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Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Intrinsic value of non-voting shares which don't pay dividends | Even with non-voting shares, you own a portion of the company including all of its assets and its future profits. If the company is sold, goes out of business and liquidates, etc., those with non-voting shares still stand collect their share of the funds generated. There's also the possibility, as one of the comments notes, that a company will pay dividends in the future and distribute its assets to shareholders that way. The example of Google (also mentioned in the comments) is interesting because when they went to voting and non-voting stock, there was some theoretical debate about whether the two types of shares (GOOG and GOOGL) would track each other in value. It turned out that they did not - People did put a premium on voting, so that is worth something. Even without the voting rights, however, Google has massive assets and each share (GOOG and GOOGL) represented ownership of a fraction of those assets and that kept them highly correlated in value. (Google had to pay restitution to some shareholders of the non-voting stock as a result of the deviation in value. I won't get into the details here since it's a bit of tangent, but you could easily find details on the web.) |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How to shop for mortgage rates ? | I asked my realtor, but she recommends to go with just one banker (her friend), and not to do any rate shopping. You need a new realtor. Anyone who would offer such advice is explicitly stating they are not advocating on your behalf. I'd do the rate shopping first. When you make an offer, once it's accepted, time becomes critical. The seller expects you to go to closing in so many days after signing the P&S. The realtor is specifically prohibited from pushing a particular lender on you. She should know better. In response to comment - Rate Shopping can be as simple as making a phone call, and having a detailed conversation. Jasper's list can be conveyed verbally. Prequalification is the next step, where a bank actually writes a letter indicating they have a high confidence you will qualify for the loan. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Do you have to be mega-rich to invest in companies pre-IPO? | "Short answer: No. Being connected is very helpful and there is no consequence by securities regulators against the investor by figuring out how to acquire pre-IPO stock. Long answer: Yes, you generally have to be an ""Accredited Investor"" which basically means you EARN over $200,000/yr yourself (or $300,000 joint) and have been doing so for several years and expect to continue doing so OR have at least 1 million dollars of net worth ( this is joint worth with you and spouse). The Securities Exchange Commission and FINRA have put a lot of effort into keeping most classes of people away from a long list of investments." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Would it ever be a bad idea to convert a traditional IRA to a Roth IRA with the following assumptions? | Taking all your assumptions: With Roth, you take $6112 from work, (let's call you tax rate 10%) pay $612 in taxes, and contribute $5500 (the max if you are younger than 50). This $5500 will grow to $21,283 in 20 years at 7% annual growth ($5500*(1.07^20)), and you will pay no additional taxes on it. With the traditional IRA, you take $6112 from work, pay $612 in taxes, and contribute $5500. You will receive a tax deduction at tax time of $612 for the contribution. This money will also grow to $21,283. This will be taxed at your ordinary income rate (which we're calling 10%), costing you $2123 at the time of withdrawal. You will have $19,155 left over. EDIT: If you invest your tax savings from every contribution to the Traditional IRA, then the numbers wash out. Perhaps a pivotal question is whether you believe you will have greater taxable earnings from your investments in retirement than you have in taxable earnings today -- affecting the rate at which you are taxed. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Recommended education path for a future individual investor? | "For a job doing that kind of stuff, what is PREFERRED is 4 year undergrad at ivy league school + 2 year MBA at ivy league school, and then several more years of experience, which you can sort of get by interning while in school this will of course saddle you with debt, which is counterintuitive to your plans basically, the easy way up is percentage based compensation. without knowing the right people, you will get a piss poor salary regardless of what you do, in the beginning. so portfolio managers earn money by percentage based fees, and can manage millions and billions. real estate agents can earn money by percentage based commissions if they close a property and other business venture/owners can do the same thing. the problem with ""how to trade"" books is that they are outdated by the time they are published. so you should just stick with literature that teaches a fundamental knowledge of the products you want to trade/make money from. ultimately regardless of how you get/earn your initial capital, you will still need to be an individual investor to grow your own capital. this has nothing to do with being a portfolio manager, even highly paid individuals on wall street are in debt to lavish expenditures and have zero capital for their own investments. hope this helps, you really need to be thinking in a certain way to just quickly deduce good ideas from bad ideas" |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Investing in low cost index fund — does the timing matter? | If you're worried about investing all at once, you can deploy your starting chunk of cash gradually by investing a bit of it each month, quarter, etc. (dollar-cost averaging). The financial merits and demerits of this have been debated, but it is unlikely to lose you a lot of money, and if it has the psychological benefit of inducing you to invest, it can be worth it even if it results in slightly less-than-optimal gains. More generally, you are right with what you say at the end of your question: in the long run, when you start won't matter, as long as you continue to invest regularly. The Boglehead-style index-fund-based theory is basically that, yes, you might save money by investing at certain times, but in practice it's almost impossible to know when those times are, so the better choice is to just keep investing no matter what. If you do this, you will eventually invest at high and low points, so the ups and downs will be moderated. Also, note that from this perspective, your example of investing in 2007 is incorrect. It's true that a person who put money in 2007, and then sat back and did nothing, would have barely broken even by now. But a person who started to invest in 2007, and continued to invest throughout the economic downturn, would in fact reap substantial rewards due to continued investing throughout the post-2007 lows. (Happily, I speak from experience on this point!) |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Is it legal for a landlord to report a large payment to a tenant using Form 1099? | I believe it's not only legal, but correct and required. A 1099 is how a business reports payments to others, and they're required by the IRS to send them for payments of $600 or more (for miscalleneous payments like this). The payment is an expense to the landlord and income to you, and the 1099 is how that's documented (although note that if they don't send you a 1099, it's still income to you and you still need to report it as such). It's similar to getting a 1099-INT for interest payments or a 1099-DIV for dividend payments. You'll get a 1099-MISC for a miscellaneous payment. If you were an employee they'd send you a W-2, not a 1099. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Primerica: All it claims to be? | "Primerica's primary value proposition is that switching from whole or universal life to term life, and investing the difference is a good idea for most people. However, there are a number of other important factors to consider when purchasing life insurance, and I would also be wary of anyone claiming that one product will be the ""best"" for you under all circumstances. Best Insurance? Without getting into a much larger discussion on how to pick insurance companies or products, here are a few things that concern me about Primerica: They have a ""captive"" sales force, meaning their agents sell only Primerica products. This means that they are not shopping around for the best deal for you. Given how much prices on term life have changed in recent years, I would highly recommend taking the time to get alternate quotes online or from an independent broker who will shop around for you. Their staff are primarily part-time employees. I am not saying they are incompetent or don't care, just that you are more likely to be working with someone for whom insurance is not their primary line of work. If you have substantial reason to believe that you may someday need whole life, their products may not suit you well. Primerica does not offer whole life as far as I am aware, which also means that you cannot convert your term life policy through them to whole life should you need to do so. For example, if you experience an accident, are disabled, or have a significant change in your health status in the future and do not have access to a group life policy, you may be unable to renew your individual policy. Above Average Returns? I am also highly skeptical about this claim. The only possible context in which I could find this valid would be if they mean that your returns on average will be better if you invest in the stock market directly as compared to the returns you would get from the ""cash value"" portion of a life insurance product such as universal life, as those types of products generally have very high fees. Can you clarify if this is the claim that was made, or if they are promising returns above those of the general stock market? If it is the latter, run! Only a handful of superstar investors (think Warren Buffet, Peter Lynch, and Bill Gross) have ever consistently outperformed the stock market as a whole, and typically only for a limited period of time. In either case, I would have the same concerns here as stated in reasons #1 and #2 above. Even more so than with insurance, if you need investment advice, I'd recommend working with someone who is fully dedicated to that type of work, such as a fee-only financial planner (http://www.napfa.org/ is a good place to find one). Once you know how you want to invest, I would again recommend shopping around for a reputable but inexpensive broker and compare their fees with Primerica's. Kudos on having a healthy level of skepticism and listening to your gut. Also, remember that if you are not interested in their offer, you don't have to prove them wrong - you can simply say ""no thank you."" Best of luck!" |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Do retailers ever stock goods just to make other goods sell better? | "There's a concept in retail called a ""loss leader"", and essentially it means that a store will sell an item intentionally at a loss as a way of bringing in business in the hope that while consumers are in the store taking advantage of the discounted item, they'll make other purchases to make up for the loss and generate an overall profit. Many times it only makes sense to carry items that enhance the value of something else the store sells. Stores pay big money to study consumer behaviors and preferences in order to understand what items are natural fits for each other and the best ways to market them. A good example of what you're talking about is the fact that many grocery stores carry private label products that sell for higher margins, and they'll stock them alongside the name brands that cost much more. As a consequence (and since consumers often don't see a qualitative difference between store brands and name brands much of the time to rationalize spending more), the store's own brands sell better. I hope this helps. Good luck!" |
Share your insights or perspective on the financial matter presented in the input. | Which dividend bearing stock should be chosen by price? | Don't ever quantify a stock's preference/performance just based on the dividend it is paying out Volatility defined by movements in the the stock's price, affected by factors embedded in the stock e.g. the corporation, the business it is in, the economy, the management etc etc. Apple wasn't paying dividends but people were still buying into it. Same with Amazon, Berkshire, Google. These companies create value by investing their earnings back into their company and this is reflected in their share prices. Their earnings create more value in this way for the stockholders. The holding structures of these companies also help them in their motives. Supposedly $100 invested in either stocks. For keeping things easy, you invested at the same time in both, single annual dividend and prices more or less remain constant. Company A: $5/share at 20% annual dividend yield. Dividend = $20 Company B: $10/share at 20% annual dividend yield Dividend = $20 You receive the same dividend in both cases. Volatility willn't affect you unless you are trading, or the stock market tanks, or some very bad news comes out of either company or on the economy. Volatility in the long term averages out, except in specific outlier cases e.g. Lehman bankruptcy and the financial crash which are rare but do happen. In general case the %price movements in both stocks would more or less follow the markets (not exactly though) except when relevant news for either corporations come out. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | What does ES1 refer to in this picture? | ES1 is the Bloomberg symbol for the CME E-mini S&P 500 front-month continuous contract. ES2, ES3, etc. will likewise yield the 2nd and 3rd months. Which exact futures contract this symbol refers to will change about once a month. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Can a credit card company raise my rates for making a large payment? | "No. That's pretty unlikely. Card issuers typically base your rate on your credit score. Paying down debt reduces your percent of available credit used, and improves your score until you are in the 1-20% range. That's optimum. To this issuer, you are one of a million customers, there's no emotion in this, just numbers to them. For what it's worth, if a card issuer raises your rate, you are permitted to ""not accept"" the rate, stop using the card for new charges, and pay at the current rate. Of course this doesn't apply to zero interest deals, only to increases to your regular rate." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What tax advantage should I keep an eye for if I am going to relocate? | "Look for states that have no income tax. A lot of these states supplement their revenue with higher property taxes, but if you rent and do not own property in the state, then you will have no state tax liability. Similarly, many states treat capital gains no differently than income tax, so if you make your earnings due to a large nest egg, then way you will still incur no tax liability on the state level Look for ""unincorporated"" areas, as these are administrative divisions of states that do not have a municipal government, and as such do not collect local taxes. Look for economic development perks of the new jurisdiction. Many states have some kind of formal tax credit for people that start business or buy in certain areas, but MONEY TALKS and you can make an individual arrangement with any agency, municipality etc. If the secretary at city hall doesn't know about a prepackaged formal arrangement that is offered to citizens, then ask for the ""expedited development package"" which generally has a ""processing fee"" involved. This is something you make up ie. ""What is the processing fee for the expedited development package, quote on quote"" States like Maryland and Nevada have formalized this process, but you are generally paying off the Secretary of State for favorable treatment. You'll always be paying off someone." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What determines a tax resident in Florida | Plenty of retired people do stay in the US for longer than 60 days and don't pay taxes. In this IRS document 60 days stay appears to be the test for having a 'substantial presence' in the US, which is part of the test for determining residency. However the following is also written: Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States. In other words, if your property in the US is not your main one, you pay tax in another country, and you stay there less than half the year, you should be treated as a non-resident (I am not a lawyer and this is not advice). This IRS webpage describes the tax situation of nonresident aliens. As I understand it, if you are not engaged in any kind of business in the US and have no income from US sources then you do not have to file a tax return. You should also look into the subject of double tax agreements. If your home country has one, and you pay taxes there, you probably won't need to pay extra tax to the US. But again, don't take my word for it. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | At what point does it become worth it to file an insurance claim? | An article linked from cnn.com has some great advice, which I think are good rules of thumb. Also, at least my insurance gives a premium price for those who haven't filed a claim in 5 or more years for homeowners or rental insurance. See if you have a similar discount, will loose it, and guess how much that will cost you over 5 years. My rule of thumb: Your premium might go up quite a bit, possibly as much as triple, especially for a large claim. But, it is certainly worth it if you are going to get more than triple your premium through your claim. The worst case: Mortgage mandated insurance, which will be about triple your current cost. |
Share your insights or perspective on the financial matter presented in the input. | Do US banks exchange info with countries abroad? | Banks do not report transactions within accounts except as required by law, usually as part of anti-money-laundering efforts. Generally those involve tracking large cash transactions. As far as large payments go, there are two reasons they might be reported to the government: taxes, and criminal investigations. For tax purposes, if the payment is considered a salary or wage (that is, you are an employee of the company and the payment is for your time working there), then the company paying you is responsible for reporting the wage and withholding applicable taxes from your salary. If you are considered an independent contract employee, then you yourself will be responsible for reporting the income to the IRS and paying the applicable taxes yourself. In the second case, unless you are already under investigation, I wouldn't worry about it. Banks are very touchy about financial records being kept private, and won't release them without a subpoena. One caveat is that this is under US law. Banks which maintain branches in multiple countries must, of course, comply with all local laws in the jurisdiction where they do business. The take away from this is that Bank of America is unlikely to report a single deposit of $75,000 into your account to anyone on their own. If it is a paper check being deposited they will probably place a hold on it to make sure it clears, but that is all. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | I want to invest in Gold. Where do I go and buy it? | Without getting into whether you should invest in Gold or Not ... 1.Where do I go and make this purchase. I would like to get the best possible price. If you are talking about Physical Gold then Banks, Leading Jewelry store in your city. Other options are buying Gold Mutual Fund or ETF from leading fund houses. 2.How do I assure myself of quality. Is there some certificate of quality/purity? This is mostly on trust. Generally Banks and leading Jewelry stores will not sell of inferior purity. There are certain branded stores that give you certificate of authenticity 3.When I do choose to sell this commodity, when and where will I get the best cost? If you are talking about selling physical gold, Jewelry store is the only place. Banks do not buy back the gold they sold you. Jewelry stores will buy back any gold, however note there is a buy price and sell price. So if you buy 10 g and sell it back immediately you will not get the same price. If you have purchased Mutual Funds / ETF you can sell in the market. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why are credit cards preferred in the US? | There are several reasons why credit cards are popular in the US: On the other hand, debit cards do not have any of these going for them. A debit card doesn't make much money for the bank unless you overdraw or something, so banks don't have incentive to push you to use them as much. As a result they don't offer rewards other benefits. Some people say the ability to spend more than you have is a downside of a credit card. But it's really an upside. The behavior of doing that when it isn't needed is bad, but that's not the card's fault, it's the users'. You can get a credit card with a very small limit if this is an issue for you. The question I find interesting is why debit cards are more popular in your home country. I can't think of any advantage they offer besides free cash back. But most people in the US don't use cash much either. I have to think in your home country the banks have a different revenue model or perhaps your country isn't as eager to offer tons of easy credit to everyone as the US is. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Does it make sense to take out student loans to start an IRA? | Depending on the student loan, this may be improper usage of the funds. I know the federal loans I received years ago were to be used for education related expenses only. I would imagine most, if not all, student loans would have the same restrictions. Bonus Answer: You must have earned income to contribute to an IRA (e.g. money received from working (see IRS Publication 590 for details)). So, if your earmarked money is coming from savings only, then you would not be eligible to contribute. As far as whether you can designate student loans for the educational expenses and then used earned income for an IRA I would imagine that is fine. However, I have not found any documentation to support my assumption. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Are index trackers subject to insolvency risk? | The Financial Services Compensation Scheme says: Investments FSCS provides protection if an authorised investment firm is unable to pay claims against it. For example: for loss arising from bad investment advice, poor investment management or misrepresentation; when an authorised investment firm goes out of business and cannot return investments or money. Investments covered include: stocks and shares; unit trusts; futures and options; personal pension plans and long-term investments such as mortgage endowments. An index-tracking fund provided by an authorised investment firm would seem to qualify in the cases where: The critical points here then are: I can't find anything easily to hand about FSCS on Blackrock's website, so I would imagine that you'd need to consult the documentation on your investment product to be sure. |
Share your insights or perspective on the financial matter presented in the input. | Confused about employee stock options: How do I afford these? | ISOs (incentive stock options) can be closed out in a cashless transaction. Say the first round vests, 25,000 shares. The stock is worth $7 but your option is to buy at $5 as you say. The broker executes and sells, you get $50,000, with no up front money. Edit based on comment below - you know they vest over 4 years, but how long before they expire? It stands to reason the longer you are able to hold them, the better a chance the company succeeds, and the price rises. The article Understanding employer-granted stock options (PDF) offers a nice discussion of different scenarios supporting my answer. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | When's 0% financing the least costly (best) option? | A Lease is an entirely different way of getting a car. In two situations it makes sense, in all other scenarios it generally doesn't make sense to lease. In the case of always wanting a new car every 2 or 3 years it can make sense to lease. Of course if you drive more the allowed miles you will pay extra at the end of the lease. If you can take the monthly lease as a business expense leasing makes sense. Otherwise you want to pay cash, or get financing. Does zero percent make sense? Sometimes. The only way to make sense of the numbers is to start with your bank, have them approve of the loan first. Then armed with the maximum loan amount they will give you and the rate and the length of the loan, then visit the dealer. You have to run the numbers for your situation. It depends on your income, your other expenses, your credit score, your bank, what deal the dealership is running, how much you have for a down payment. Here is an example. For a recent loan situation I saw: 36 months, 1.49% rate, 20K loan, total interest paid: ~$466. Armed with that information can the person get a better deal at the dealership? There was only one way to find out. In that case the credit union was better. The rebate was larger than the interest paid. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | How can I find a checking account that allows for automated transfers of dynamic amounts? | Almost any financial institution has the technical ability to do this (simply called sweeps, auto sweeps, or deposit sweeps); the issue you face is finding an institution that is willing to do it for you. I think you will have the most luck at your primary financial institution where you currently keep the majority of your banking relationship. You will have better luck at small-town banks and credit unions. The mega banks will likely not waver from their established policies. Deposit sweeps are common for business accounts. They are usually tied to a savings account, which is usually held within the same institution, however this is not a requirement. The sweep can send money to any US bank if you can provide the routing number and account number. The sweep will establish a peg balance, or floor balance, on the checking account. At the end of the day, any amount above the peg is swept into the savings account automatically. I doubt you will find what you’re asking for within an online banking system. You will likely have to go into a branch and speak with a personal banker. Explain to them you want to establish a sweep on your checking account and want to send the funds to another financial institution. You will have better luck asking for a peg of $100, or some other small amount. They may not take your request seriously if you want to completely empty the checking account to zero. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How do third-party banks issue car loans? | I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Ordering From UK to Base Overseas - VAT exempt? | If you are an UK citizen and resident, then no. If you are an EU resident or non-EU resident then yes, but there are conditions. Source You can sometimes get VAT refunds on goods bought in the UK if you: You can’t get a VAT refund for: As bringing a laptop PCSpecialist is an online sale(I bought my desktop from them), I don't think you can claim VAT. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Bait-and-switch on new car lease | Within some limitations, the dealer is allowed to approve or deny lending to anyone that it chooses. Those constraints are the basics that you'd expect for any regulation in the US: Race Religion Nationality Sex Marital Status Age Source of income You can read more about them in this leaflet from the FDIC's Fair Lending Laws office. (Link is a pdf download.) As far as what to do in your mother's case, it sounds like it may be some slightly shady sales tactics, but it isn't entirely illegal... It's just annoying. One thing you could do to try to head off some of the crazy bait-and-switch sales tactics is to communicate with a handful of dealerships in your area about the specifics of your mother's profile as a purchaser. It's much harder to give someone the run-around if you have already agreed to something in principle by email. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why do cash back credit cards give a higher rate for dining and gasoline purchases? | These two categories ensure you will carry the card in your wallet (since they only work for physical locations), but don't tend to have excessive spending (most people maxing out at $200 or so per month, so $2 for the bonus). You then use the same card for other purchases, because you have it on you, where you only get the 1%. It worked for me, I started carrying the Amazon card when I found out it had a higher percentage for gas purchases. I only use it for gas though. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Does Edmunds get a kick-back from the use of Edmunds Price Promise? | Yes, Edmunds gets money from the dealerships in this program. According to this USA Today article from 2013, dealers pay Edmunds a monthly fee to participate in the program. This contrasts with TrueCar.com, a similar service, where dealers pay a fee for each sale. And yes, it is certainly possible to negotiate a lower price than the Edmunds Price Promise quote, if you enjoy haggling. The purpose of the program is not to get you the best price, just the easiest buying experience. From the USA Today article: Edmunds.com's price promise business model is designed to take the uncertainty out of pricing, speed up the buying process and also comes with the expectation that the customer will be given top-notch customer service. Dealers who have participated find that they are able to sell their cars for $300 to $500 more than consumers who go through the more traditional price quote request process. Customers, [Edmunds.com president and chief operating officer Seth] Berkowitz said, are willing to pay a little more than the best possible deal if they can save time, get great customer service and know they are getting a fair price. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Is it better to buy this used car from Craigslist or from a dealership? | "I do not think you are missing much. One thing you have right is low cost cars depreciate almost nothing. One thing you are missing is your satisfaction index. Driving a 200K car for 4 years requires a bit of motivation when your friends are driving new cars. Typically you need a larger goal to keep you focused. That might be saving money, getting out of debt, or obtaining an education. Buying a car from a private party, Craigslist is only one source, can save both parties money as the ""middle man"" is cut out. If you have the ability to do so, one can save a lot of money by doing your own brakes. The info is up on youtube, and I typically ""earn"" between 100-300/hour doing this work myself. Most of the time warranties do not pay off. At the core, they are insurance and insurance companies are in the business to make money. If your car is likely to need repairs a policy may be unattainable or very high in price." |
Share your insights or perspective on the financial matter presented in the input. | Escrow Removal Fee? | "Assume they do not overwithhold. You pay in $500/mo, and every time it hits $3000, they pay the tax. Engineers call this a sawtooth function, it looks like this. The average balance is not $3000, but close to $1500. The very simple math is $1500 * rate * years. It looks like your equation except it's not 58, it's just the years. And the question is whether you can make more than $850 on $1500 average before you sell. I wouldn't be so quick to plug in 29 years, as the average home ownership is 7 years, and depending, who knows if a refinance is in your future? The bottom line - How long would it take you to get a 57% return (2350/1500)? Ironically, the most responsible (and risk averse) person would say ""decades. Banks offer less than 1%."" even an 8% market return, while not guaranteed, is close to 7 years. But, if you carry 18% credit card debt, you can pay it down a bit each month and let it float back up every 6 months. Less than 4 years to break even." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why is Net Asset Value (NAV) only reported by funds, but not stocks? | The (assets - liabilities)/#shares of a company is its book value, and that number is included in their reports. It's easy for a fund to release the net asset value on a daily basis because all of its assets (stocks, bonds, and cash) are given values every day by the market. It's also necessary to have a real time value for a fund as it will be bought and sold every day. A company can't really do the same thing as it will have much more diverse assets - real estate, cars, inventory, goodwill, etc. The real time value of those assets doesn't have the same meaning as a fund; those assets are used to earn cash, while a fund's business is only to maximize its net asset value. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Are AAA private-sector corporate bonds safer than government bonds? | "If you are afraid of your government defaulting, then you also have reason to fear that your country's so-called ""AAA"" corporate bonds might not be a safe investment. When governments default, they often do things like: In these scenarios, it is not predictable whether government bonds will suffer more or less than any particular corporate bonds. You might want to diversify into precious metals, foreign currencies, and/or foreign securities. For the most security, you might want to choose investment vehicles that your government would have a hard time confiscating. Of course, you will face currency fluctuation risks if you do so." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Does the profit of a company directly affect its stock or indirectly by causing people to buy or sell? | The short answer to your question is yes. Company performance affects stock price only through investors' views. But note that selling for higher and lower prices when the company is doing well or poorly is not an arbitrary choice. A stock is a claim on the future cash flows of the firm, which ultimately come from its future profits. If the company is doing well, investors will likely expect that there will large cash flows (dividends) in the future and be willing to pay more to hold it (or require more to sell it). The price of a stock is equal what people think the future dividends are worth. If market participants started behaving irrationally, like not reacting to changes in the expected future cash flows, then arbitrageurs would make a ton of money trading against them until the situation was rectified. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How can I avoid international wire fees or currency transfer fees? | Be aware that ATM withdrawals often generate hidden fees, which are not obviously declared. Many banks operate e.g. with a currency exchange fee, giving you an exchange rate some 1-2% lower than actually applicable. If you withdraw larger amounts, such a currency exchange fee easily adds up to what you would have paid for a wire transfer, where you would get a better exchange rate. Although it's probably much hassle for you to change banks, another option may be to find a bank which operates both in France and the US. Banks with different national branches often offer cheap and fast wire transfers between same-bank accounts in different countries. E.g. Citibank used to offer such services, but I am not sure if they still serve private customers in France. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Do I not have a credit score? | Generally, if you have a loan, you have a credit score. But since you have never had a loan before, then it is likely that you do not have a credit score. You should not be worried if you aren't planning on applying for credit and/or loans. If you are wanting to purchase a house, car, or even just having a credit card, you should work on obtaining a secure loan so then you can establish history. Most of the time you have to pay to view your credit score. By law, you can obtain a free copy of your credit report, which it sounds like you have at annualcreditreport.com, which only shows your payment history, but in order to view your credit score, you generally have to pay for it. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | US sanctions against foreign citizens | "Are most big US based financial institutions and banks in such a close relationship with USCIS (United States Citizenship And Immigration Services) so they can easily request the information about market traders? Yes. They must be in order to enforce the laws required by the sanctions. What online broker would you suggest that probably won't focus on that dual citizenship matter? ""Dual"" citizenship isn't actually relevant here. Nearly anyone in the world can invest in US banks except for those few countries that the US has imposed sanctions against. Since you are a citizen of one of those countries, you are ineligible to participate. The fact that you are also a US citizen isn't relevant in this case. I believe the reasoning behind this is that the US doesn't encourage dual citizenship: The U.S. Government does not encourage dual nationality. While recognizing the existence of dual nationality and permitting Americans to have other nationalities, the U.S. Government also recognizes the problems which it may cause. Claims of other countries upon U.S. dual-nationals often place them in situations where their obligations to one country are in conflict with the laws of the other. In addition, their dual nationality may hamper efforts of the U.S. Government to provide consular protection to them when they are abroad, especially when they are in the country of their second nationality. If I had to guess, I'd say the thinking there is that if you (and enough other people that are citizens of that country) want to participate in something in the US that sanctions forbid, you (collectively) could try to persuade that country's government to change its actions so that the sanctions are lifted. Alternatively, you could renounce your citizenship in the other country. Either of those actions would help further the cause that the US perceives to be correct. What it basically boils down to is that even though you are a US citizen, your rights can be limited due to having another citizenship in a country that is not favorable in the current political climate. Thus there are pros and cons to having dual citizenship." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How to refuse a Clearxchange payment? | "Your bank uses ClearXchange, not you. It is not a website where you open an account, like many others, but an inter-bank transfer system based on email addresses, kind of like free wire transfers between everyone. You don't have to set anything up, just accept the payment, and the money appears in your account (assuming the client used the email address your bank has on file for you). However, if you still don't want it, you can just ignore it. There is a timeout when his transaction gets auto-cancelled, and he gets his money back. Here is an example text from the 'fine print' (my highlighting): ""[...]We will continue our attempts by sending a second notice of a transfer to the recipient, and providing the recipient a period of nine (9) succeeding Business Days to register in the Service, or the person-to-person payment service of clearXchange, Zelle or a Network Bank. At the end of this period, if the recipient still has not registered, the transfer request will be Cancelled. The sender may cancel the transfer at any time during this ten (10) day period if the recipient is not registered at the time of cancellation.[...]"" (https://chaseonline.chase.com/Public/Misc/LAContent.aspx?agreementKey=chasenet_la)" |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Is it correct to call an exchange-traded note a type of ETF? | They're exchange traded debt, basically, not funds. E.g. from the NYSE: An exchange-traded note (ETN) is a senior unsecured debt obligation designed to track the total return of an underlying market index or other benchmark, minus investor fees. Whereas an ETF, in some way or another, is an equity product - which doesn't mean that they can only expose you to equity, but that they themselves are a company that you buy shares in. FCOR for example is a bond ETF, basically a company whose sole purpose is to own a basket of bonds. Contrast that to DTYS, a bear Treasury ETN, which is described as The ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Also from Barclays site: Because the iPath ETNs are debt securities, they do not have any voting rights. FCOR on the other hand is some sort of company owned/managed by a Fidelity trust, though my EDGAR skills are rusty. AGREEMENT made this 18th day of September, 2014, by and between Fidelity Merrimack Street Trust, a Massachusetts business trust which may issue one or more series of shares of beneficial interest (hereinafter called the Trust), on behalf of Fidelity Corporate Bond ETF (hereinafter called the Fund), and Fidelity Investments Money Management, Inc., a New Hampshire corporation (hereinafter called the Adviser) as set forth in its entirety below. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why are banks providing credit scores for free? | I think the biggest reason is price; it's a lot cheaper now than it was to offer these. That's because for the most part, when you get a credit score for free, you're not getting a true FICO score. You're getting instead a VantageScore. VantageScore was created by the three credit bureaus, and as such they can offer it without paying Fair Isaac a licensing fee. That makes it a lot cheaper to offer, and while it's not absolutely identical to FICO (or more accurately to any of the FICO provided scores) it's close enough for most peoples' purpose. And of course undoubtedly Fair Isaac has some price pressure on their side now that Vantage is big enough that many people see them as fungible. As such they've had to make it easier, or they'd lose business - no longer being a monopolist. The other relevant piece here is that probably in many of these cases they're really just offering you what Experian would give you directly - so it's just a cross-marketing thing (where Experian, or perhaps another bureau, gets access to you as a customer so they can up-sell you ID theft insurance and whatnot, while the bank gets to offer the free score). |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Should I keep most of my banking, credit, and investment accounts at the same bank? | http://www.fdic.gov/deposit/deposits/index.html FDIC currently insures up to $250,000. (I would have put that as a comment to Jeffery but it says it was locked.) You don't want to put all your eggs in one basket. If you shop around, and keep shopping all the time you can keep your accounts in a single place so long as that single place provides the best deal. Don't have any loyalty to your banking institutions because they don't have any loyalty to you. Also, having lots of accounts means you are familiar with lots of institutions, so you are likely better at shopping around. Things I consider. For fewer institutions: For more institutions: |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Insurance broker - Online vs. physical location? | "Traditional insurance agent guy here. There is no right answer in my opinion because your individual needs cannot be generalized. There are a variety of factors that influence the price charged to you including but not limited to your past claims history, geographic location, credit profile, and the carrier's book of business itself. This is just a small sampling, in reality their pricing calculations may be far more complicated. The point is there is no one-size-fits all carrier. My agency works with 15 different carriers. Sometimes we can offer the best combination of coverage and cost to a prospective client that beats their existing coverage; other times we are nowhere close to being competitive. The most important thing you can do is find a person/site/company you can trust and one that does not take advantage of you. Insurance policies are complex and ""getting the best deal"" may oftentimes mean lessening coverage without realizing it. So I would recommend using whatever service channel (online, phone, local agent) that's most convenient and consultative for you. And otherwise, shop around once every year or two to make sure you're still getting the most for your money." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Are these scenarios considered as taxable income? | For case 1, there is no tax due as you sold the book for less than your cost basis. If you had sold for more than $100, then you would have had a profit. For case 2, that depends on the value of the gift card with respect to the value of your fare. Most likely that gift card is less than the cost of the fare. And in that case it would generally be treated as a reduction in the purchase price. The same way that rebates and cash back on credit card are treated. Note if for some reason a 1099 was generated that would change the situation and you would need to consult a tax professional. Since that would indicate that the other party to the transaction had a different view of the situation. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What home improvements are tax deductible? | In general, for a home you live in, there's maintenance, which is just that, you pay to keep your house in good repair. There's also real improvements. I spend $xxx to turn my poured cement basement into living space. Here, I keep my receipts and the cost (although not my labor) is added to the basis of my home when I sell. The couple things that may offer a deduction have to do with energy. When I insulated my basement, there was a state tax credit which I got back when I filed taxes. There are also credits for installing solar panels. What you've described in your question just sounds like one of the small joys of home ownership. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Receive money from US Client to Myself in India by selling services | You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income? |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Can a merchant charge you more in the US if you want to use a credit card? | "This isn't so much a legal issue, the prohibition on giving discounts was written into the merchant agreements that most of the major credit card companies enforced on businesses that accepted their credit cards. That is, until the recent Financial Reform Bill (2010) passed Congress. It changes everything. (The logic on this is a little convoluted, so read carefully) Credit card companies can no longer prohibit merchants from requiring a minimum purchase amount to use a credit card. Meaning: That if merchants want to, they can now stop taking credit cards for a $4 latte. Credit card companies can no longer prohibit merchants from giving discounts for cash. Here is an article with a lot more detail: Financial Reform Bill Good News for Credit Card Holders Here is a link to the actual bill details and content: HR 4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act Here is the relevant part: This subsection is supposed to take affect ""at the end of the 12-month period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010."" In other words, July 21st, 2011." |
Share your insights or perspective on the financial matter presented in the input. | How do you invest in real estate without using money? | I know this is broad, but this isn't a scam -- it's a workshop/educational thing about teaching people of investing in the real estate market, and how to profit The scam is that the free or cheap class doesn't give you enough info to make money; so they sell you a more advanced and expensive class that gets you almost enough info; but the goal of the 2nd class is to get you to pay for the specialized seminar and coaching sessions that either fail to materialize or are so basic they aren't worth the money. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How can I claim tax back from whilst I was working in Austria? | I don't have any specific situation on the situation in Austria, but in general there are a few things that you should keep in mind. First of all, the official website of the Austrian tax authorities appears to be this one: https://www.bmf.gv.at/steuern/startseite-steuern.html. There is an English page there, but it is mainly aimed at international businesses. The part about tax treaties may be relevant, though. The general procedure is outlined here: https://www.bmf.gv.at/steuern/startseite-steuern.html. Like I said in my comment, most information is likely only available in German. I would strongly advise to ask help from someone who speaks German and is familiar with the tax system in Austria. The main thing that you would have to do first is to check of which country you are a resident for tax purposes. This is usually the country in which you lived for more than 183 days in the past year. If you moved during the year, and had income from more than one country, you may have to file tax returns in both countries. There are tax treaties between Austria and the UK (and most other countries), so you would have to check those treaties to find out what gets taxed where. In principle you get taxed only once, but usually you would have to declare all income. The last important thing is of course to make sure you submit before the relevant deadlines. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Is a company allowed to give employees an option for a bonus to be paid out as a 401k match or cash? | "This has to do with the type of plan offered: is it a 401(k) plan or a profit-sharing plan, or both? If it's 401(k) I believe the IRS will see this distribution as elective and count towards the employee's annual elective contribution limit. If it's profit sharing the distribution would be counted toward the employer's portion of the limit. However -- profit sharing plans have a formula that's standard across the board and applied to all employees. i.e. 3% of company profits given equally to all employees. One of the benefits of the profit sharing plans is also that you can use a vesting schedule. I'd consult your accountant to see how this specifically impacts your business - but in the case you describe this sounds like an elective deferral choice by an employee and I don't see how (or why) you'd make this decision for them. Give them the bonus and let them choose how it's paid out. Edit: in re-reading your question it actually sounds like you're wanting to setup a profit sharing type situation - but again, heed what I said above. You decide the amount of ""profit"" - but you also have to set an equation that applies across the board. There is more complication to it than this brief explanation and I'd consult your accountant to see how it applies in your situation." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | What data does a seller receive when I pay by credit card? | It depends on the seller. If the seller wants, they can collect the information from you and send it to the payment gateway. In that case, they of course have everything that you provide at some point. They are not supposed to keep the security code, and there are rules about keeping the credit card number safe. The first four digits of the credit card number often indicate the bank, although smaller banks may share. But for example a Capital One card would indicate the bank. Other sellers work through a payment gateway that collects the information. Even there, the seller may collect most of the information first and send it to the gateway. In particular, the seller may collect name, email, phone, and address information. And in general the gateway will reveal that kind of information. They will not give the seller credit card info other than the name on the card, expiration date, and possible last four digits. They may report if the address matches the card's billing address (mismatched addresses may mean fraud). Buying through someone like PayPal can provide the least information. For a digital good, PayPal can only expose the buyer's name (which may be a business name) and email (associated with the payment account). However PayPal still has the other information and may expose it under legal action (e.g. if the credit card transaction is reversed or the good sold is illegal). And even PayPal will expose the shipping address for physical goods that require shipping. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Where can I find filings of HUD-1 statements? | "Three companies may have copies of it: the bank, the Title Company (aka settlement company), and perhaps the real estate agent. The bank (assuming you had a mortgage) is usually the easiest one to contact, as you're probably still making payments to them. They may have sent you the form in a large packet when you sold the house and paid off the old mortgage. There is a tradition of sending customers their entire mortgage file once they pay off the mortgage after 30 years - which is very rare nowadays but many banks still adhere to it because the mortgage business is built on momentum and very slow to change. Otherwise, the title company should have a copy of it. If you don't know which company was used, they should be named as Trustee on the Deed Of Trust (which in most states is the official name of the document that we call a ""mortgage""). The county recorder's office will have a copy of that Deed Of Trust on record if you can't find it anywhere. Some counties have digitized these so you could find it online, but some would require you to request a copy and pay a small printing fee for it." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How can you possibly lose on investments in stocks? | In your own example of VW, it dropped from its peak price of $253 to $92. If you had invested $10,000 in VW in April 2015, by September of that year it would have gone down to $3,600. If you held on to your investment, you would now be getting back to $6,700 on that original $10,000 investment. Your own example demonstrates that it is possible to lose. I have a friend who put his fortune into a company called WorldCom (one of the examples D Stanley shared). He actually lost all of his retirement. Luckily he made some money back when the startup we both worked for was sold to a much larger company. Unsophisticated investors lose money all the time by investing in individual companies. Your best bet is to start searching this site for answers on how to invest your money so that you can see actual strategies that reduce your investment risk. Here's a starting point: Best way to start investing, for a young person just starting their career? If you want to better illustrate this principle to yourself, try this stock market simulation game. |
Share your insights or perspective on the financial matter presented in the input. | What is a maximum amount that I can wire transfer out of US? | Chase has a limit of $500,000 per day. A banker should be able to help you determine any immediate tax liabilities that will arise as a direct result of the transaction. You may wish to consult with a tax professional about any indirect implications the transfer may have. This transaction will be reported to the government but assuming that you are not involved in any illegitimate activities the likelihood of the US government taking any action on the notice is incredibly low. I have heard of 7 and 14 day holds being placed on out of character transfers but if you are buying property you should work with your bank to help facilitate. Bankers understand the business and can help you avoid any appearances of impropriety that the government flags. Should your account be flagged, I would retain a lawyer immediately. If you feel you have a reason to be concerned, then I would contact a lawyer in the US and Thailand before initiating the transfer. As they say an ounce of prevention is worth a pound of cure. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How does remittance work? How does it differ from direct money transfer? | "The Option 2 in your answer is how most of the money is moved cross border. It is called International Transfer, most of it carried out using the SWIFT network. This is expensive, at a minimum it costs in the range of USD 30 to USD 50. This becomes a expensive mechanism to transfer small sums of money that individuals are typically looking at. Over a period of years, the low value payments by individuals between certain pair of countries is quite high, example US-India, US-China, Middle-East-India, US-Mexico etc ... With the intention to reduce cost, Banks have built a different work-flow, this is the Option 1. This essentially works on getting money from multiple individuals in EUR. The aggregated sum is converted into INR, then transferred to partner Bank in India via Single SWIFT. Alongside the partner bank is also sent a file of instructions having the credit account. The Partner Bank in India will use the local clearing network [these days NEFT] to credit the funds to the Indian account. Option 3: Other methods include you writing a check in EUR and sending it over to a friend/relative in India to deposit this into Indian Account. Typically very nominal costs. Typically one month of timelines. Option 4: Another method would be to visit an Indian Bank and ask them to issue a ""Rupee Draft/Bankers Check"" payable in India. The charges for this would be higher than Option 3, less than Option 1. Mail this to friend/relative in India to deposit this into Indian Account. Typically couple of days timelines for transfer to happen." |
Share your insights or perspective on the financial matter presented in the input. | How do taxes work with donations made to an individual, e.g. for free software I wrote? | Do I report it as income? Is it subject to just the same amount of taxes (~30%) as regular income? Are there any restrictions on how it can be used? It is income. You can deduct the costs of maintaining the web page and producing the software from it (have an accountant do that for you, there are strict rules on how to do that, and you can only deduct up to the income if its a hobby and not a for-profit business), but otherwise it's earned income like any other self employment income. It is reported on your schedule C or on line 21 of your 1040 (miscellaneous income), and you're also liable for self-employment taxes on this income. There are no restrictions, it's your money. Technically, who is the donation even being made to? Me, just because I own the webpage? Yes. This is for the United States, but is there any difference if the donations come from overseas? No, unless you paid foreign taxes on the money (in which case you should fill form 1116 and ask for credit). If you create an official 501(c) organization to which the donations are given, instead of you getting it directly, the tax treatment will be different. But of course, you have to have a real charitable organization for that. To avoid confusion - I'm not a licensed tax professional and this is not a tax advice. If in doubt - talk to a EA/CPA licensed in your State. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Why is company provided health insurance tax free, but individual health insurance is not? | During World War II, the United States (US) instituted wage and price controls. To attract better employees, companies would offer benefits to get around salary limits. Health insurance was one of the more successful benefits. At that time, income taxes were newer and there were many ways to evade them. Companies could generally deduct expenses. So at that time, health care was deductible because everything was. And at that time, only wages were taxable compensation from employer to employee. Since that time, many other benefits have become non-deductible for employers, e.g. housing or the reduced deduction for meals and entertainment. But health care is generally regarded as different, as a necessity. While everyone needs to eat, not everyone needs to eat at a $100 a meal restaurant. People who need expensive health care really need it. People who eat expensive food just prefer it. And of course, health care is more intermittent where food is relatively consistent. You don't need ten thousand calories one day and zero the next. But some families have no health care expenses in a year while another might have cancer or a pregnancy. Note that medical care expenses can be deducted for individuals if they are large enough in aggregate and you itemize. And of course both businesses and workers have incentives to maintain the current system with deductibility. Health insurance is a common benefit. Housing is not (although it's worth noting that travel housing and meals are deductible). So there have been few people impacted by making housing taxable while many people would be impacted by taxable health insurance. You can deduct health insurance costs if self-employed. It's also not true that health insurance is the only benefit with preferential tax treatment. Retirement and child care are also deductible. Even meals and housing can be deducted in certain circumstances. The complex rules about what and how much is deductible. There have been rumbles about normalizing the tax treatment of health insurance and medical care, but there is a lot of opposition. Insurance companies oppose making all healthcare expenses deductible, as that reduces their effective benefit. They would prefer only insurance premiums be deductible. Traditionally employed individuals oppose making health insurance taxable, as that would increase their taxes. So the situation persists. There isn't quite enough support to move in either direction, although the current compromise is economically silly. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Should you co-sign a personal loan for a friend/family member? Why/why not? | "My thoughts on loaning money to friends or family are outlined pretty extensively here, but cosigning on a loan is a different matter. It is almost never a good idea to do this (I say ""almost"" only because I dislike absolutes). Here are the reasons why: Now, all that said, if my sister or parents were dying of cancer and cosigning a loan was the only way to cure them, I might consider cosigning on a loan with them, if that was the only option. But, I would bet that 99.9% of such cases are not so dire, and your would-be co-borrower will survive with out the co-signing." |
Share your insights or perspective on the financial matter presented in the input. | What can I replace Microsoft Money with, now that MS has abandoned it? | I've been budgeting with MS Money since 2004 and was pretty disappointed to hear it's being discontinued. Budgeting is actually a stress-relieving hobby for me, and I can be a bit of a control-freak when it comes to finances, so I decided to start early looking for a replacement rather than waiting until MS Money can no longer download transactions. Here are the pros and cons of the ones I've tried (updated 10/2010): You Need A Budget Pro (YNAB) - Based on the old envelopes system, YNAB has you allot money from each paycheck to a specific budget category (envelope). It encourages you to live on last money's income, and if you have trouble with overspending, that can be a great plan. Personally, I'm a big believer in the envelope concept, so that's the biggest pro I found. Also, it's a downloaded software, so once I've bought it (for about $50) it's mine, without forced upgrades as far as I've seen. The big con for me was that it does not automatically download transactions. I would have to sign on to each institution's website and manually download to the program. Also, coming from Money, I'm used to having features that YNAB doesn't offer, like the ability to store information about my accounts. Overall, it's forward-thinking and a good budgeting system, but will take some extra time to download transactions and isn't really a comprehensive management tool for all my financial needs. You can try it out with their free trial. Mint - This is a free online program. The free part was a major pro. It also looks pretty, if that's important to you. Updating is automatic, once you've got it all set up, so that's a pro. Mint's budgeting tools are so-so. Basically, you choose a category and tell it your limit. It yells at you (by text or email) when you cross the line, but doesn't seem to offer any other incentive to stay on budget. When I first looked at Mint, it did not connect with my credit union, but it currently connects to all my banks and all but one of my student loan institutions. Another recent improvement is that Mint now allows you to manually add transactions, including pending checks and cash transactions. The cons for me are that it does not give me a good end-of-the-month report, doesn't allow me to enter details of my paychecks, and doesn't give me any cash-flow forecasting. Overall, Mint is a good casual, retrospective, free online tool, but doesn't allow for much planning ahead. Mvelopes - Here's another online option, but this one is subscription-based. Again, we find the old envelopes system, which I think is smart, so that's a pro for me. It's online, so it downloads transactions automatically, but also allows you to manually add transactions, so another pro. The big con on this one is the cost. Depending on how you far ahead you choose to pay (quarterly, yearly or biannually), you're paying $7.60 to $12 per month. They do offer a free trial for 14 days (plus another 14 days offered when you try to cancel). Another con is that they don't provide meaningful reports. Overall, a good concept, but not worth the cost for me. Quicken - I hadn't tried Quicken earlier because they don't offer a free trial, but after the last few fell short, I landed with Quicken 2009. Pro for Quicken, as an MS Money user is that it is remarkably similar in format and options. The registers and reports are nearly identical. One frustration I'd had with Money was that it was ridiculously slow at start-up, and after a year or so of entering data, Quicken is dragging. Con for Quicken, again as an MS Money user, is that it's budgeting is not as detailed as I would like. Also, it does not download transactions smoothly now that my banks all ask security questions as part of sign-in. I have to sign in to my bank's website and manually download. Quicken 2011 is out now, but I haven't tried it yet. Hopefully they've solved the problem of security questions. Quicken 2011 promises an improved cash-flow forecast, which sounds promising, and was a feature of MS Money that I have very much missed. Haven't decided yet if it's worth the $50 to upgrade to 2011. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Idea for getting rich using computers to track stocks | The main reason I'm aware of that very few individuals do this sort of trading is that you're not taking into account the transaction costs, which can and will be considerable for a small-time investor. Say your transaction costs you $12, that means in order to come out ahead you'll have to have a fairly large position in a given instrument to make that fee back and some money. Most smaller investors wouldn't really want to tie up 5-6 figures for a day on the chance that you'll get $100 back. The economics change for investment firms, especially market makers that get special low fees for being a market maker (ie, offering liquidity by quoting all the time). |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Why do only motor insurers employ “No Claims Discounts”? | "Some people are better drivers than others. A collision can happen to anybody, even good drivers. The collision might not be your fault at all; it might be entirely the fault of the other party. However, the best drivers do a better job of avoiding collisions in situations where the other drivers on the road are doing the wrong things. The ""no claims discount"" is a way to identify and reward those good drivers, as they have a lower likelihood of claims in the future." |
Share your insights or perspective on the financial matter presented in the input. | Renting from self during out of area remodel project - deductible? | There are certain situations where you could legally pay yourself rent, but it'd be in the context of multiple business entities interacting, never in the context of an individual renting their own property. Even if you could, any rent paid to yourself would count as rental income, so there'd be no benefit. Edit: I was hunting for examples where it might be acceptable, and didn't, but I found a good explanation as to why it is not acceptable from Brandon Hall on a BiggerPockets post: To get technical, you will be going up against the Economic Substance Doctrine which states that a transaction has economic substance if: (1) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position; and (2) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction. By transferring your primary residence into a LLC, you would not be changing your economic position. Further, you do not have a substantial purpose for entering into such transaction other than to simply avoid paying federal income taxes. So it might make sense if multiple people owned the LLC that owned the property you wanted to rent, and there are instances where company X owns holding company Y that owns an office building that company X rents space in. But if you're the sole player in the LLC's then it sounds like a no-go. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why do governments borrow money instead of printing it? | "Governments borrowing money doesn't create new money. When banks ""borrow"" money (i.e. take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. If everyone did actually ask for their money back at once, the illusion of the extra money created by this process would collapse, and the bank would go bust. In contrast when governments borrow money, the loan isn't repayable on demand, it has a fixed maturity and the money is only repaid at the end of that period (plus interest at defined points during the period). So holders of government debt don't have money they can spend (they can turn it into money they can spend but only by finding someone else to buy it). So government debt doesn't create inflation in itself. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | When you pay off a loan early, you pay the remaining principal, and you save all of the remaining interest. So you do save on interest, but it's the interest you would have paid in the future, not the interest you have paid in the past. (Your remaining balance when you pay off the loan only includes the principal, not the projected interest.) Interest is a factor of the amount borrowed, the interest rate and the amount of time you borrow the money. The sooner you repay the money, the less interest you pay. Imagine if you had taken a 30 year loan at 4% interest but were allowed to make no payments until the loan term ended. If you waited 15 years to make your first payment, you wouldn't owe the same money as if you'd made payments every month. No, instead of owing ~$64k, you'd owe ~$182k, because you had borrowed $100k for 15 years (plus the interest due) rather than borrowing a declining sum. So that's why you don't get a refund on interest for previous months. If you had started with a 16 year loan, then you would have been paying more principal every month, and your monthly amount due would have been higher to reflect that. As you paid the principal off faster, the interest each month would drop faster. Paying a huge portion of the principal at the end of the loan is not the same as steadily paying it down in the same time frame. You will pay a lot more interest in the former case, and rightfully so. It might help to consider a credit card payment in comparison. If you run up a balance and pay only the minimum each month, you pay a lot of interest over time, because your principal goes down slowly. If you suddenly pay off your credit card, you don't have to pay any more interest, but you also don't get any interest back for previous months. That's because the interest accrued each month is based on your current balance, just like your mortgage. The minimum payments are calculated differently, but the interest accrued each month uses essentially the same mechanism. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why do card processing companies discourage “cash advance” activities | "This is most likely protecting Square's relationship with Visa/Mastercard/AMEX/etc. Credit card companies typically charge their customers a much higher interest rate with no grace period on cash advances (withdrawals made from an ATM using a credit card). If you use Square to generate something that looks like a ""merchandise transaction"" but instead just hand over a wad of banknotes, you're forcing the credit card company to apply their cheaper ""purchases"" interest rate on the transaction, plus award any applicable cashback offers†, etc. Square would absolutely profit off of this, but since it would result in less revenue for the partner credit card companies, that would quickly sour the relationship and could even result in them terminating their agreements with Square altogether. † This is the kind of activity they are trying to prevent: 1. Bill yourself $5,000 for ""merchandise"", but instead give yourself cash. 2. Earn 1.5% cashback ($75). 3. Use $4,925 of the cash and a $75 statement credit to pay your credit card statement. 4. Pocket the difference. 5. Repeat. Note, the fees involved probably negate any potential gain shown in this example, but I'm sure with enough creative thinking someone would figure out a way to game the system if it wasn't expressly forbidden in the terms of service" |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What is the difference between a check and a paycheck? | "A paycheck is simply a check for your salary. It's just like a rent check, or a birthday check, or a grocery check... I've had ""paychecks"" that were personal checks from the owner of the business, I've had ones that are printed in the office I worked in and signed right there, and I've had paychecks that are printed through a third party company and mailed to me (my favorite, of course, is to forgo the ""paycheck"" entirely and get direct deposit :) ). Really, they're all just checks. Although that's a little disingenuous, because banks are often slightly more trusting of paychecks. However, this has little to do with it being a ""paycheck,"" per se, and more to do with the fact that they see you getting the same check for (roughly) the same amount on a regular basis; having seen you get a paycheck for the same amount from the same company for the last 12 months, there is less risk of the check bouncing or being returned unpaid, so you can often get banks to waive their hold policy and just give you the money." |
Share your insights or perspective on the financial matter presented in the input. | What's the process to buy an old house to tear it down and create a new one? | By process, I assume you mean the financial process. Financially, this doesn't look any different to me than buying an empty lot to build a rental unit, with the added expense (potentially significant) of doing the tear-down. Given your lack of experience and capital, I would be very hesitant to jump in like this. You are going to have to spend a lot of time managing the build process, or pay someone else to do it for you. And expect everything to take twice as long and cost twice as much as you expect. If you really want to get into the landlord business, I would suggest starting with a structurally sound building that needs some renovation work and start there. One you have that up and running, you can use the cash flow and equity to finance something more aggressive. If you still think you want to do this, the first thing to do is figure out if the financials make sense. How much will it cost to do the tear-down and rebuild, plus the typical rental expenses:ongoing maintenance, taxes, insurance, vacancy rates and compare that to the expected rental rates in the area to see how long it will take to 1) achieve a positive cash flow, and 2) break even. There are a lot of good questions on this site related to rentals that go into much more detail about how to approach this. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How to take advantage of home appreciation | "Assuming ""take advantage"" means continue to build wealth, as opposed to blow it all on a fancy holiday... Downgrade As you already note, you could downgrade/downsize. This could happen via moving to a smaller house in the same area, or moving to an area where the cost of buying is less. HELOC Take out a Home Equity Line of Credit. You could use the line of credit to do home improvements further boosting the asset value (forced appreciation, assuming the appreciation to date is simply market based). Caution is required if the house has already appreciated ""considerably"" - you want to keep the home value within tolerance levels for the area. (Best not to have the only $300K house on a street of $190K-ers...) Home Equity Loan Assuming you have built up equity in the house, you could leverage that equity to purchase another property. For most people this would form part of the jigsaw for getting the financing to purchase again." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Got charged ridiculous amount for doctor's walk in visit. What are my options? | You should start by calling the clinic and asking them to tell you how the visit was coded. Some clinics have different billing codes based on the complexity of the visit. If you have one thing you are seeing the doctor about, that could be coded differently than if you have 4 things you are seeing the doctor about. In fact, even if you are there just for one ailment, but while you are there you happen to ask a few quick questions about other possible ailments, the doctor could decide to use the billing code for the higher complexity. If when speaking to the billing department it is determined that the visit is using a higher complexity billing code (and a higher charge as a result), you could then request that it be re-coded with the lower complexity visit. Realize if you request that they will probably have to first get approval from the doctor that saw you. Note: I am basing this answer on first hand experience about 6 months ago in Illinois, where the situation I described happened to me because I asked some unrelated questions about other possible ailments at the end of a visit to an after hours clinic. The billing department explained that my visit was coded for 4 issues. (3 of them were quick questions I asked about at the end of the visit, one of which she referred me to another doctor. My additional questions probably extended the visit by 3-4 minutes.) In my case I never got the bill reduced, mainly due to my own laziness and my knowing that I would hit my deductible anyway this year. Of course I can't say for sure if this is what happened in your case, or even if this practice is widespread. This was the first and only time in my life that I encountered it. As a side note, your primary doctor would likely rarely ever bill you for a more complex visit, as it likely wouldn't lead to much repeat business. As for your last question regarding your credit: if the provider decides to lower the price, and you pay the lower price, this in no way can affect your credit. Surprising Update: When I called the billing office months ago, I had asked if they could confirm the code with the doctor, and I was told they would look into it. I never heard back, never followed up, and assumed that was the end of it. Well, today I got a call back (months later) and was informed that they had re-coded the visit which will result in a lower charge! It's still pending the insurance adjustment but at some point in the future I expect to receive either a credit on my next statement or a check in the mail. (The price difference pre-insurance in my case has gone from $359 to $235.) Update: I did receive a check for the difference. The check was dated July 20, 2016, which is just over 2 months after the phone call informing me I would receive it. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Are parking spaces and garage boxes a good investment? | If the company that owns the lot is selling them it is doing so because it feels it will make more money doing so. You need to read carefully what it is you are getting and what the guarantees are from the owner of the property and the parking structure. I have heard from friends in Chicago that said there are people who will sell spaces they do not own as a scam. There are also companies that declare bankruptcy and go out of business after signing long term leases for their spots. They sell the lot to another company(which they have an interest in) and all the leases that they sold are now void so they can resell the spots. Because of this if I were going to invest in a parking space, I would make sure: The company making the offer is reputable and solvent Check for plans for major construction/demolition nearby that would impact your short and long term prospects for rent. Full time Rental would Recoup my investment in less than 5 years. Preferably 3 years. The risk on this is too high for me with out that kind of return. |
Share your insights or perspective on the financial matter presented in the input. | Why would a public company not initiate secondary stock offerings more often? | Selling stock means selling a portion of ownership in your company. Any time you issue stock, you give up some control, unless you're issuing non-voting stock, and even non-voting stock owns a portion of the company. Thus, issuing (voting) shares means either the current shareholders reduce their proportion of owernship, or the company reissues stock it held back from a previous offering (in which case it no longer has that stock available to issue and thus has less ability to raise funds in the future). From Investopedia, for exmaple: Secondary offerings in which new shares are underwritten and sold dilute the ownership position of stockholders who own shares that were issued in the IPO. Of course, sometimes a secondary offering is more akin to Mark Zuckerberg selling some shares of Facebook to allow him to diversify his holdings - the original owner(s) sell a portion of their holdings off. That does not dilute the ownership stake of others, but does reduce their share of course. You also give up some rights to dividends etc., even if you issue non-voting stock; of course that is factored into the price presumably (either the actual dividend or the prospect of eventually getting a dividend). And hopefully more growth leads to more dividends, though that's only true if the company can actually make good use of the incoming funds. That last part is somewhat important. A company that has a good use for new funds should raise more funds, because it will turn those $100 to $150 or $200 for everyone, including the current owners. But a company that doesn't have a particular use for more money would be wasting those funds, and probably not earning back that full value for everyone. The impact on stock price of course is also a major factor and not one to discount; even a company issuing non-voting stock has a fiduciary responsibility to act in the interest of those non-voting shareholders, and so should not excessively dilute their value. |
Share your insights or perspective on the financial matter presented in the input. | How To Assign Payments Received Properly In GnuCash? | "When I receive a check from a customer whom I previously sent an invoice, I go to the customer report for that customer, click on the link ""Invoice"" for that invoice, then click on the Pay Invoice button (very far right side). I then do a customer report and see that there is no balance (meaning all the invoices have been paid). I don't process invoices using the same method you do. Instead I go to Business -> Customer -> Process Payment. From there I can select the applicable customer, and a list of unpaid invoices will come up. I've never experienced the issue you've described. On a related topic: are you posting your invoices? From experience that has caused issues for me; when you post the invoice it should show up in your Accounts Receivable (or whichever account you've designated), and after you process the payment the A/R should go down accordingly. When posting your invoice, you specify which account it gets posted to: So that account should show a balance once you have posted it: Then, when a client pays you, your cash will go up, and A/R will go down." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Will my Indian debit card work in the U.S.? | Debit cards with the Visa or Mastercard symbol on them work technically everywhere where credit cards work. There are some limitations where the respective business does not accept them, for example car rentals want a credit card for potential extra charges; but most of the time, for day-to-day shopping and dining, debit cards work fine. However, you should read up the potential risks. A credit card gives you some security by buffering incorrect/fraudulent charges from your account, and credit card companies also help you reverse incorrect charges, before you ever have to pay for it. If you use a debit card, it is your money on the line immediately - any incorrect charge, even accidential, takes your money from your account, and it is gone while you work on reversing the charge. Any theft, and your account can be cleaned out, and you will be without money while you go after the thief. Many people consider the debit card risk too high, and don't use them for this reason. However, many people do use them - it is up to you. |
Share your insights or perspective on the financial matter presented in the input. | How to read a balance sheet to determine if a company has enough money to keep paying their employees? | "I heard today while listening to an accounting podcast that a balance sheet... can be used to determine if a company has enough money to pay its employees. The ""money"" that you're looking at is specifically cash on the balance sheet. The cash flows document mentioned is just a more-finance-related document that explains how we ended at cash on the balance sheet. ...even looking for a job This is critical, that i don't believe many people look at when searching for a job. Using the ratios listed below can (and many others), one can determine if the business they are applying for will be around in the next five years. Can someone provide me a pair of examples (one good)? My favorite example of a high cash company is Nintendo. Rolling at 570 Billion USD IN CASH ALONE is astonishing. Using the ratios we can see how well they are doing. Can someone provide me a pair of examples (one bad)? Tesla is a good example of the later on being cash poor. Walk me though how to understand such a document? *Note: This question is highly complex and will take months of reading to fully comprehend the components that make up the financial statements. I would recommend that this question be posted completely separate." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | What are the advantages and disadvantages of leasing out a property or part of a property (such as a basement apartment)? | "The obvious advantage is turning your biggest liability into an income-generating asset. The downside are: (1), you have to find tenants (postings, time to show the place, credit/background check, and etc) (2), you have to deal with tenants (collection of rent, repairs of things that broke by itself, complaints from neighbors, termination, and etc) (3), you have to deal with the repairs In many ways, it's no different from running another (small) business, so it all boils down to how much time you are willing to invest and how handy you are in doing reno's and/or small repairs around the house. For profitability/ROI analysis, you want to assume collection of 11 months of rent per year (i.e. assume tenant doesn't renew after year, so you have the worst case scenario) and factor in all the associated expense (be honest). Renting out a second property is a bit tricky as you often have to deal with a large operating expense (i.e. mortgage), and renting a basement apartment is not bad financially and you will have to get used to have ""strangers"" downstairs." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How do I enter Canadian tax info from US form 1042-S and record captial gains from cashing in stock options? | I can't give you a specific answer because I'm not a tax accountant, so you should seek advice from a tax professional with experience relevant to your situation. This could be a complicated situation. That being said, one place you could start is the Canada Revenue Agency's statement on investment income, which contains this paragraph: Interest, foreign interest and dividend income, foreign income, foreign non-business income, and certain other income are all amounts you report on your return. They are usually shown on the following slips: T5, T3, T5013, T5013A To avoid double taxation, Canada and the US almost certainly have a foreign tax treaty that ensures you are only taxed in your country of residence. I'm assuming you're a resident of Canada. Also, this page states that: If you received foreign interest or dividend income, you have to report it in Canadian dollars. Use the Bank of Canada exchange rate that was in effect on the day you received the income. If you received the income at different times during the year, use the average annual exchange rate. You should consult a tax professional. I'm not a tax professional, let alone one who specializes in the Canadian tax system. A professional is the only one you should trust to answer your question with 100% accuracy. |
Share your insights or perspective on the financial matter presented in the input. | What does Capital Surplus mean? | "I think it's easiest to illustrate it with an example... if you've already read any of the definitions out there, then you know what it means, but just don't understand what it means. So, we have an ice cream shop. We started it as partners, and now you and I each own 50% of the company. It's doing so well that we decide to take it public. That means that we will be giving up some of our ownership in return for a chance to own a smaller portion of a bigger thing. With the money that we raise from selling stocks, we're going to open up two more stores. So, without getting into too much of the nitty gritty accounting that would turn this into a valuation question, let's say we are going to put 30% of the company up for sale with these stocks, leaving you and me with 35% each. We file with the SEC saying we're splitting up the company ownership with 100,000 shares, and so you and I each have 35,000 shares and we sell 30,000 to investors. Then, and this depends on the state in the US where you're registering your publicly traded corporation, those shares must be assigned a par value that a shareholder can redeem the shares at. Many corporations will use $1 or 10 cents or something nominal. And we go and find investors who will actually pay us $5 per share for our ice cream shop business. We receive $150,000 in new capital. But when we record that in our accounting, $5 in total capital per share was contributed by investors to the business and is recorded as shareholder's equity. $1 per share (totalling $30,000) goes towards actual shares outstanding, and $4 per share (totalling $120,000) goes towards capital surplus. These amounts will not change unless we issue new stocks. The share prices on the open market can fluctuate, but we rarely would adjust these. Edit: I couldn't see the table before. DumbCoder has already pointed out the equation Capital Surplus = [(Stock Par Value) + (Premium Per Share)] * (Number of Shares) Based on my example, it's easy to deduce what happened in the case you've given in the table. In 2009 your company XYZ had outstanding Common Stock issued for $4,652. That's probably (a) in thousands, and (b) at a par value of $1 per share. On those assumptions we can say that the company has 4,652,000 shares outstanding for Year End 2009. Then, if we guess that's the outstanding shares, we can also calculate the implicit average premium per share: 90,946,000 ÷ 4,652,000 == $19.52. Note that this is the average premium per share, because we don't know when the different stocks were issued at, and it may be that the premiums that investors paid were different. Frankly, we don't care. So clearly since ""Common Stock"" in 2010 is up to $9,303 it means that the company released more stock. Someone else can chime in on whether that means it was specifically a stock split or some other mechanism... it doesn't matter. For understanding this you just need to know that the company put more stock into the marketplace... 9,303 - 4,652 == 4,651(,000) more shares to be exact. With the mechanics of rounding to the thousands, I would guess this was a stock split. Now. What you can also see is that the Capital Surplus also increased. 232,801 - 90,946 == 141,855. The 4,651,000 shares were issued into the market at an average premium of 141,855 ÷ 4,651 == $30.50. So investors probably paid (or were given by the company) an average of $31.50 at this split. Then, in 2011 the company had another small adjustment to its shares outstanding. (The Common Stock went up). And there was a corresponding increase in its Capital Surplus. Without details around the actual stock volumes, it's hard to get more exact. You're also only giving us a portion of the Balance Sheet for your company, so it's hard to go into too much more detail. Hopefully this answers your question though." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why would a tender offer be less than the market price? | "Rational shareholders wouldn't accept such an offer. The company making the offer is simply trying to get a deal with questionable — though not illegal — tactics. Your answer is actually in the link you provided. Quoting from the fourth paragraph [emphasis is mine]: The SEC has cautioned investors about mini-tender offers, noting that ""[s]ome bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price."" The SEC's tips for investors regarding mini-tender offers may be found on the SEC's Web site at http://www.sec.gov/investor/pubs/minitend.htm. There's a lot more information at the SEC web page mentioned. One part I'll highlight from the SEC web page mentions another reason for a mini-tender: Investors need to scrutinize mini-tender offers carefully. Some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price. Others make mini-tender offers at a premium – betting that the market price will rise before the offer closes and then extending the offer until it does or improperly canceling if it doesn't. You'll also find a lot more information at Wikipedia - Mini-tender offer." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How do you get out of a Mutual Fund in your 401(k)? | One of the strengths of 401K accounts is that you can move from investment X in the program to investment Y in the program without tax consequences. As you move through your lifetime you will tend to want to lower risk by investing in funds that are less aggressive. The only way this works is if there is an ability to move funds. If there were only one or two funds to pick from or that you were locked in to your initial choices that would be a very poor 401K to be enrolled in. On your benefits/401K website you should be able to adjust three sets of numbers: Some have you enter the current money as a percentage others allow you to enter it in dollars. They might limit the number of changes you can do in a month to the current money balances to avoid the temptation to try and time the market. These changes usually happen within 1 business day. Regarding new and match money they could limit the lowest non zero percent to 5% or 10%, but they might allow numbers as low as 1%. These changes take place generally with the next paycheck. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Ask for credit decrease | "Aside from an annual fee, if any, the card issuer makes money 2 ways, the transaction fee, about 1.5%-2% charged to the merchant, and interest from you if you leave a balance month to month. Obviously, the bank has some cost in processing statements and maintaining your account. If up front you are saying you will not have any chance of providing a certain profit level, they may have no interest in your business. (As you updated.) Other card issuers (almost surely with fees) might. Put the cards on ice. A bag of water in freezer. Don't be so hasty that you ding your report this way. By trashing the history as well as utilization, you may impact your score enough to do some harm if you actually need credit in the near future. I know this is a game with the credit agencies, a ""how good a borrower am I"" game, but it can really impact your bottom line if you don't play along. In reply to Michael's comment 1/5/15, if I have one card and am budgeted for $1000/mo in spending, in order to keep utilization down to less than 20%, I'd need a line of more than $5000. Even if I ignore utilization, my January spending is $1000, but the bill is cut on the 31st and not due till Feb 25th. So a line of nearly $2000 is required unless you wish to make mid cycle payments on an ongoing basis." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Do Fundamentals Matter Anymore in Stock Markets? | All you have to do is ask Warren Buffet that question and you'll have your answer! (grin) He is the very definition of someone who relies on the fundamentals as a major part of his investment decisions. Investors who rely on analysis of fundamentals tend to be more long-term strategic planners than most other investors, who seem more focused on momentum-based thinking. There are some industries which have historically low P/E ratios, such as utilities, but I don't think that implies poor growth prospects. How often does a utility go out of business? I think oftentimes if you really look into the numbers, there are companies reporting higher earnings and earnings growth, but is that top-line growth, or is it the result of cost-cutting and other measures which artificially imply a healthy and growing company? A healthy company is one which shows year-over-year organic growth in revenues and earnings from sales, not one which has to continually make new acquisitions or use accounting tricks to dress up the bottom line. Is it possible to do well by investing in companies with solid fundamentals? Absolutely. You may not realize the same rate of short-term returns as others who use momentum-based trading strategies, but over the long haul I'm willing to bet you'll see a better overall average return than they do. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Investing $50k + Real Estate | I would say that, for the most part, money should not be invested in the stock market or real estate. Mostly this money should be kept in savings: I feel like your emergency fund is light. You do not indicate what your expenses are per month, but unless you can live off of 1K/month, that is pretty low. I would bump that to about 15K, but that really depends upon your expenses. You may want to go higher when you consider your real estate investments. What happens if a water heater needs replacement? (41K left) EDIT: As stated you could reduce your expenses, in an emergency, to 2K. At the bare minimum your emergency fund should be 12K. I'd still be likely to have more as you don't have any money in sinking funds or designated savings and the real estate leaves you a bit exposed. In your shoes, I'd have 12K as a general emergency fund. Another 5K in a car fund (I don't mind driving a 5,000 car), 5k in a real estate/home repair fund, and save about 400 per month for yearly insurance and tax costs. Your first point is incorrect, you do have debt in the form of a car lease. That car needs to be replaced, and you might want to upgrade the other car. How much? Perhaps spend 12K on each and sell the existing car for 2K? (19K left). Congratulations on attempting to bootstrap a software company. What kind of cash do you anticipate needing? How about keeping 10K designated for that? (9K left) Assuming that medical school will run you about 50K per year for 4 years how do you propose to pay for it? Assuming that you put away 4K per month for 24 months and have 9K, you will come up about 95K short assuming some interests in your favor. The time frame is too short to invest it, so you are stuck with crappy bank rates. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | UK - How to receive payments in euros | "See my comment below about the official exchange rate. There is no ""official"" exchange rate to apply as far as I'm aware. However the bank is already applying the same exchange rate you can find in the forex markets. They are simply applying a spread (meaning they will add some amount to the exchange rate whichever way you are exchanging currency). You will almost certainly not find a bank that doesn't apply a spread. Of course, their spread might be large, so that's why it is good to compare rates. By the way, 5 GBP/month seems reasonable for a foreign currency (or any) acct. The transaction fees might be cheaper in a different ""package"" so check. You should consider trying PayPal. Their spread is quite small - and publicly disclosed - and their per-transaction fees are very low. Of course, this is not a bank account. But you can easily connect it to your bank account and transfer the money between accounts quickly. They also offer free foreign currency accounts that you can basically open and close in a click. Transfers are instantaneous. I am based in Germany but I haven't had a problem with clients from various English-speaking countries using PayPal. They actually seem to prefer it in many instances." |
Share your insights or perspective on the financial matter presented in the input. | Online Foreign Exchange Brokerages: Which ones are good & reputable for smaller trades? | "For ""smaller trades"", I'm not sure you can beat FXCM.com, a large, dedicated FX trading shop with extremely tight spreads, and a ""Micro"" account that you can open for as little as $25(US). Their ""main"" offering has a minimum account size of $2k (US), but recommends an account size of $10k or more. But they also have a ""micro"" account, which can be opened for as little as $25, with a $500 or higher recommended size. I haven't used them personally, but they're well known in the discount FX space. One strong positive indicator, in my opinion, is that they sell an online FX training course for $19.99. Why is that positive? It means that their margins on your activity are small, and they're not trying to get you ""hooked"". If that were not the case, they'd give the course away, since they'd be able to afford to, and they would expect to make so much of your subsequent activity. They do have some free online materials, too, but not the video stuff. Another plus is that they encourage you to use less leverage than they allow. This does potentially serve their interests, by getting more of your deposits with them, but a lot of FX shops advertise the leverage to appeal to users' hope to make more faster, which isn't a great sign, in my opinion. Note that the micro account has no human support; you can only get support via email. On the other hand, the cost to test them out is close to nil; you can literally open an account for $25." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | In what category would I put a loan I took to pay an expense | A loan is most generally a liability, a part of the balance sheet. Expenses & income are part of the income statement. Income is the net of revenues after expenses. The interest is an expense on the income statement, but the loan itself does not reside there unless if it is defaulted and forgiven. Then it would become a revenue or contra-expense, depending on the methodology. The original purpose of the income statement is to show the net inflows of short term operational accruals which would exclude new borrowing and repaid loans. The cash flow statement will better show each cash event such as borrowing debt, repaying debt, or paying off a bill. To show how a loan may have funded a bill, which in theory it directly did not because an entity, be it a person or business, is like a single tank of water with multiple pipes filling and multiple pipes extracting, so it is impossible to know which exact inflow funded which exact outflow unless if there is only one inflow per period and one outflow per the same period. That being said, with a cash flow statement, the new loan will show a cash inflow when booked under the financing portion, and paying a bill will show a cash outflow when booked under the operating portion. With only those two transactions booked and an empty balance sheet beforehand, it could be determined that a new loan funded a bill payment. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | In debts now, help please | |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Real estate loans for repairs | If you intend to flip this property, you might consider either a construction loan or private money. A construction loan allows you to borrow from a bank against the value of the finished house a little at a time. As each stage of the construction/repairs are completed, the bank releases more funds to you. Interest accrues during the construction, but no payments need to be made until the construction/repairs are complete. Private money works in a similar manner, but the full amount can be released to you at once so you can get the repairs done more quickly. The interest rate will be higher. If you are flipping, then this higher interest rate is simply a cost of doing business. Since it's a private loan, you ca structure the deal any way you want. Perhaps accruing interest until the property is sold and then paying it back as a single balloon payment on sale of the property. To find private money, contact a mortgage broker and tell them what you have in mind. If you're intending to keep the property for yourself, private money is still an option. Once the repairs are complete, have the bank reassess the property value and refinance based on the new amount. Pay back the private loan with equity pulled from the house and all the shiny new repairs. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How do I figure out if I will owe taxes | Do I get a write off for paying student loans? Maybe. See https://www.irs.gov/publications/p970/ch04.html Generally, personal interest you pay, other than certain mortgage interest, isn't deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $80,000 ($160,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500. Read the whole document to be sure, but that's the basics. You'll have to fill out a 1040 or 1040A to claim a student loan deduction. It won't be on the 1040EZ. You do not have to itemize though. What kinds of write-offs and credits are available for someone who is single and lives in an apartment with two roommates? As a practical matter, in 2016 you'll get the standard deduction for someone who is single ($6300) and the personal exemption ($4050). It's extremely unlikely that you'll be able to deduct more by itemizing. Most people who itemize are taking a mortgage interest deduction. Major medical bills are another possibility, but they have to be more than 10% of your adjusted gross income (it's one of the lines on your tax return). Assuming you rent and are reasonably healthy, you are unlikely to have enough to itemize. The most likely additional deduction would be the one for an IRA (Individual Retirement Account). Although you might be better off doing a Roth anyway (no tax deduction). If you are self-employed or making more than $100,000 a year, there are additional issues. But most people aren't. If you filled out a W-4 and will get a W-2 back, you aren't self-employed. Hopefully you have a rough idea of your annual income. The first $9275 over your deductions will pay 10%. After that, up to $37,650 you pay 15%. The 2016 link above has a link (PDF) to the full table if you need more than that. Note that that is the first $48,000 in income with your $10,350 in deductions. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What are some factors I should consider when choosing between a CPA and tax software | Largely it comes down to the complexity of your return (likely relatively simple if it's your first time filing) and your comfort level with using software. More complex returns would include filing business claims, handling stocks and investments, special return forms, etc. One benefit to most of the software options out there such as TurboTax, HR Block, and Tax Slayer, are that they are free to use and you only pay when you're ready to file. You could give them a shot to see how easy/difficult they are and if you feel overwhelmed, then contact a CPA (whose time won't be free). Also remember that those HR Block seasonal places that open up are not CPA's, but are temps hired and trained to use the software that you would find online. You didn't indicate they were an option, but I like to point that out to those who might not know otherwise. My opinion would be to use one of the online options because of cost and their ease of use. They also allow you to take your time and save your progress, so you can start using it and go ask questions/do research on your own time. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | How to process IRS check as a non-resident? | I suspect @SpehroPefhany is correct and that your bank will cash a check from the US Department of the Treasury. Especially since they're the same ones who guarantee the U.S. Dollar. They may hold the funds until the check clears, but I think you'll have good luck going through your bank. Of course, fees and exchange rate are a factor. Consider browsing the IRS and US Treasury Department websites for suggestions/FAQs. I suggest you line up a way to cash it, and make sure there's enough left after fees and exchange rate and postage to get the check that the whole process is worth it, all before you ask it to be shipped to you. If there's no way to do it through your bank, through a money exchange business (those at the airport come to mind) or through your government (postal bank?), and the check is enough that you're willing to go through some trouble, then you should look into assigning power of attorney for this purpose. I don't know if it is possible, but it might be worth looking into. Look for US based banks in your area. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Payroll reimbursments | Not correct. First - when you say they don't tax the reimbursement, they are classifying it in a way that makes it taxable to you (just not withholding tax at that time). In effect, they are under-withholding, if these reimbursement are high enough, you'll have not just a tax bill, but penalties for not paying enough all year. My reimbursements do not produce any kind of pay stub, they are a direct deposit, and are not added to my income, not as they occur, nor at year end on W2. Have you asked them why they handle it this way? It's wrong, and it's costing you. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Are Credit Cards a service to banks? | "As i see it, with a debit card, they are taken kinda out of the game. They are not lending money, it seems really bad for them. Not exactly. It is true that they're not lending money, but they charge a hefty commission from the retailers for each swipe which is pure profit with almost no risk. One of the proposals considered (or maybe approved already, don't know) in Congress is to cap that hefty commission, which will really make the debit cards merely a service for the checking account holder, rather than a profit maker for the bank. On the other hand, it's definitely good for individuals. I disagree with that. Debit cards are easier to use than checks, but they provide much less protection than credit cards. Here's what I had to say on this a while ago, and seems like the community agrees. But, why do we really need a credit history to buy some of the more expensive stuff Because the system is broken. It rewards people in debt by giving them more opportunities to get into even more debts, while people who owe nothing to noone cannot get a credit when they do need one. With the current system the potential creditor can only asses the risk of someone who has debt already, they have no way of assessing risks of someone with no debts. To me, all this credit card system seems like an awfully nice way to make loads of money, backed by governments as well. Well, credit cards have nothing to do with it. It's the credit scores system that is broken. If we replace the ""card"" with ""score"" in your question - then yes, you're thinking correctly. That of course is true for the US, in other countries I have no knowledge on how the creditors assess the risks." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | For net worth, should I value physical property at my cost to replace it, or the amount I could get for selling it? | You are not asking for insurance purposes. So I'll go with this - I have two asset numbers I track. All investments, retirement accounts, etc, the kind that are valued at day's end by the market, etc. From that number I subtract the mortgage. This produces the number that I can say is my net worth with a paid in full house. The second number simply adds back the house's value, give or take. Unless I owned art that was valued in the six figures, it seems pointless to me to add it up, except for insurance. If my wife and I died tomorrow, the kid can certainly auction our stuff off, but knowing that number holds no interest for us. When most people talk 'net worth', I don't see them adding these things up. Cars, maybe, but not even that. |
Share your insights or perspective on the financial matter presented in the input. | Why are people from UAE and Dubai so rich? | They aren't all rich on average. And oil and gas is actually now only about 25% of the economy in the UAE (incredibly!). There are good reasons why it felt that way, though: The UAE and a number of other oil-rich nations all realize that they need to diversify away from oil revenues. International investment and tourism are the main ways in which they hope to attract capital (free trade/full foreign ownership/no-tax zones, World Cup, etc.). Business and government are often one and the same or working closely together, and they are extremely savvy about cultivating your experience in their company, and want to make sure they are doing everything in their power to get you to like and spend money in their country. Essentially, you are visiting their version of Las Vegas. Additionally, they have taken on massive debt to create those kinds of cities and experiences. According to the World Bank and the CIA (see here), the per capita GDP of the UAE on a Purchasing Price Parity basis is about 18% higher than in the US. Since much of the oil wealth is controlled by the state, it is not certain how evenly that income is distributed (World Bank and CIA statistics do not provide R/P or Gini data for UAE, while it is provided for most nations). |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | When should I open a “Line of credit” at my bank? | With the information you have given, I would say never. Remember the banker is a salesman, and the line of credit is the product. If you don't need to borrow the money for something specific, then you don't need the line of credit in the first place. Even if you did need something I would tell you to save up and pay cash for it. On the tax advantage: There is none, in the US you can deduct your mortgage interest on your taxes but it's not a tax credit it's a tax deductions. Let me explain further: You spend $10,000 on mortgage interest, and you're in the 25% tax bracket. You send the bank $10,000 in return you get at tax savings of $2500. You are still in the hole $7500 You would have been better off not taking out the loan in the first place. On the Emergency Fund: You should have 3 - 6 months of expenses in cash, like a money market account. This money isn't for investing, it's like insurance, and you don't make money on insurance. The last thing you want to do is have to go into debt right in the middle of an emergency. Say you lost your job, the last thing you would want to do is borrow money, right at the time you have no income to pay it back. The bank is under no obligation to maintain you credit limit and can without notice reduce it, they can in most cases call the loan balance due in full with little or no notice as well. Both of those are likely scenarios if the bank were to become aware of the fact that you were unemployed. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Company wants to sell all of its assets, worth more than share price? | Why is the stock trading at only $5 per share? The share price is the perceived value of the company by people buying and selling the stock. Not the actual value of the company and all its assets. Generally if the company is not doing well, there is a perceived risk that it will burn out the money fast. There is a difference between its signed conditional sale and will get money and has got money. So in short, it's trading at $5 a share because the market doesn't feel like it's worth $12 per share. Quite a few believe there could be issues faced; i.e. it may not make the $12, or there will be additional obligations, i.e. employees may demand more layoff compensation, etc. or the distribution may take few years due to regulatory and legal hurdles. The only problem is the stock exchange states if the company has no core business, the stock will be suspended soon (hopefully they can release the $12 per share first). What will happen if I hold shares in the company, the stock gets suspended, and its sitting on $12 per share? Can it still distribute it out? Every country and stock markets have laid out procedures for de-listing a company and closing a company. The company can give $10 as say dividends and remaining later; or as part of the closure process, the company will distribute the balance among shareholders. This would be a long drawn process. |
Share your insights or perspective on the financial matter presented in the input. | Why do I not see goods and services all change their price when inflation is high? | In most circumstances prices do not change on a daily basis on most goods and services, and just because inflation is high does not mean all prices of every good and service has to increase over the short term. Prices are determined by costs of doing business, manufacturing costs and wage growth, and by competition. For example, if one product has very little competition and costs to produce it have gone up, then the seller might increase prices by 10% to cover their cost of buying the goods off the manufacturer, whilst another product may have plenty of competition, the seller has sourced a new manufacturer from overseas with lower manufacturing costs, they might lower their selling costs by 5% to better compete and increase their sales. Inflation figures are calculated from a set basket of goods and services, and if inflation increases it does not mean that all prices in that basket have gone up, only that the aggregate for the whole basket of goods and services has gone up since the last inflation figures were calculated. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Hiring freelancers and taxes | I am not a lawyer or a tax accountant, but from the description provided it sounds to me like you have created two partnerships: one in which you share 50% of Bob's revenue, and another in which you share 50% of the revenue from the first partnership. If this is the case, then each partnership would need to file form K-1 and issue a copy to the partners of that partnership. I think, but I'm not sure, that each partnership would need an Employer Identification Number (EIN; you can apply for and receive these online with the IRS). You would only pay tax on the portion of profits that are assigned to you on the K-1. (If you've accidentally created a partnership without thinking through all the ramifications, you probably want to straighten this out. You can be held liable for the actions of your partners.) On the other hand, if your contract with Bob explicitly makes you a contractor and not a partner, then Bob should probably be issuing a 1099 to you. Similarly for you and Joe -- if your contract with Joe makes him a subcontractor, then you may need to get an EIN and issue him a 1099 at the end of the year. The money you pay to Joe is a business expense, and would be deducted from the profits you show on your Schedule C. In my opinion, it would be worth the $200 fee paid to a good CPA to make sure you get this right. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Should the price of fuel in Australia at this point be so high? | First price isn't artificially maintained at a level. When a refining company signs a contract to buy crude from a supplier, it promises to buy at a certain price with options for increase and decrease due to the fluctuating prices in the market. And it buys crude to build up a certain buffer to supply itself for a certain duration, in case of supply problems. As it had bought oil at a higher price, it would be reluctant to lower the prices even if the current crude it buys is at a lower cost. If it buys oil from the open market, it has no other option than to pass on the hike on to the consumers, so a more intense fluctuation in the prices of oil at the point, where you buy it. Some airlines used hedging to take care of the spurts in the price of oil, to mantian their operating margins. And moreover refining and distribution is a very low margin business, so the company has an incentive to sell at a higher cost if required. |
Share your insights or perspective on the financial matter presented in the input. | Are my purchases of stock, mutual funds, ETF's, and commodities investing, or speculation? | This depends on what your definition of the word is is. Strictly speaking, you are only investing in a company when you buy stock from them somehow. This is usually done during an IPO or a secondary offering. Or, if you are someone like Warren Buffet or an institutional investor, you strike a deal with the company to buy shares directly from them. Otherwise, your money goes to someone else. Merriam-Webster defines speculate as 1b: to review something idly or casually and often inconclusively However, it also defines it as: 2: to assume a business risk in hope of gain; especially : to buy or sell in expectation of profiting from market fluctuations The typical use of the term stock speculation vs stock investing involves definition 1b. This alludes to the idea that little to no research was done about the stock. This may be due to a lack of time, interest, knowledge, etc., or it may be due to a lack of information. The former usually has a negative connotation. The latter may have a negative connotation, though usually the connotation is one of greater risk. Strictly speaking, definition 2 includes investing as you define it along with investing in securities/commodities. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Why do grocery stores in the U.S. offer cash back so eagerly? | The only card I've seen offer this on credit card purchases is Discover. I think they have a special deal with the stores so that the cash-over amount is not included in the percentage-fee the merchant pays. (The cash part shows up broken-out from the purchase amount on the statement--if this was purely something the store did on its own without some collaboration with Discover that would not happen). The first few times I've seen the offer, I assumed it would be treated like a cash-advance (high APR, immediate interest with no grace period, etc.), but it is not. It is treated like a purchase. You have no interest charge if you pay in full during the grace period, and no transaction fee. Now I very rarely go to the ATM. What is in it for Discover? They have a higher balance to charge you interest on if you ever fail to pay in full before the grace period. And Discover doesn't have any debit/pin option that I know of, so no concern of cannibalizing their other business. And happier customers. What is in it for the grocer? Happier customers, and they need to have the armored car come around less often and spend less time counting drawers internally. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Transferring money between two banks | "Why? Because they can get away with it, of course. In short - why not? You may want to read the answers to this similar question (my answer is the one accepted by the OP). Who has the money? The banks, who else. I have found that some banks are capable of sending/receiving ACH transfers faster than others. I have accounts in two banks, lets call them A and B. If I send money (push) from A to B, it may take several days. But if I decide to pull the money from A to B by originating the transaction through my account at B - the money arrives the next day! So the actual transfer only takes a night, one business day. Its just the direction that matters - if the bank has to give the money out, it will do all it can (including taking 2-3 days for ""processing"") to keep the money as long as possible. But when another bank charges them - they have no choice but to pay. By the way, bank B behaves better - when I send the money from my account at B, it arrives to A the next day as well. Try a similar experiment. Instead of originating the transaction at the sender bank - try to originate it at the receiver bank, see how long it takes then for the money to appear on your account after it disappeared from the other one." |
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