the asset will either increase in value or generate income. This definition holds true whether you are investing in shares of stock, in real estate, or in a comic book collection. You can also purchase debt: if you loan money, you own debt that will (hopefully) be repaid and generate income. Gambling is playing a game for chance. When you gamble, you have not purchased an asset; you have only paid to participate in a game. Some games have a degree of skill (blackjack, poker), others are pure chance (slot machine). In most gambling games, the odds are against the player and in favor of the one running the game. Lottery tickets, without a doubt, are gambling. There is a good article on Investopedia that discusses the difference between investing and gambling in more detail. One thing that this article discusses is the house edge, or the advantage that the people running a gambling game have over the players. With most casino games, the house has an advantage of between 1 and 15% over the players. With a typical lottery, the house edge is 50%. To address some of the points made by the OP's recent edit and in the comments: I do not think the definitions of investment and gambling need to be dependent on expected value. There can be bad investments, where the odds of a good result are low. Similarly, there could be gambling games where the odds are in the player's favor, either due to the skill of the player or through some quirk of the game; it's still gambling. Investing is purchasing an asset; gambling is a game of chance. I do not consider a lottery ticket an asset. When you buy a lottery ticket, you are just paying a fee to participate in a game. It is the same as putting a coin in a slot machine. The fact that you are given a piece of paper and made to wait a few days for the result do not change this. Assets have inherent value. They might be valuable because of their ability to generate income (stocks, bonds, debt), their utility (precious metals, commodities, real estate), or their desirability as a thing of beauty (collectibles), for example. A lottery ticket, however, is only an element of a game. It has no value other than in the game. |
Share your insights or perspective on the financial matter presented in the input. | Is there any way to pay online in a country with no international banking system | According to Paypal, they support transactions in Ethiopia: https://www.paypal.com/webapps/mpp/country-worldwide https://developer.paypal.com/docs/classic/api/country_codes/ However those appear to be limited to transferring money out of the country. (link) There is an article here (link) which talks about how to transfer money from paypal back to your bank in Ethiopia. It sounds like you have to set up a US bank account, withdraw the funds to that then somehow transfer the money from their to your bank. NOTE: I have no relationship to any of the sites above, nor do I know if the information is accurate or the trustworthiness of those businesses. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How to incentivize a real-estate broker to find me a cheap house | "Here in the U.S., a realtor can act as a ""seller's agent"" or a ""buyer's agent"". I think what you are calling a ""broker"" in the U.S. we call a ""buyer's agent"", and this may just be a difference in terminology, from your post it sounds like the concept is the same. I am answering from a U.S. perspective, please let me know if something doesn't make sense in the Israeli context. Here, each typically gets 3% to 3.5% of the sale price (at least in my part of the country). So yes, the buyer's agent has an incentive to get a higher price, even though this is contrary to the interests of the person he is supposed to represent. On the other hand, the buyer's agent has a strong incentive to find a house at a price that you consider acceptable. If the absolute most you are willing to pay is, say, ₪1,000,000, and he keeps showing you houses that cost ₪1,500,000, he's just wasting his time. (He's wasting your time too, of course, but let's assume he doesn't care about that.) (I don't know what housing prices are in Israel today, just making up numbers.) Suppose he has two houses that he can show you, one in your price range and one not. If he shows you the first you may buy it and we will very quickly get his commission. If he shows you the second, you probably won't buy it and he'll get zero. If he keeps showing you houses above your price range, he's doing a bunch of work for which he will never be paid. The worst case from your point of view is if you're thinking that you're expecting and prepared to pay, say, ₪1,000,000 to ₪1,300,000, and you tell the broker that, his incentive is to concentrate on the upper end, maybe even push it a little. But still, if he shows a house that's well within your range so you'll quickly buy, he can get ₪30,000 today, versus trying to push you to go higher so he can maybe get ₪39,000 in a few months. Is the extra ₪9,000 worth several months of extra work? Probably not. Personally, I've never had a problem with a realtor trying to push me to buy a house more expensive than I said I was prepared to pay. At least not that I noticed. Maybe they were very skillful at it and I didn't realize they were doing it, like showing me houses that were totally run-down dumps until I decided I was willing to pay more. As to your specific suggestion: I don't know if a realtor would be willing to negotiate an alternative deal from their standard contract. I've never tried to do such a thing. Yes, this would give him an incentive to find the lowest possible price. Arguably this would create a perverse incentive to show you houses of very low quality just because they're cheap. And there would be the problem that he'd have no incentive to show you houses at or just over your stated maximum, as his commission would be zero. (Negative if it goes over slightly?) What I did on my last house was tell the realtor, I want to start by looking at houses costing under \$X. If I can't find anything I like, I'll go a little higher. By not telling the realtor my maximum, I discouraged her from immediately going for the maximum. At least that was my theory." |
Share your insights or perspective on the financial matter presented in the input. | How can online trading platforms be trustworthly? | In most countries trading platforms are legally required to be overseen by a regulator, in the US this is the SEC (Securities and Exchanges Commission). This regulatory oversight is required in order to operate (i.e. have clients) in that country and the company will lose the right to operate in that country if they do not comply with the regulations. If you believe that you have genuine cause to complain that a trading platform that you are using within your jurisdiction is behaving unfairly towards you you can report this to the regulator and they will investigate so long as you can provide them with some concrete evidence. Note that in many jurisdictions gambling websites are also regulated (they are in the UK for example) and so arguments about their fairness are specious. A big problem with a lot of these complaints is that people who lose money are very vocal about blaming everyone else, people who make money are very vocal about their own amazing skills... think about that! |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Why do banks encourage me to use online bill payment? | Another reason for banks to push this is sitckyness. Once you have all of your bills setup, its more trouble to change banks. This reduces the customer turnover rate, which lowers their costs. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Form as LLC or S Corp to reduce tax liability | "This is actually quite a complicated issue. I suggest you talk to a properly licensed tax adviser (EA/CPA licensed in your State). Legal advice (from an attorney licensed in your State) is also highly recommended. There are many issues at hand here. Income - both types of entities are pass-through, so ""earnings"" are taxed the same. However, for S-Corp there's a ""reasonable compensation"" requirement, so while B and C don't do any ""work"" they may be required to draw salary as executives/directors (if they act as such). Equity - for S-Corp you cannot have different classes of shares, all are the same. So you cannot have 2 partners contribute money and third to contribute nothing (work is compensated, you'll be getting salary) and all three have the same stake in the company. You can have that with an LLC. Expansion - S-Corp is limited to X shareholders, all of which have to be Americans. Once you get a foreign partner, or more than 100 partners - you automatically become C-Corp whether you want it or not. Investors - it would be very hard for you to find external investors if you're a LLC. There are many more things to consider. Do not make this decision lightly. Fixing things is usually much more expensive than doing them right at the first place." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Good at investing - how to turn this into a job? | Staying in Idaho, you could pursue some additional degree and try to get a job with a bank in the area as an investment advisor of some sort. However, I have doubts as to whether or not you'd be able to employ your creativity and test your own instincts in that sort of a position. If you really want to get into the big-money investment sector, I'd suggest a move to a financial hub (Chicago, New York, San Francisco) and getting a job programming for a big firm. After obtaining some experience there, you may be able to transfer to a more investment-oriented position (at the same firm or another) and from there to a position where you can unleash your talent (assuming you have some). Putting a degree in finance somewhere in the mix would help too. Consider the following. You want to make $50,000/yr (low) by running a fund with a 1% expense ratio (high) investing other peoples' money... you're dealing with at least $5 million. That's a good chunk of change. To be entrusted with that kind of money is kind of a big deal, and you'll need to get some people to believe in your capabilities. You're not likely to get that kind of trust working out of Boise. Even if you're just doing research for some fund manager, you're not likely to find too many of those in Boise either. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Alternatives to Intuit's PayTrust service for online bill viewing and bill payment? | Ally bank has a free billpay service where you have the option of paying bills via eBills. Though I use Ally's billPay service (and I write about my experience with Ally in my blog), I haven't used eBills, but from reading your question, looks like this is what you are looking for. From Ally's site: What are eBills? An eBill is an online version of a bill or statement that can replace a traditional paper copy. Many large companies, like your electric, phone, cable and major credit card companies have the ability to send you eBills. To receive eBills at Ally, you must already receive your bill online at the biller's website. Ally will ask for the biller's website credentials to set up an eBill. Hope this helps. |
Share your insights or perspective on the financial matter presented in the input. | Is Stock Trading legal for a student on F-1 Visa in USA? [duplicate] | As an F1 student, I have been investing (and occasionally buying and selling within few weeks) for several years, and I have never had problems (of course I report to IRS gains/losses every year at tax time). On the other hand, the officer in charge of foreign students at my school advised me to not run ads on a website and make a profit. So, it seems to me that investing is perfectly legit for a F1 student, as it's not considered a business activity. That's obviously my personal understanding, you may want to speak with an immigration attorney to be on the safe side. |
Share your insights or perspective on the financial matter presented in the input. | Does a restaurant have to pay tax on a discount? | In almost any jurisdiction, the restaurant will pay tax on the amount after the discount. Discounting is just a selective way to reduce prices for particular clients and thus achieve some degree of price discrimination. It's no different in principle to cutting prices for everyone or having a sale or similar. It would be very strange for a tax jurisdiction to work any other way, because businesses would end up being taxed on money they never actually got. While tax systems often have that kind of anomaly in rare cases at the edge of the system, discounting via vouchers is extremely common. For example, here are the rules in the UK. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Can my brother fix his credit? | Well, he could negotiate with the bank to pay off the loan before the foreclosure takes effect. That would obviously cost him a large pile of cash but might remove the foreclosure, and possibly the late payments, from his record. But the real answer is that, having signed the note, he should have been making sure payments occurred so it never got close to foreclosure. That's what he promised the bank he would do. Having failed to do so, he really isn't in a position to complain when they tell other businesses that he didn't meet that promise. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Should I pay half a large balance this month before I get my CC statement? | Utilization is near real-time. What that means is that what is reported is what is taken in terms of debt-to-income (DTI) ratios. When a mortgage broker pulls your credit, they will pull the latest balances with the minimum payments. This is what is taken to determine DTI along with your gross monthly income. If you do not pay your account in full before the statement date, then you more than likely will have to wait an additional statement cycle before it reports to the credit bureaus. Therefore, your utilization is dynamic and the history of your utilization month-to-month is not recorded forever. Only the current balance. What is maintained and reported is your payment history. So you want to never be late if you want to be approved anytime soon for a mortgage. A lower DTI will not help your interest rate. As long as you stay away from the maximum DTI for the mortgage vehicle you are attempting to be approved for (VA, FHA, Conventional, etc), then your DTI should not be a concern. If you are borderline at the time of underwriting, you can take the opportunity and pay off the balances. The mortgage company can then do what is called a credit supplement which entails contacting those lenders where you have proven you have a zero balance and manually input the zero balance cards, that have not yet reported to the bureaus, in your final application to the mortgage company for underwriting approval. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Money put down on home | I cannot emphasize enough how important it is, when you buy a house with someone you are not married to, to make a legal agreement on how the money should be divided when you sell. I know it's too late for you, but I write this for anyone else reading this answer. From a legal point of view, if you made no agreement otherwise, you each own 50% of the house. If you want to divide it any other way, you will have to agree what an appropriate division is. Dividing according to the amount each of you paid towards it is a good way. Decide for yourselves if that means just mortgage payments, or also taxes, repairs, utilities etc. You should also be aware that if you have been living together a long time, like more than a year, some jurisdictions will allow one party to sue the other as if they were getting divorced. Then the courts would be involved in the division of property. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Saving for retirement without employer sponsored plan | I'm looking for ways to geared to save for retirement, not general investment. Many mutual fund companies offer a range of target retirement funds for different retirement dates (usually in increments of 5 years). These are funds of funds, that is, a Target 2040 Fund, say, will be invested in five or six different stock and bond mutual funds offered by the same company. Over the years and as the target date approaches closer, the investment mix will change from extra weight given to stock mutual funds towards extra weight being given to bond mutual funds. The disadvantage to these funds is that the Target Fund charges its own expense ratio over and above the expense ratios charged by the mutual funds it invests in: you could do the same investments yourself (or pick your own mix and weighting of various funds) and save the extra expense ratio. However, over the years, as the Target Fund changes its mix, withdrawing money from the stock mutual funds and investing the proceeds into bond mutual funds, you do not have to pay taxes on the profits generated by these transactions except insofar as some part of the profits become distributions from the Target Fund itself. If you were doing the same transactions outside the Target Fund, you would be liable for taxes on the profits when you withdrew money from a stock fund and invested the proceeds into the bond fund. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why will the bank only loan us 80% of the value of our fully paid for home? | To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, you quit paying the mortgage and they have to foreclose. Can the bank get their $200,000 back? An appraisal is only an estimate; nobody can predict perfectly how much a property will sell for. Maybe the appraiser missed something significant, and the property will only fetch $180,000. Even if the appraisal was accurate when it was made, property values may have dropped in the meantime. Maybe a sudden economic crisis is driving real estate prices down across the board. Maybe interest rates have spiked. Maybe the county has changed the zoning regulations to locate a toxic waste dump next door to the property. In any of these cases, the property may again fetch well under $200,000. Maybe the condition of the property has changed. Perhaps you trashed the place and it will take $30,000 to clean it up. (People have a tendency to do things like that when they get foreclosed.) If the bank wants to get full market value for the property, they will incur the usual costs of selling a property: paying a real estate agent's commission, painting, renting furniture to stage the property, and so on. This will eat into the net amount they actually get from the sale. It may take some time (perhaps months) for a property to sell at its full market value. During this time, the bank is out $200,000. That's money they would rather be loaning out at interest to someone else, so this represents lost income. Foreclosing a mortgage is a fairly complicated procedure. The bank has to pay its staff, including lawyers, for a significant number of hours to get the foreclosure done. There will be court filing fees and so on. If you refuse to leave, they may have to get the sheriff to evict you; that has a fee as well. If you fight the foreclosure, that racks up even more legal fees. This too eats into the net proceeds from the sale. So if the bank loans you the full $200,000, they stand a pretty significant risk of not getting all of it back, after expenses. You can understand that risk may not be worth the interest they would get from you on the extra $40,000. On the other hand, if they loan you only 80% of the property's appraised value ($160,000), they effectively shift that risk onto you. Should you default on the loan, and they foreclose, all they have to do is sell the property for $160,000 or a little bit more. That shouldn't be too hard, even if it is not freshly painted or a bit trashed. They probably don't need to hire a real estate agent: just hold a quick auction, maybe first calling up a few investors who might be interested in flipping it. If it happens to sell for more than the outstanding principal of the loan, plus the bank's costs, then they will pay you the difference; but they have no incentive to make that happen, and every incentive to just get it sold quick. So any difference between the property's true value and the actual sale price now represents a loss to you first, not to the bank. So you can see why the bank would rather not loan you the full value of the property. 80% is a somewhat arbitrary figure but it cuts their risk by a lot. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Lend money at a rate linked to the prime rate | Yes. In the US these are called certificates of deposit or savings accounts. Every run-of-the-mill bank offers them. You give the bank money and in return they pay you an interest rate that is some fraction of or (negative) offset from the returns they expect to make from your money. Since most investments that a bank makes (say, loaning money to a local business) are themselves based on some multiple of or (positive) offset from the prime rate, in return the interest rate that they offer you is also mathematically based on the prime rate. You can find lists of banks offering the best returns on CDs or savings accounts at sites like BankRate. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Is Bogleheadism (index fund investing) dead? | The reports of my death have been greatly exaggerated. - Twain I use index funds in my retirement planning, but don't stick to just S&P 500 index funds. Suppose I balance my money 50/50 between Small Cap and Large Cap and say I have $10,000. I'd buy $5,000 of an S&P Index fund and $5,000 of a Russell 2000 index fund. Now, fast forward a year. Suppose the S&P Index fund has $4900 and the Russell Index fund has $5200. Sell $150 of Russell Index Fund and buy $150 of S&P 500 Index funds to balance. Repeat that activity every 12-18 months. This lets you be hands off (index fund-style) on your investment choices but still take advantage of great markets. This way, I can still rebalance to sell high and buy low, but I'm not stressing about an individual stock or mutual fund choice. You can repeat this model with more categories, I chose two for the simplicity of explaining. |
Share your insights or perspective on the financial matter presented in the input. | Is it legal to receive/send “gifts” of Non-Trivial Amounts to a “friend”? | "Am I right to say that no tax needs to be given for the annual ~$130k USD, since they are considered as annual gift tax exclusion? Not only that you're wrong, but it also looks like a tax fraud, not just mere avoidance. You'll have hard time proving to any judge or jury that the gifts are ""in good faith"". By the way, $5 a month is below minimum wage." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Why do credit cards have minimum limits? | I believe it's just to limit the less well-off from acquiring one. If your credit history and income do not support a $15,000 credit limit, then don't even think about applying for an Altitude Black card. If they do, then don't bother with a student card. It's primarily about market segmentation by wealth or income. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | What mix of credit lines and loans is optimal for my credit score? | Over time, you'll have more loans, maybe a few store cards, mortgage, car loan, etc. I'm a fan of maximizing one's wealth, and the small rebate/reward adds up over time, so I'm not against the store cards, so long as you always pay the bill in full. As far as FICO is concerned, what they 'like' to see may not necessarily be optimum for you. I'd suggest you go about your business, and over time use the few cards that combine to give to the best benefit combination that works for you. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Taxation from variations in currency | Here is the technical guidance from the accounting standard FRS 23 (IAS 21) 'The Effects of Changes in Foreign Exchange Rates' which states: Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognised in profit or loss in the period in which they arise. An example: You agree to sell a product for $100 to a customer at a certain date. You would record the sale of this product on that date at $100, converted at the current FX rate (lets say £1:$1 for ease) in your profit loss account as £100. The customer then pays you several $100 days later, at which point the FX rate has fallen to £0.5:$1 and you only receive £50. You would then have a realised loss of £50 due to exchange differences, and this is charged to your profit and loss account as a cost. Due to double entry bookkeeping the profit/loss on the FX difference is needed to balance the journals of the transaction. I think there is a little confusion as to what constitutes a (realised) profit/loss on exchange difference. In the example in your question, you are not making any loss when you convert the bitcoins to dollars, as there is no difference in the exchange rate between the point you convert them. Therefore you have not made either a profit or a loss. In terms of how this effects your tax position; you only pay tax on your profit and loss account. The example I give above is an instance where an exchange difference is recorded to the P&L. In your example, the value of your cash held is reflected in your balance sheet, as an asset, whatever its value is at the balance sheet date. Unfortunately, the value of the asset can rise/fall, but the only time where you will record a profit/loss on this (and therefore have an impact on tax) is if you sell the asset. |
Share your insights or perspective on the financial matter presented in the input. | Strategies for saving and investing in multiple foreign currencies | If you want to use that money and maybe don't have the time to wait a few years if things should go bad, than you will definitely want to hold a good bunch of your money in the currency you buy most stuff with (so in most cases the currency of the country you live in) even if it is more volatile. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Would there be tax implications if I used AirBnB as opposed to just renting out a unit normally? | There's no tax difference between using AirBnB or Craigslist or any other method to find tenants. The rules relating to occupancy and frequency may be different for some purposes if you go from yearly or monthly tenants to daily-rate tenants. Your state and local authorities may in the future try to consider you a motel or Bed n Breakfast equivalent, and subject you to various regulations and business taxes. But the method of finding customers itself is probably not meaningful for tax purposes. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | What to do if a state and federal refund is denied direct deposit? | "It is not allowed to pay refunds to anyone other than the taxpayer. This is due to various tax return fraud schemes that were running around. Banks are required to enforce this. If the direct deposit is denied, a check will be issued. In her name, obviously. What she does with it when she gets it is her business - but I believe that tax refund checks may not be just ""endorsed"", the bank will likely want to see her when you deposit it to your account, even if it is endorsed. For the same reason." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Are there any e-commerce taxation rules in India? | There are no clear guidelines. If you are selling as individual, then what ever profit you make gets added to your overall income as you pay tax accordingly. This is true for sole proprietor or partnership kind of firms. If you are registered as a Company, the profits are taxed as business income. There may be VAT and other taxes. Please consult a CA who can guide you in specifics as for eCommerce, there is no defined law and one has to interpret various other tax laws. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Are reimbursements from company taxable,and do I need to deduct them? | "I'm assuming that you're in the US. In that case, the answer is that it depends on how your company set up its reimbursement plan. The IRS recognizes ""accountable"" and ""nonaccountable"" plans. Accountable plans have to meet certain requirements. Anything else is nonaccountable. If you are reimbursed according to an accountable plan, this is not income and should not be reported to the IRS at all. If you are reimbursed under a nonaccountable plan, then this is income but you might be able to get a deduction on your tax return if you itemize. Most established companies have accountable plans for normal business expenses. More detail from IRS: http://www.tax.gov/TaxabilityCertainFringeBenefits/pdf/Accountable_v_Nonaccountable_Plans_Methods_of_Reimbursing_Employees_for_Expense.pdf" |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Rental Property - have someone look for you | Many real estate agents will assist with an apartment hunt, for a suitable fee. In a hot market that may be worth the money. Then again, my best finds were always through co-workers, after the first two. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | How do I get a Tax Exemption Certificate for export from the US if I am in another country? | Assuming you are being charged sales tax, it all depends on where you take possession of the shipment. Are your suppliers shipping to a US address, say your freight forwarder, from where you handle the ongoing shipment, or directly to you in South America? If the latter, per Michael Pryor's answer, you should not be charged sales tax. If the former, if the address is in a state in which your supplier has a physical location they will have to charge sales tax. That said, your freight forwarder should be able to furnish your supplier with a letter stating that the goods have been exported (with a copy of the relevant Bill of Lading) which will allow your supplier to refund you the taxes (a company I was at before would allow refunds up to two years past the date of sale per various tax regulations). Alternatively, you could see if just a letter of intent from your freight forwarder is enough to not charge you in the first place, but that's technically not proof of exportation. You might be able to get a refund or an exception from the state's tax department directly, but I would recommend going through your supplier - much less hassle. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Free/open source Unix software that pulls info from all my banks/brokers/credit cards? | Gnucash uses aqbanking, so I'd suggest looking at aqbanking to see if it will do what you want. It seems to be actively developed (as of 26.2.2011), but the main page is in German and my German is a bit rusty... You might also try asking on the gnucash-users list. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Creating S-Corp: Should I Name My Wife as a Director/Shareholder? | If you're creating an S-Corp for consulting services that you personally are going to provide, what would it give her to have 50% of the corporation when you're dead? Not to mention that you can just add it to your will that the corporation stock will go to her, and it will be much better (IMHO, talk to a professional) since she'll be getting stepped-up basis. Why aren't you talking to a professional before making decisions? It doesn't sound like a good way to conduct business. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why do credit cards require a minimum annual household income? | Here's one reason that's being overlooked in answers so far. (@ChrisInEdmonton, this is for your comment on @Chad's answer.) How do credit card companies make money? Sure, there's interest charges, but those are offset significantly by the cost of borrowing money, and by people defaulting on their debt / entering bankruptcy. The other way they make money is by processing transactions. They get a cut of whatever you buy. If you're a high-income person, and you're going to process a lot of expenditures with this credit card, your business is worth more. They will be willing to bribe you with things like cash-back, frequent flier miles, and insurance on your auto rentals, so that they can be your #1 go-to card. (This works in concert with the way that some credit card vendors with richer clientele overall - American Express - get to charge higher merchant fees for access to these customers' wallets. But that was mentioned in other answers.) If you're not a high-income person, your business is worth less. If you go somewhere asking for credit, they're going to try and give you a card which will earn them the most money - which probably isn't the one where they give you back 50% of their transaction fee in rewards. It's a calculated risk, since they still have to compete against cash, debit cards, and all the other credit card companies, so they don't have you totally over a barrel, but you shouldn't expect as many freebies, either. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why is the total 401(k) contribution limit (employee + employer) so high? | "Because 401k's are also used by self employed. A person who has a schedule C profitable income can open a 401k and ""match"" in whatever ratio he wants, up to 25% of the net profits or the limits you stated. This allows self-employed to defer more income taxes to the future. Why only self-employed? Good question. Ask your congressman. My explanation would be that since they're self-employed they're in much more danger of not having income, especially later in life, if their business go south. Thus they need a bigger cushion than an average W2 employee who can just find another job." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Should I take contributions out of my Roth IRA to live off of? | Take another job. From a personal finance perspective this is the wrong reason to dip into a retirement account. You will lose so much ground towards actually retiring. Sure you won't be taxed, but you will be missing so much opportunity where that money won't be working for your retirement. The off-topic answer to take to the start-ups stackexchange site is: don't quit your day job until your business plan is written out and you have an idea of where to get your startup capital. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Withdraw USD from PayPal without conversion to my home currency of EUR? | I just tried doing that on my PP which is in the Netherlands, I have added a USD bank account (from my dutch bank) and they sent the verification amount in Euros, I called the bank and wonder why they didn't let me choose account currency they said it's not possible and if I cashout Dollars that I have in my PP (cause we usually do international business so we set it to dollars) it will be changed to Euros, So we decided to keep the dollars in account to pay our bills instead of getting ripped off by PayPal in xchange rates. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How can I determine which stores are regarded as supermarkets for a rewards credit card? | Credit card companies organize types of businesses into different categories. (They charge different types of businesses different fees.) When a business first sets up their credit card processing merchant account, they need to specify the category. Here is a list of categories that Visa uses. Grocery stores and supermarkets are category number 5411. Other types of businesses, such as the examples you provided in your question, have a different category number. American Express simply looks at the merchant category code for each of your transactions and only gives you rewards for the ones in the grocery store category. It's all automated. They likely don't have a list of every grocery store in the US, and even if they did, they would probably not provide it to the public, for proprietary reasons. If you are in doubt about whether or not a particular store is in the grocery category, you'll just have to charge it to your card and see what happens. Often, the category of transaction will be shown for each transaction on your credit card's website. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | When should I walk away from my mortgage? | The value of debt is that it allows you to profit from the return of equity beyond the amount of actual net equity you own. Of course, this only works if the cost of borrowing is less than your return on equity. Market timing matters a great deal but isn't accounted for in this view. For my answer I would like to hand-wave away market timing considerations. One plausible justification is that you could default on your current home and then immediately go buy one of equal value. If you buy a new home of a lesser value (due to lack of funds) and then prices appreciate, then you missed some opportunity cost but probably not $100k worth of it. Moving on, here are some helpful assumptions I'll make. I'll ignore performance of your portfolio after retirement and only seek to optimize F, which will be your net worth upon retirement. In either case, your current net worth is earning the R2 rate. We can convert this for both your current net worth and future savings using conversion formulas. Present to future value F = P (1+R2)^x Annual to future value F = S ( (1+R2)^x - 1 ) / R2 Adding these together is sufficient to obtain F in the case that you have no borrowing power. The case where you do not default and maintain your credit score is different due to an initial $100k penalty and the amortized value of borrowing power. In a completely theoretical sense, you get an effective (R2-R1) yield on all borrowed money. The future value will be the following: F = A1 (1+R2-R1)^x One step is missing, however, which is to convert this value (the value of having a good credit score) into present value to compare to value of your defaulting. P of borrowing power = F / (1+R2)^x = A1 { (1+R2-R1)/(1+R2) }^x Now, let's put some specific values in. Say that you can borrow $300k with your good credit history and this applies for the next 25 years, after which you retire. The borrowing rate is 7% and the time-value of money to you is 10%. I would then calculate: P of borrowing power = $58 k < $100 k This indicates that it would be more economical to default. Of course, some people might point out that it will be removed from your record after 7 years. If you plug 7 years instead of 25 years into the equation, almost no assumptions about rates will lead to the option of keeping your house being preferable. So in a nutshell, the value of your credit is probably less than $100k in a purely mathematical sense. But there are other factors too. If you don't have that borrowing ability maybe you wouldn't be able to borrow money to start the business of your dreams. If you are a rock star entrepreneur, then time-value of money to you could be 1,000% yield, sure, then maybe you could make the above numbers work (to favor keeping the house). I've also neglected ethics. As other people point out, it would be like stealing from the bank. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Multi-Account Budgeting Tools/Accounts/Services | IngDirect has this concept of sub accounts inside a main account - that might be perfect for what you are looking for. To clarify, you basically have one physical account with logical sub account groupings. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Adding a 180 day expiration to checks | While you can print that on the check, it isn't considered legally binding. If you are concerned about a check not being deposited in a timely manner, consider purchasing a cashier's check instead. This doesn't solve the problem per se, but it transfers responsibility of tracking that check from you to the bank. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Consumer Loans vs Mortgages | I went here: Consumer Loan Law. It seems that a consumer loan is anything other than a business loan or mortgage. However, in California it seems to include a mortgage. It's a bit weird to see that a HEL can be considered a consumer loan even if it is the primary or the only loan on a property. Getting a HEL can be a great low cost way to (re)finance a property as they tend to have low or no closing costs and lower interest rates. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | One company asks for picture of my debit card | Although it is strange, there is little risk. The first four numbers are just the card type (Visa, Master, etc.), and the last four alone don't give them much - there are still 8 digits missing that they do not have. There is nothing much they can do with that info, especially without the PIN and the CCV, so as I said, little risk. Maybe they are using this to verify that you are the right person - you probably used that card originally to put money in for the gaming. That would be a way for them to authenticate you. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | Shop around for Gym January is a great time to look because that's when most people join and the gyms are competing for your business. Also, look beyond the monthly dues. Many gyms will give free personal training sessions when you sign up - a necessity if you are serious about getting in shape! My gym offered a one time fee for 3 years. It cost around $600 which comes out to under $17 a month. Not bad for a new modern state of the art gym. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Emptying a Roth IRA account | If you have multiple accounts, you have to empty them all before you can deduct any losses. Your loss is not a capital loss, its a deduction. It is calculated based on the total amount you have withdrawn from all your Roth IRA's, minus the total basis. It will be subject to the 2% AGI treshhold (i.e.: if your AGI is > 100K, none of it is deductible, and you have to itemize to get it). Bottom line - think twice. Summarizing the discussion in comments: If you have a very low AGI, I would guess that your tax liability is pretty low as well. Even if you deduct the whole $2K, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6K), you save say $300 if you're in 15% tax bracket. That's the most savings you have. However I'm assuming something here: I'm assuming that you're itemizing your deductions already and they're above the standard deduction. This is very unlikely, with such a low income. You don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and I would argue that with the low AGI you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. You can be in 15% bracket with AGI between (roughly) $8K and $35K, i.e.: you cannot deduct between $160 and $750 of the $2K, so it's already less than the maximum $300. If your AGI is $8K, the deduction doesn't matter, EIC might cover all of your taxes anyway. If your AGI is $30K, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. That, again, assuming it's above your other deductions, which in turn are already above the standard deduction. Highly unlikely. As I said in the comments - I do not think you can realistically save on taxes because of this loss in such a manner. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | How does stock dilution work in relation to share volume? | Here is an example for you. We have a fictional company. It's called MoneyCorp. Its job is to own money, and that's all. Right now it owns $10,000. It doesn't do anything special with that $10,000 - it stores it in a bank account, and whenever it earns interest gives it to the shareholders as a dividend. Also, it doesn't have any expenses at all, and doesn't pay taxes, and is otherwise magic so that it doesn't have to worry about distractions from its mathematical perfection. There are 10,000 shares of MoneyCorp, each worth exactly $1. However, they may trade for more or less than $1 on the stock market, because it's a free market and people trading stock on the stock market can trade at whatever price two people agree on. Scenario 1. MoneyCorp wants to expand. They sell 90,000 shares for $1 each. The money goes in the same bank account at the same interest rate. Do the original shareholders see a change? No. 100,000 shares, $100,000, still $1/share. No problem. This is the ideal situation. Scenario 2: MoneyCorp sells 90,000 shares for less than the current price, $0.50 each. Do the original shareholders lose out? YES. It now has something like $55,000 and 100,000 shares. Each share is now worth $0.55. The company has given away valuable equity to new shareholders. That's bad. Why didn't they get more money from those guys? Scenario 3: MoneyCorp sells 90,000 shares for more than the current price, $2 each, because there's a lot of hype about its business. MoneyCorp now owns $190,000 in 100,000 shares and each share is worth $1.90. Existing shareholders win big! This is why a company would like to make its share offering at the highest price possible (think, Facebook IPO). Of course, the new shareholders may be disappointed. MoneyCorp is actually a lot like a real business! Actually, if you want to get down to it, MoneyCorp works very much like a money-market fund. The main difference between MoneyCorp and a random company on the stock market is that we know exactly how much money MoneyCorp is worth. You don't know that with a real business: sales may grow, sales may drop, input prices may rise and fall, and there's room for disagreement - that's why stock markets are as unpredictable as they are, so there's room for doubt when a company sells their stock at a price existing shareholders think is too cheap (or buys it at a price that is too expensive). Most companies raising capital will end up doing something close to scenario 1, the fair-prices-for-everyone scenario. Legally, if you own part of a company and they do something a Scenario-2 on you... you may be out of luck. Consider also: the other owners are probably hurt as much as you are. Only the new shareholders win. And unless the management approving the deal is somehow giving themselves a sweetheart deal, it'll be hard to demonstrate any malfeasance. As an individual, you probably won't file a lawsuit either, unless you own a very large stake in the company. Lawsuits are expensive. A big institutional investor or activist investor of some sort may file a suit if millions of dollars are at stake, but it'll be ugly at best. If there's nothing evil going on with the management, this is just one way that a company loses money from bad management. It's probably not the most important one to worry about. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | US citizen sometimes residing in spain, wanting to offer consulting services in Europe, TAXES? | With something this complicated you are going to want to consult professionals. Either a professional with international experience, who will tell you the best tax arrangement overall but might come expensive, or one professional in each country who will optimize for that country. You will have to pay US taxes, and depending on your residency probably some in Spain. Double tax agreements should kick in to prevent you paying tax on the same money twice. You do not have to pay separate 'European' taxes. If you do substantial business in another country you might have to pay there, but one of your professionals should sort it out. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How to evaluate stocks? e.g. Whether some stock is cheap or expensive? | "If you are looking for numerical metrics I think the following are popular: Price/Earnings (P/E) - You mentioned this very popular one in your question. There are different P/E ratios - forward (essentially an estimate of future earnings by management), trailing, etc.. I think of the P/E as a quick way to grade a company's income statement (i.e: How much does the stock cost verusus the amount of earnings being generated on a per share basis?). Some caution must be taken when looking at the P/E ratio. Earnings can be ""massaged"" by the company. Revenue can be moved between quarters, assets can be depreciated at different rates, residual value of assets can be adjusted, etc.. Knowing this, the P/E ratio alone doesn't help me determine whether or not a stock is cheap. In general, I think an affordable stock is one whose P/E is under 15. Price/Book - I look at the Price/Book as a quick way to grade a company's balance sheet. The book value of a company is the amount of cash that would be left if everything the company owned was sold and all debts paid (i.e. the company's net worth). The cash is then divided amoung the outstanding shares and the Price/Book can be computed. If a company had a price/book under 1.0 then theoretically you could purchase the stock, the company could be liquidated, and you would end up with more money then what you paid for the stock. This ratio attempts to answer: ""How much does the stock cost based on the net worth of the company?"" Again, this ratio can be ""massaged"" by the company. Asset values have to be estimated based on current market values (think about trying to determine how much a company's building is worth) unless, of course, mark-to-market is suspended. This involves some estimating. Again, I don't use this value alone in determing whether or not a stock is cheap. I consider a price/book value under 10 a good number. Cash - I look at growth in the cash balance of a company as a way to grade a company's cash flow statement. Is the cash account growing or not? As they say, ""Cash is King"". This is one measurement that can not be ""massaged"" which is why I like it. The P/E and Price/Book can be ""tuned"" but in the end the company cannot hide a shrinking cash balance. Return Ratios - Return on Equity is a measure of the amount of earnings being generated for a given amount of equity (ROE = earnings/(assets - liabilities)). This attempts to measure how effective the company is at generating earnings with a given amount of equity. There is also Return on Assets which measures earnings returns based on the company's assets. I tend to think an ROE over 15% is a good number. These measurements rely on a company accurately reporting its financial condition. Remember, in the US companies are allowed to falsify accounting reports if approved by the government so be careful. There are others who simply don't follow the rules and report whatever numbers they like without penalty. There are many others. These are just a few of the more popular ones. There are many other considerations to take into account as other posters have pointed out." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Which US services allow small/micro-payments using a credit card? | I don't know of any and it is unlikely that you will be able to find one. Most credit card processors charge a flat fee plus percentage. The flat fee is typically in the 35 cent range making the cost of doing business, in the manner you are suggesting, astronomical. Also what you are suggesting is contrary to best practices as hosting services, and many other industries, offer deep discounts when making a single payment for an extended period of time. This is not very helpful, but I think it is unrealistic to find what you are suggesting. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Buying a home with down payment from family as a “loan” | "Say you're buying a 400K house. Your relative finances 120K (30%). Say I'm optimistic, but the real-estate market recovers, and your house is worth 600K in 5-6 years (can happen, with the inflation and all). The gain is 200K. Your relative gets 100K. You repay him 220K on 120K loan for 5 years. Roughly, 16% APR. Quite an expensive loan. I'm of course optimistic, it seems to me that so is your relative. The question is: if the house loses value in that term, does your relative take 50% of the losses? Make calculations based on several expected returns (optimistic, ""realistic"", loss case, etc), and for each calculate how much in fact will that loan cost. It will help you to decide if you want it. Otherwise your relationships with your relative might go very bad in a few years. BTW: Suggestion: it's a bad idea to mix business and friend/family you don't want to lose." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How does refinancing work? | "A re-financing, or re-fi, is when a debtor takes out a new loan for the express purpose of paying off an old one. This can be done for several reasons; usually the primary reason is that the terms of the new loan will result in a lower monthly payment. Debt consolidation (taking out one big loan at a relatively low interest rate to pay off the smaller, higher-interest loans that rack up, like credit card debt, medical bills, etc) is a form of refinancing, but you most commonly hear the term when referring to refinancing a home mortgage, as in your example. To answer your questions, most of the money comes from a new bank. That bank understands up front that this is a re-fi and not ""new debt""; the homeowner isn't asking for any additional money, but instead the money they get will pay off outstanding debt. Therefore, the net amount of outstanding debt remains roughly equal. Even then, a re-fi can be difficult for a homeowner to get (at least on terms he'd be willing to take). First off, if the homeowner owes more than the home's worth, a re-fi may not cover the full principal of the existing loan. The bank may reject the homeowner outright as not creditworthy (a new house is a HUGE ding on your credit score, trust me), or the market and the homeowner's credit may prevent the bank offering loan terms that are worth it to the homeowner. The homeowner must often pony up cash up front for the closing costs of this new mortgage, which is money the homeowner hopes to recoup in reduced interest; however, the homeowner may not recover all the closing costs for many years, or ever. To answer the question of why a bank would do this, there are several reasons: The bank offering the re-fi is usually not the bank getting payments for the current mortgage. This new bank wants to take your business away from your current bank, and receive the substantial amount of interest involved over the remaining life of the loan. If you've ever seen a mortgage summary statement, the interest paid over the life of a 30-year loan can easily equal the principal, and often it's more like twice or three times the original amount borrowed. That's attractive to rival banks. It's in your current bank's best interest to try to keep your business if they know you are shopping for a re-fi, even if that means offering you better terms on your existing loan. Often, the bank is itself ""on the hook"" to its own investors for the money they lent you, and if you pay off early without any penalty, they no longer have your interest payments to cover their own, and they usually can't pay off early (bonds, which are shares of corporate debt, don't really work that way). The better option is to keep those scheduled payments coming to them, even if they lose a little off the top. Often if a homeowner is working with their current bank for a lower payment, no new loan is created, but the terms of the current loan are renegotiated; this is called a ""loan modification"" (especially when the Government is requiring the bank to sit down at the bargaining table), or in some cases a ""streamlining"" (if the bank and borrower are meeting in more amicable circumstances without the Government forcing either one to be there). Historically, the idea of giving a homeowner a break on their contractual obligations would be comical to the bank. In recent times, though, the threat of foreclosure (the bank's primary weapon) doesn't have the same teeth it used to; someone facing 30 years of budget-busting payments, on a house that will never again be worth what he paid for it, would look at foreclosure and even bankruptcy as the better option, as it's theoretically all over and done with in only 7-10 years. With the Government having a vested interest in keeping people in their homes, making whatever payments they can, to keep some measure of confidence in the entire financial system, loan modifications have become much more common, and the banks are usually amicable as they've found very quickly that they're not getting anywhere near the purchase price for these ""toxic assets"". Sometimes, a re-fi actually results in a higher APR, but it's still a better deal for the homeowner because the loan doesn't have other associated costs lumped in, such as mortgage insurance (money the guarantor wants in return for underwriting the loan, which is in turn required by the FDIC to protect the bank in case you default). The homeowner pays less, the bank gets more, everyone's happy (including the guarantor; they don't really want to be underwriting a loan that requires PMI in the first place as it's a significant risk). The U.S. Government is spending a lot of money and putting a lot of pressure on FDIC-insured institutions (including virtually all mortgage lenders) to cut the average Joe a break. Banks get tax breaks when they do loan modifications. The Fed's buying at-risk bond packages backed by distressed mortgages, and where the homeowner hasn't walked away completely they're negotiating mortgage mods directly. All of this can result in the homeowner facing a lienholder that is willing to work with them, if they've held up their end of the contract to date." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Why don't some places require a credit card receipt signature, and some do? | This is basically done to reduce costs and overhead, with agreement of the credit card issuers. When the card is physically present and the charge is low, the burden of keeping the signed receipts and of additional delays at the cash register is not worth the potential risk of fraud. Depending on the location and the specific charge-back history of the business, the limit above which signature is required differs. In one supermarket in the area I live they require signatures only on charges above $50. In another, 10 miles away from the first one, they require signatures on charges above $25. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What ETF best tracks the price of gasoline, or else crude oil? | There is no ETF that closely tracks oil or gasoline. This is because all existing oil and gasoline ETFs hold futures contracts or other derivatives. Storing the oil and gasoline would be prohibitively costly. Futures contracts are prone to contango and backwardation, sometimes resulting in large deviations from the price of the physical commodity. Contrast oil ETFs with metal ETFs, which track nicely. EDIT: See this article about contango. The UNG chart is particularly ugly. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Any extra fees charged by passive stock and bond ETFs on top of the standard fees? | Brokers will have transaction fees in addition to the find management fees, but they should be very transparent. Brokering is a very competitive business. Any broker that added hidden fees to their transactions would lose customers very quickly to other brokers than can offer the same services. Hedge funds are a very different animal, with less regulation, less transparency, and less competition. Their fees are tolerated because the leveraged returns are usually much higher. When times are bad, though, those fees might drive investors elsewhere. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Should the bank cover money lost due to an unsuccessful transfer? | Since the transaction was not your bank's mistake (but a decision by the Indian government) why should your bank bear the cost of the unsuccessful transaction? Your bank charged a fee for a service that you were willing to pay for. You might be able to negotiate a full or partial refund, and I have done the same with my own bank for fees that I didn't feel were appropriate. Your bank will agree or not based on how much they value your business. If you are an otherwise profitable customer, they may agree to refund the fee. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What's the fuss about Credit Score / History? | Simply staying out of debt is not a good way of getting a good credit score. My aged aunt has never had a credit card, loan or mortgage, has always paid cash or cheque for everything, never failed to pay her utility bills on time. Her credit score is lousy because she has never had any debts to pay off so there is no credit history data for her. To the credit checking agencies she barely exists. To get a good score (UK) then get a few debts and pay them off on time. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Can I use FOREX markets to exchange cash? | Because the standard contract is for 125,000 euros. http://www.cmegroup.com/trading/fx/g10/euro-fx_contractSpecs_futures.html You don't want to use Microsoft as an analogy. You want to use non financial commodities. Most are settled in cash, no delivery. But in the early 80's, the Hunt brothers caused a spectacular short squeeze by taking delivery sending the spot price to $50. And some businesses naturally do this, buying metal, grain, etc. no reason you can't actually get the current price of $US/Euro if you need that much. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Does cash back apply to online payments with credit card | "Retail purchases are purchases made at retail, i.e.: as a consumer/individual customer. That would include any ""standard"" individual expenditure, but may exclude wholesale sales or purchases from merchants who identify themselves as service providers to businesses. Specifics of these limitations really depend on your card issuer, and you should inquire with the customer service at what are their specific eligibility requirements. As an example, here in the US many cards give high cash-back for gasoline purchases, but only at ""retail"" locations. That excludes wholesale/club sellers like Costco, for example." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Are there any banks in Europe that I can have an account without being in that country? | Opening account in foreign bank is possible, but you must have strong proofs you use it for legitimate purposes. More chances to get an account if you visit Europe and able to stay, for example, for a week, to visit bank in person and wait for all the checks and approvals. Also keep in mind that there will be deposit/withdraw limits and fees applicable, that are significantly stricter and larger for non-EU citizen. In my opinion, if your amounts are not large, it might not worth it. If amounts are large, you might consider business account rather than personal, as is the example of strong proof I meant. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Is there a way to monitor when executives or leaders in a company sell off large holdings? | Exec Insiders have to file with the SEC and some sites like secform4.com track it. But many insiders have selling programs where the sell the same amount every month or quarter so you would have to do your homework to determine if there are real signals in the activity. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why is the breakdown of a loan repayment into principal and interest of any importance? | The breakdown between how much of your payment is going toward principal and interest is very important. The principal balance remaining on your loan is the payoff amount. Once the principal is paid off, your loan is finished. Each month, some of your payment goes to pay off the principal, and some goes to pay interest (profit for the bank). Using your example image, let's say that you've just taken out a $300k mortgage at 5% interest for 30 years. You can click here to see the amortization schedule on that loan. The monthly payment is $1610.46. On your first payment, only $360 went to pay off your principal. The rest ($1250) went to interest. That money is lost. If you were to pay off your $300k mortgage after making one payment, it would cost you $299,640, even though you had just made a payment of $1250. Interest accrues on the principal balance, so as time goes on and more of the principal has been paid, the interest payment is less, meaning that more of your monthly payment can go toward the principal. 15 years into your 30-year mortgage, your monthly payment is paying $762 of your principal, and only $849 is going toward interest. Your principal balance at that time would be about $203k. Even though you are halfway done with your mortgage in terms of time, you've only paid off about a third of your house. Toward the end of your mortgage, when your principal balance is very low, almost all of your payment goes toward principal. In the last year, only $513 of your payments goes toward interest for the whole year. You can think of your monthly loan payment as a minimum payment. If you continue to make the regular monthly payments, your mortgage will be paid off in 30 years. However, if you pay more than that, your mortgage will be paid off much sooner. The extra that you pay above your regular monthly payment all goes toward principal. Even if you have no plans to pay your mortgage ahead of schedule, there are other situations where the principal balance matters. The principal balance of your mortgage affects the amount of equity that you have in your home, which is important if you sell the house. If you decide to refinance your mortgage, the principal balance is the amount that will need to be paid off by the new loan to close the old loan. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What are the reasons to get more than one credit card? | |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Buy and sell stock at specific earnings | Enjoy the free trades as long as they last, and take advantage of it since this is no longer functionally a tax on your potential profits. On a side note, RobinHood and others in the past have roped customers in with low-to-zero fee trades before changing the business paradigm completely or ceasing operations. All brokers could be charging LESS fees than they do, but they get charged fees by the exchanges, and will eventually pass this down to the customer in some way or go bankrupt. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why must identification be provided when purchasing a money order? | The Bank Secrecy Act of 1970 requires that banks assist the U.S. Gov't in identifying and preventing money laundering. This means they're required to keep records of cash transactions of Negotiable Instruments, and report any such transactions with a daily aggregate limit of a value greater than (or equal to?) $10,000. Because of this, the business which is issuing the money order is also required to record this transaction to report it to the bank, who then holds the records in case FinCEN wants to review the transactions. EDITED: Added clarification on the $10,000 rule |
Share your insights or perspective on the financial matter presented in the input. | What are the financial advantages of living in Switzerland? | The cost of living is quite high in New York City. It has the highest CPI (Consumer Price Index) of any city in the U.S. Salaries also tend to be highest in NYC. Just about any bicycle lock sold in the U.S. has an exception in its warranty for NYC. It is the most populous American city. So, why do people deal with all the hassles of living here? Because, it is a hotbed of activity. I venture that the advantages are basically the same in Zurich: |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Best way to start investing, for a young person just starting their career? | "First off, I highly recommend the book Get a Financial Life. The basics of personal finance and money management are pretty straightforward, and this book does a great job with it. It is very light reading, and it really geared for the young person starting their career. It isn't the most current book (pre real-estate boom), but the recommendations in the book are still sound. (update 8/28/2012: New edition of the book came out.) Now, with that out of the way, there's really two kinds of ""investing"" to think about: For most individuals, it is best to take care of #1 first. Most people shouldn't even think about #2 until they have fully funded their retirement accounts, established an emergency fund, and gotten their debt under control. There are lots of financial incentives for retirement investing, both from your employer, and the government. All the more reason to take care of #1 before #2! Your employer probably offers some kind of 401k (or equivalent, like a 403b) with a company-provided match. This is a potential 100% return on your investment after the vesting period. No investment you make on your own will ever match that. Additionally, there are tax advantages to contributing to the 401k. (The money you contribute doesn't count as taxable income.) The best way to start investing is to learn about your employer's retirement plan, and contribute enough to fully utilize the employer matching. Beyond this, there are also Individual Retirement Accounts (IRAs) you can open to contribute money to on your own. You should open one of these and start contributing, but only after you have fully utilized the employer matching with the 401k. The IRA won't give you that 100% ROI that the 401k will. Keep in mind that retirement investments are pretty much ""walled off"" from your day-to-day financial life. Money that goes into a retirement account generally can't be touched until retirement age, unless you want to pay lots of taxes and penalties. You generally don't want to put the money for your house down payment into a retirement account. One other thing to note: Your 401K and your IRA is an account that you put money into. Just because the money is sitting in the account doesn't necessarily mean it is invested. You put the money into this account, and then you use this money for investments. How you invest the retirement money is a topic unto itself. Here is a good starting point. If you want to ask questions about retirement portfolios, it is probably worth posting a new question." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Foreign company incorporated in US and W9 | According to the W9 instructions you are considered a U.S. person if: According to the following section, it looks like a C corporation may be easier then an LLC: All of this information can be found here: http://www.irs.gov/pub/irs-pdf/fw9.pdf Hope this helps! |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What special considerations need to be made for a US citizen who wishes to purchase a house in Canada? | "About deducting mortgage interest: No, you can not deduct it unless it is qualified mortgage interest. ""Qualified mortgage interest is interest and points you pay on a loan secured by your main home or a second home."" (Tax Topic 505). According to the IRS, ""if you rent out the residence, you must use it for more than 14 days or more than 10% of the number of days you rent it out, whichever is longer."" Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, ""The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived."" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these cannot be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read the official publications and get professional tax advice. Here's an excerpt from Publication 856 - Foreign Tax Credit for Individuals: ""In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040)."" Note and disclaimer: Sources: IRS Tax Topic 505 Interest Expense, IRS Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) , IRS Topic 514 Foreign Tax Credit , and Publication 856 Foreign Tax Credit for Individuals" |
Share your insights or perspective on the financial matter presented in the input. | What effect would a company delisting from the LSE to move to china have on shareholders? | Source Rule 41 of the AIM Rules sets out the procedure for delisting. In summary, a company that wishes to cancel the right of any of its trading securities must: The notification to the Exchange should be made by the company’s nominated adviser and should be given at least 20 business days prior to the intended cancellation date (the 20 business days’ notice requirement is a minimum). Any cancellation of a company’s securities on AIM will be conditional upon seeking shareholder approval in general meeting of not less than 75% of votes cast by its shareholders present and voting (in person or by proxy) at the meeting. The notification to shareholders should set out the preferred date of cancellation, the reasons for seeking the cancellation (for example annual fees to the Exchange, the cost of maintaining a nominated adviser and broker, professional costs, corporate governance compliance, inability to access funds on the market), a description of how shareholders will be able to effect transactions in the AIM securities once they have been cancelled and any other matters relevant to shareholders reaching an informed decision upon the issue of the cancellation. Cancellation will not take effect until at least 5 business days after the shareholder approval is obtained and a dealing notice has been issued by the Exchange. It should be noted that there are circumstances where the Exchange may agree that shareholder consent is not required for the cancellation of admission of a company’s shares, for example (i) where comparable dealing facilities on an EU regulated market or AIM designated market are put in place to enable shareholders to trade their AIM securities in the future or (ii) where, pursuant to a takeover which has become wholly unconditional, an offeror has received valid acceptances in excess of 75% of each class of AIM securities. The company’s Nominated Adviser will liaise with the Exchange to secure a dispensation if relevant. So you should receive information from the company regarding the due process informing you about your options. |
Share your insights or perspective on the financial matter presented in the input. | How long should I keep my tax documents, and why? | How long you need to keep tax records will depend on jurisdiction. In general, if you discard records in a period of time less than your tax authority recommends, it may create audit problems down the road. ie: if you make a deduction supported by business expense receipts, and you discard those receipts next year, then you won't be able to defend the deduction if your tax authority audits you in 3 years. Generally, how long you keep records would depend on: (a) how much time your tax authority has to audit you; and (b) how long after you file your return you are allowed to make your own amendments. In your case (US-based), the IRS has straight-forward documentation about how long it expects you to keep records: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records Period of Limitations that apply to income tax returns Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Note that the above are the minimum periods to keep records; for your own purposes you may want to keep them for longer periods than that. For example, you may be in a position to discover that you would like to refile a prior tax return, because you forgot to claim a tax credit that was available to you. If you would have been eligible to refile in that period but no longer have documentation, you are out of luck. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Why are typical 401(k) plan fund choices so awful? | 401k choices are awful because: The best remedy I have found is to roll over to an IRA when changing jobs. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Making higher payments on primary residence mortgage or rental? | You're in the same situation I'm in (bought new house, didn't sell old house, now renting out old house). Assuming that everything is stable, right now I'd do something besides pay down your new mortgage. If you pay down the mortgage at your old house, that mortgage payment will go away faster than if you paid down the one on the new house. Then, things start to get fun. You then have a lot more free cash flow available to do whatever you like. I'd tend to do that before searching for other investments. Then, once you have the free cash flow, you can look for other investments (probably a wise risk) or retire the mortgage on your residence earlier. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | EIN for personal LLC: Is this an S-Corp? | Having an EIN does not make the LLC a corporation -- your business can have an EIN even when treated like a sole proprietorship. An EIN is required to have a Individual 401(k), for example. But you can still be an LLC, taxed as a sole proprietor, and have a 401(k). You would need to file a Form 2553 with the IRS to elect S Corporation status. If you don't do that, you're still treated as a disregarded LLC. Whether or not you should make the election is another question. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What are institutional investors? | "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." |
Share your insights or perspective on the financial matter presented in the input. | What is the added advantage of a broker being a member of NFA in addition to IIROC | "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." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | tax deduction for 30k loan | 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. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How much life insurance do I need? | "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!"" :-)" |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Is there a catch to offers of $100 when opening up a new checking account? | 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: |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What are online payment options with no chargeback protection? | 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. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Shorting: What if you can't find lenders? | "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." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Should I get an accountant for my taxes? | "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." |
Share your insights or perspective on the financial matter presented in the input. | What's the difference between TaxAct and TurboTax? | 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. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Do I need to pay tax on the amount of savings I have in the bank? | 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 |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | When are stock trade fees deducted? | 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. |
Share your insights or perspective on the financial matter presented in the input. | Where to categorize crypto-currencies | "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." |
Share your insights or perspective on the financial matter presented in the input. | How smart is it really to take out a loan right now? | 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. |
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