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For net worth, should I value physical property at my cost to replace it, or the amount I could get for selling it? | There is no objective "should". You need to be clear why you're tracking these numbers, and the right answer will come out of that. I think the main reason an individual would add up their assets and net worth is to get a sense of whether they are "making progress" or whether they are saving enough money, or perhaps whether they are getting close to the net worth at which they can make some life change. Obviously shares or other investment property ought to be counted in that. Buying small-medium consumer goods like furniture or electronics may improve your life but it's not especially improving your financial position. Accounting for them with little $20 or $200 changes every month or year is not necessarily useful. Things like cars are an intermediate case because firstly they're fairly large chunks of money and secondly they commonly are things people sell on for nontrivial amounts of money and you can reasonably estimate the value. If for instance I take $30k out of my bank account and buy a new car, how has my net worth changed? It would be too pessimistic to say I'm $30k worse off. If I really needed the money back, I could go and sell the car, but not for $30k. So, a good way to represent this is an immediate 10-20% cost for off-the-lot depreciation of the car, and then another 12% every year (or 1% every month). If you're tracking lifestyle assets that you want to accumulate, I think monetary worth is not the best scale, because it's only weakly correlated with the value you get out of them. Case in point: you probably wouldn't buy a second-hand mattress, and they have pretty limited resale value. Financially, the value of the mattress collapses as soon as you get it home, but the lifestyle benefit of it holds up just fine for eight years or so. So if there are some major purchases (say >$1000) that you want to make, and you want to track it, what I would do is: make a list of things you want to buy in the future, and then tick them off when you either do buy them, or cross them out when you decide you actually don't want them. Then you have something to motivate saving, and you have a chance to think it over before you make the purchase. You can also look back on what seemed to be important to you in the past and either feel satisfied you achieved what you wanted, or you can discover more about yourself by seeing how your desires change. You probably don't want to so much spend $50k as you want to buy a TV, a dishwasher, a trip to whereever... |
Is it worth it to reconcile my checking/savings accounts every month? | My wife and I are paid every two weeks. I go on line see the exact deposit, add it to register, and see what checks cleared. In effect, I reconcile twice per month, and the statement can't be different that what their system tells me. Since the online site shows "last statement balance" I feel there's no need to bother with the paper, nothing left to reconcile. |
Combined annual contribution limits for individuals [duplicate] | You're correct about the 401(k). Your employer's contributions don't count toward the $18k limit. You're incorrect about the IRAs though. You can contribute a maximum of $5500 total across IRA and Roth IRA, not $5500 to each. There are also limits once you reach higher levels of income. from IRS.gov: Retirement Topics - IRA Contribution Limits: For 2015, 2016, and 2017, your total contributions to all of your traditional and Roth IRAs cannot be more than: |
How can I avoid international wire fees or currency transfer fees? | I did some empirical research, comparing the exchange rates for wire transfers vs. the exchange rates for ATM withdrawals. With my bank, wire transfers typically take a 4% float off the exchange rate. ATM withdrawals seem to take just over 2%. And ATM withdrawals don't have a wire transfer fee, as long as I'm withdrawing from a branch of the same bank (overseas). The only problem with ATM withdrawals is the daily limit. As far as I can see, Tor's answer above has it completely backwards, at least with my bank, ATM withdrawals are a much better value. Do the research yourself...call the bank you're going to transfer from and find out what their current exchange rate is. Compare it to the current spot rate (e.g. XE.com) to determine how much of a cut the bank is taking. Then, if you can, withdraw some cash from the foreign location with your ATM card and see how much of the original currency is deducted from your account. In this way you can empirically discover for yourself the better rate. |
How to plan in a budget for those less frequent but mid-range expensive buys? | We have what we call "unallocated savings" that go into a fund for this purpose. We'll also take advantage of "6 months no interest" or similar financing promotions, and direct this savings towards the payments. |
Gigantic point amount on rewards card - what are potential consequences? | Of course, as a 'good' person (or maybe a 'stupid' person), I should call them, (wait 30 minutes in the queue), and then try to explain the issue to the service desk. I actually did that, and the guy thought I am nuts to even call, and told me to 'just use them they are yours now'. I don't feel like calling again and again until I get someone that believes it, just to return them their points. Calling generally does not solve this problem. You would need to write a letter using certified mail and send some reminders. Hopefully they should notice it, if not you at least have evidence that you have communicated. I could just toss the card and forget about it. However, I had quite some points on it that really belong to me, so that feels like I pay for their fault. There is no need. You can continue to use the card as usual. Use them and play stupid. This is not a good idea. They are clearly not yours. Somewhere in Terms and Conditions you will find some fine print about notifying Bank/Financial Institution about the errors. Best course, after intimating informing them via letters, keep using your card as normal and use your points as normal. You would roughly know your points balance. |
What is a negotiable security and how are they related to derivatives? | As Dheer pointed out, Wikipedia has a good definition of what a negotiable instrument is. A security is an instrument or certificate that signifies an ownership interest in something tangible. 1 share of IBM represents some small fraction of a company. You always have the ability to choose a price you are willing to pay -- which may or may not be the price that you get. A derivative is a level of abstraction linked by a contract to a security... if you purchase a "Put" contract on IBM stock, you have a contractural right to sell IBM shares at a specific price on a specific date. When you "own" a derivative, you own a contract -- not the actual security. |
Bank of the Sierra: Are they legit? How can the checking interest APY be so high? | I believe MrChrister's answer is correct: Since they're FDIC insured, they are "legit." Second, on the seemingly too-good-to-be-true rate: They're basically making up the difference on other fees (not necessarily paid by you) in order to offer you the higher-than-market rate. I'd like to point out two things not mentioned about the current rate offer, though: The high 4.09% APY advertised is only on balances up to $25,000; anything over that threshold is at a lower 1.01% APY. The offer also states in the footnotes: "Rates may change after the account is opened." You might want to see if they have a good history of paying higher than average interest rates. You wouldn't want to switch only to find out the promotional rate was a teaser that soon gets reduced. |
irr calculation on stock with dividends | Re. question 2 If I buy 20 shares every year, how do I get proper IRR? ... (I would have multiple purchase dates) Use the money-weighted return calculation: http://en.wikipedia.org/wiki/Rate_of_return#Internal_rate_of_return where t is the fraction of the time period and Ct is the cash flow at that time period. For the treatment of dividends, if they are reinvested then there should not be an external cash flow for the dividend. They are included in the final value and the return is termed "total return". If the dividends are taken in cash, the return based on the final value is "net return". The money-weighted return for question 2, with reinvested dividends, can be found by solving for r, the rate for the whole 431 day period, in the NPV summation. Now annualising And in Excel |
What exactly is the interest rate that the Fed is going to adjust? | While it is true that if the Federal reserve bank makes a change in their rate there is not an immediate change in the other rates that impact consumers; there is some linkage between the federal rate, and the costs of banks and other lenders regarding borrowing money. Of course the cost of borrowing money does impact the costs for businesses looking to expand, which does impact their ability to hire more workers and expand capacity. A change in business expansion does impact employment and unemployment... Then changes in employment can cause a change in raises, which can cause changes in prices which is inflation... Plus the lenders that lend to business see the flow of new loans change as the employment outlook change. If the costs of doing business for the bank changes or the flow of loans change, they do adjust the rates they pay depositors and the rates they charge borrowers... How long it will take to change the cost of an auto loan? No way to tell. Keep in mind that in complex systems, change can be delayed, and won't move in lock step. For example the price of gas\s doesn't always move the same way a price of a barrel of oil does. |
How do freight derivatives like Forward Freight Agreements (FFAs) work? | To answer this part of the question: "How can you build an index based on shipping routes - what is the significance of that? Indexes are traditionally built based on companies: e.g. S&P Index is a basket of companies whose price varies. But here you need a basket of FFA contracts from different oil firms (Shell, BP), 5 year Shell FFA's, 10 year shell FFA's. Where do routes enter the picture? Let the tanker any route he feels like." No, you don't get a basket of FFA contracts from given companies (such as Shell and BP). What you get are rates assessed by a panel of brokers for the main tanker routes (especially in the tanker market, there are comparatively few standard routes, because the major oil loading areas are also comparatively few). The panel will assess the spot and future markets on a daily basis, and issue the rates accordingly. |
Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building? | Grade 'Eh' Bacon answers it well, the issue is risk. To explain further, when a bank issues a loan, that loan comes with certain legal rights. If the bank decided to partner with a construction company, many of those rights to collect would be gone. Debt is treated differently than equity in the legal system. Banks are good at debt, investors are good at equity. We also oversimplify it by asking why banks don't prefer equity to debt. Some investment banks also like to deal in equity, so it's probably an inaccurate assumption that you start with. |
Is real (physical) money traded during online trading? | This is my two cents (pun intended). It was too long for a comment, so I tried to make it more of an answer. I am no expert with investments or Islam: Anything on a server exists 'physically'. It exists on a hard drive, tape drive, and/or a combination thereof. It is stored as data, which on a hard drive are small particles that are electrically charged, where each bit is represented by that electric charge. That data exists physically. It also depends on your definition of physically. This data is stored on a hard drive, which I deem physical, though is transferred via electric pulses often via fiber cable. Don't fall for marketing words like cloud. Data must be stored somewhere, and is often redundant and backed up. To me, money is just paper with an amount attached to it. It tells me nothing about its value in a market. A $1 bill was worth a lot more 3 decades ago (you could buy more goods because it had a higher value) than it is today. Money is simply an indication of the value of a good you traded at the time you traded. At a simplistic level, you could accomplish the same thing with a friend, saying "If you buy lunch today, I'll buy lunch next time". There was no exchange in money between me and you, but there was an exchange in the value of the lunch, if that makes sense. The same thing could have been accomplished by me and you exchanging half the lunch costs in physical money (or credit/debit card or check). Any type of investment can be considered gambling. Though you do get some sort of proof that the investment exists somewhere Investments may go up or down in value at any given time. Perhaps with enough research you can make educated investments, but that just makes it a smaller gamble. Nothing is guaranteed. Currency investment is akin to stock market investment, in that it may go up or down in value, in comparison to other currencies; though it doesn't make you an owner of the money's issuer, generally, it's similar. I find if you keep all your money in U.S. dollars without considering other nations, that's a sort of ignorant way of gambling, you're betting your money will lose value less slowly than if you had it elsewhere or in multiple places. Back on track to your question: [A]m I really buying that currency? You are trading a currency. You are giving one currency and exchanging it for another. I guess you could consider that buying, since you can consider trading currency for a piece of software as buying something. Or is the situation more like playing with the live rates? It depends on your perception of playing with the live rates. Investments to me are long-term commitments with reputable research attached to it that I intend to keep, through highs and lows, unless something triggers me to change my investment elsewhere. If by playing you mean risk, as described above, you will have a level of risk. If by playing you mean not taking it seriously, then do thorough research before investing and don't be trading every few seconds for minor returns, trying to make major returns out of minor returns (my opinion), or doing anything based on a whim. Was that money created out of thin air? I suggest you do more research before starting to trade currency into how markets and trading works. Simplistically, think of a market as a closed system with other markets, such as UK market, French market, etc. Each can interact with each other. The U.S. [or any market] has a set number of dollars in the pool. $100 for example's sake. Each $1 has a certain value associated with it. If for some reason, the country decides to create more paper that is green, says $1, and stamps presidents on them (money), and adds 15 $1 to the pool (making it $115), each one of these dollars' value goes down. This can also happen with goods. This, along with the trading of goods between markets, peoples' attachment of value to goods of the market, and peoples' perception of the market, is what fluctates currency trading, in simple terms. So essentially, no, money is not made out of thin air. Money is a medium for value though values are always changing and money is a static amount. You are attempting to trade values and own the medium that has the most value, if that makes sense. Values of goods are constantly changing. This is a learning process for me as well so I hope this helps answers your questions you seem to have. As stated above, I'm no expert; I'm actually quite new to this, so I probably missed a few things here and there. |
Is it unreasonable to double your investment year over year? | Yes, because you cannot have an exponential growth rate that is faster than the rate at which the economy grows on the long term. 100% growth is much more than the few percent at which the economy grows, so your share in the World economy would approximately double every year. Today the value of all the assets in the World economy is about $200 trillion. If you start with an investment of just $1000 and this doubles every year, then you'll own all the World's assets in 37.5 years, assuming this doesn't grow. You can, of course, take into account that it does grow, this will yield a slightly larger time before you own the entire World. |
Right account for local purchases, loan EMI, and investments | What is the best and most economical way for me to pay the loan EMIs directly? (whether from a Singapore account or a NRE/NRO account) It is advisable to have it via the NRE account as this would be easier. If you already have funds in NRO account, you can use that before you use the funds from NRE account. For all expenses I make in India (e.g shopping, general expenses in India visits) what account should I be using, ideally? Is the route to transfer into NRE then NRO and then withdraw from NRO? Whatever is convenient. Both are fine. If I plan to make any investments in SIPs/Stock markets, should I link my NRE account with a demat account and directly use that? If I sell the shares will the earnings come back into NRO or NRE? You need to open a DEMAT PINS Account and link it to NRE account. You are sell and repatriate the funds without any issue from PINS account. Related question Indian Demat account |
Is inflation a good or bad thing? Why do governments want some inflation? | Basically, in any financial system that features fractional reserve banking, the monetary supply expands during times of prosperity. Stable, low inflation of 2-4% keeps capital available while keeping the value of money stable. It also discourages hoarding of wealth. Banks aren't vaults. They take deposits and make an explicit promise to repay the depositor on demand. Since most depositors don't need to withdraw money regularly, the lend out the money you deposited and maintain a reserve sufficient to meet daily cash needs. When times are good, banks lend to people and businesses who need capital, who in turn do things that add value to the overall economy. When times are bad, people and businesses either cannot get capital or pay more for it, which reduces the number of times that money changes hands and has a negative impact on the wider economy. People who are trying to sell you commodities or who have a naive view of how the economy actually works decry the current monetary system and throw around scary words like "fiat currency" and "inflation is theft". What these people don't realize is that before the present system, where the value of money is based on promises to repay, the gold and silver backed systems also experienced inflation. With gold/silver based money, inflation was driven by discoveries of gold and silver deposits |
Should the poor consider investing as a means to becoming rich? | What could a small guy with $100 do to make himself not poor To answer the question directly, not much. Short of investing in something at the exact moment before it goes bananas, then reinvesting into a bigger stock and bigger etc, it's super high risk. A better way is to sacrifice some small things, less coffee, less smokes, less going out partying so that instead of having $100, you have $100 a week. This puts you into a situation where you can save enough to become a deposit on an appreciating asset (choose your own asset class, property in AU for me). Take out a loan for as much as you can for your $100 a week payment and make it interest only with an offset against it, distributions from shares can either be reinvested or put into the offset or in the case of property, rent can be put against the offset, pretty soon you end up with a scenario where you have cash offsetting a loan down to nothing but you still have access to the cash, invest into another place and revalue your asset, you can take out any equity that has grown and put that also into your offset. Keep pulling equity and using the money from the offset as deposits on other assets (it kind of works really well on property) and within 15 years you can build an empire with a passive income to retire on. The biggest thing the rich guys get that the poor guys don't is that debt is GOOD, use someone else's money to buy an appreciating asset then when you pay it back eventually, you own the growth. Use debt to buy more debt for exponential growth. Of course, you need to also invest your time to research what you are investing in, you need to know when you make the decision to buy that it will appreciate, it's no good just buying off a tip, you may as well drop your money on the horses if you want to play it like that. Fortunately, one thing we all have in common regardless of our money is time, we have time which we can invest. |
Mortgage company withholding insurance proceeds | Fire insurance, as you have discovered, is a complete ripoff. Most people pay fire insurance all their lives with no benefit whatsoever, and those such as yourself who are lucky enough to get a payout find that it is completely insufficient to replace their loss. I once computed the actual beneficial net present financial value of my fire insurance policy and it came out to $40 per month. The cost was $800 per month. That is typical. Homeowners pay $500 to $800 per year for something that is worth $30 to $50 per year. Ironically banks would actually make more money from mortgages if they did not require mortgagees to buy insurance, but nevertheless they insist on it. It is not about logic, but about fear and irrationality. When I paid off my mortgage and gained ownership of my home the first thing I did was cancel my fire insurance. I now invest the money I would have wasted on insurance, making money instead of losing it. Being compelled to throw money down the toilet on fire insurance is one of the hidden costs of a homeowners mortgage in the United States. In your situation, the main option is to borrow the money to rebuild the house using the land as collateral, if the land is valuable enough. Of course, you still owe the money for your original mortgage on your now (non-existent) home. So, to get a home, you will have to have the income to service two mortgages. A loan officer at a reputable bank can tell you whether you have the income necessary to support two mortgages. If you were maxed out on your original mortgage, then you may not have enough income and you are screwed. In that case you will have to go back to renting and gradually paying off your old mortgage. (If it were me, I would sue the insurance company pro se as a way to get the necessary money to rebuild the home, because insurance companies roll over like a $20 hooker when they get sued. Juries hate insurance companies. But I am unusual in that I love courtrooms and suing people. Most people are terrified of courtrooms though, so it may not be an option for you.) |
Payroll question | That $200 extra that your employer withheld may already have been sent on to the IRS. Depending on the size of the employer, withholdings from payroll taxes (plus employer's share of Social Security and Medicare taxes) might be deposited in the US Treasury within days of being withheld. So, asking the employer to reimburse you, "out of petty cash" so to speak, might not work at all. As JoeTaxpayer says, you could ask that $200 less be withheld as income tax from your pay for the next pay period (is your Federal income tax withholding at least $200 per pay period?), and one way of "forcing" the employer to withhold less is to file a new W-4 form with Human Resources/Payroll, increasing the number of exemptions to more than you are entitled to, and then filing a new W-4 changing your exemptions back to what they are right now once when you have had $200 less withheld. But be careful. Claims for more exemptions than you are entitled to can be problematic, and the IRS might come looking if you suddenly "discover" several extra children for whom you are entitled to claim exemptions. |
Does it make sense to trade my GOOGL shares for GOOG and pocket the difference? | To keep it simple, let's say that A shares trade at 500 on average between April 2nd 2014 and April 1st 2015 (one year anniversary), then if C shares trade on average: The payment will be made either in cash or in shares within 90 days. The difficulties come from the fact that the formula is based on an average price over a year, which is not directly tradable, and that the spread is only covered between 1% and 5%. In practice, it is unlikely that the market will attribute a large premium to voting shares considering that Page&Brin keep the majority and any discount of Cs vs As above 2-3% (to include cost of trading + borrowing) will probably trigger some arbitrage which will prevent it to extend too much. But there is no guarantee. FYI here is what the spread has looked like since April 3rd: * details in the section called "Class C Settlement Agreement" in the S-3 filing |
Is it worth it to re-finance my car loan? | Seems like a good deal to me. You are paying less interest over the lifetime of the loan. And what I would do is take the difference between the new payments and the old, put it into a savings account each month, and when the savings account exceeds the balance of the loan pay it off. |
How can I stop wasting food? | You want to combine a set of techniques to avoid throwing food away. Consider setting aside a weekend day or other non-busy time to do some food prep. Check to see if there is anything in the fridge that needs to be used quickly and prioritize meals that use that item. Make a weekly menu and get your groceries. Chop all the vegetables and fruits you need for the week's meals. Cook meats that can be cooked in advance. Chefs call the concept of having everything ready for making a meal "mis en place." Try to do yours in advance to energize you for cooking and also make you more likely to cook on those nights you've been at the office late. Get to know and love your freezer. Buy frozen meat in bulk and portion individually (wrap 1/2 lb blocks of ground beef and chicken pieces in foil then store in freezer bags, for example). Get frozen packaged fish fillets for seafood. Boil a whole chicken, shred the meat, and have on hand for easy meals like tacos, enchiladas, chicken pot pie, pasta, etc. Do the same with beef roasts or pork shoulder for pulled pork, etc. Freeze vegetables and fruits if you can't use them in time (or buy frozen vegetables to begin with). You can even consider making dumplings like perogis or pelmeni and freezing for a homemade alternative to a frozen food aisle meal. You can even go all the way with freezer cooking. Cook with shelf-stable items. Rice, pasta, beans, lentils, canned goods, and other items can be made into major components of a meal. When you do buy something perishable that doesn't freeze well, try to utilize it in more than one of your meals for the week. This works well for items like fresh herbs. If you don't want to spend a lot of time cooking, a source like stonesoup is a great place to start - many recipes there can be finished in under 10 minutes, most are five ingredients or less, and all are tasty and good for you. This question from Seasoned Advice has a lot of great suggestions, although geared towards a college student, that you should consider. |
Is there software to buy and sell stocks in real time on very small moves in price? | I'm answering in a perspective of an End-User within the United Kingdom. Most stockbrokers won't provide Real-time information without 'Level 2' access, however this comes free for most who trade over a certain threshold. If you're like me, who trade within their ISA Holding each year, you need to look elsewhere. I personally use IG.com. They've recently began a stockbroking service, whereas this comes with realtime information etc with a paid account without any 'threshold'. Additionally, you may want to look into CFDs/Spreadbets as these, won't include the heavy 'fees' and tax liabilities that trading with stocks may bring. |
How to resolve imbalances and orphan transactions in Gnucash? | I have been following some of these threads. Some of them are really old. I have read used recording to equity accounts to resolve the imbalance USD issue. The thing I noticed is that all my imbalances occur when paying bills. I took all the bills and set them up as vendor accounts, entered the bills in the new bills, and used the process payment when paying bills. The imbalance issue stopped. It makes sense. The system is a double entry. That's it will credit and debit. Assets accounts are increased with a debit and decreased with a credit. Equity accounts are increased with a credit and decreased with a debit. ie; Say you have an monthly insurance bill for $100. You enter it into the new vendor bill. This credits Accounts Payable. When paying the bill it credits checking, debits account payable, credits vendor account, debits the expense insurance. In short for each credit there has to be a debit for the books to balance. When there is no account for it to record to it will record in Imbalance USD to balance the books. |
Are stores that offer military discounts compensated by the government? | This story is about military grocery stores - i.e.: grocery stores for military personnel on military bases. There are no discounts for military personnel in a regular grocery store. But they may have subsidised prices in grocery stores located inside a military installation, and these are those stores that the story is talking about. |
How come I can't sell short certain stocks? My broker says “no shares are available” | Shorts are difficult because you have to find someone to lend the stock to you. In contrast, put options don't require that. They also have some nice properties like you're only out the contract price. The options chain for BSFT will give you an idea of where the market is. Keep in mind that BSFT only IPO'd last year and announced blowout earnings recently. Make sure the P:E you're looking at is using recent earnings reports! |
What would I miss out on by self insuring my car? | Convenience, and of course money. In case of an event, you'll have to spend the full worth of money to fix/replace, while if you're insured - you get the insurance to pay for it. It is up to you to decide, if the money saved on the lower premiums worth the risk of paying much more in case of an event. Of course, the cheaper the car the more it makes sense not to pay the premiums. Many people do that. Regarding the bargaining power, I actually think that you would pay less if it is not going through insurance than the bill the insurance pays. I fixed a nasty dent for like $300 at one shop, while at the other they said "It's $1200, but what do you care, your insurance will cover it" (I had $500 deductible, so in the end it was cheaper for me to pay $300 without the insurance at all). |
Is there any advantage to owning equity in a company compared to a royalty agreement? | Each way you go is a little bit of a gamble. Owning equity in the company is best in situations where you can trade and sell that equity, or where the dilution of your royalty product would affect your returns, or if you can maintain a certain equity stake without working at the company or if you can hold out on taking equity to reinvest profits for the purposes of growth. The royalty is best in situations where you're getting a portion of the gross, since you get paid as a creditor, no matter how the company is performing, or if you intend to collect royalties after you leave the company. Now for your situation: if your royalties are fluctuating with profit instead of gross and your equity is tied to your continued partnership and not subject to potential growth... then they're pretty much both workarounds for the same thing, you've removed the particular advantages for each way of receiving payment. If the company ever does buy out or go public, how much of your additional X earning a month would you have to then re-invest to get an equity stake? And for royalties, if another developer came aboard, or your company bought another company, how much would this dilute your IP contribution? So, aside from the gambling nature of the issue, I'm not sure your tax calculation is right. You can take equity profit as dividend, as long as you're collecting a sufficient salary (this prevents a business from declaring all profits as a dividend). This would put those profits into a different tax bracket, 15% capital gains. Or if all profits are equitably split, you could take part as salary, part as dividend. As well, as someone who's making active income off of their IP, not passive income, you're supposed to file a Schedule C, not a Schedule E, so your royalties would include your self employment taxes. The schedule E is for royalties where the author isn't actively in the field or actually self employed in that area, or if you own royalties on something you didn't create. Should you keep the royalties then go to another job field or retire then your royalties could go on a Schedule E. Now, a tax advantage may exist on a Schedule C if you can write off certain health and business expenses reducing your income that you can't on a Schedule E, though it'd probably be difficult to write off more than the adjusted self employment cost savings of a Schedule E. |
Advice for college student: Should I hire a financial adviser or just invest in index funds? | Couple of clarifications to start off: Index funds and ETF's are essentially the same investments. ETF's allow you to trade during the day but also make you reinvest your dividends manually instead of doing it for you. Compare VTI and VTSAX, for example. Basically the same returns with very slight differences in how they are run. Because they are so similar it doesn't matter which you choose. Either index funds and ETF's can be purchased through a regular taxable brokerage account or through an IRA or Roth IRA. The decision of what fund to use and whether to use a brokerage or IRA are separate. Whole market index funds will get you exposure to US equity but consider also diversifying into international equity, bonds, real estate (REITS), and emerging markets. Any broker can give you advice on that score or you can get free advice from, for example, Future Advisor. Now the advice: For most people in your situation, you current tax rate is currently very low. This makes a Roth IRA a very reasonable idea. You can contribute $5,500 for 2015 if you do it before April 15 and you can contribute $5,500 for 2016. Repeat each year. You won't be able to get all your money into a Roth, but anything you can do now will save you money on taxes in the long run. You put after-tax money in a Roth IRA and then you don't pay taxes on it or the gains when you take it out. You can use Roth IRA funds for college, for a first home, or for retirement. A traditional IRA is not recommended in your case. That would save you money on taxes this year, when presumably your taxes are already low. Since you won't be able to put all your money in the IRA, you can put the rest in a regular taxable brokerage account (if you don't just want to put it in a savings account). You can buy the same types of things as you have in your IRA. Note that if your stocks (in your regular brokerage account) go up over the course of a year and your income is low enough to be in the 10 or 15% tax bracket and you have held the stock for at least a year, you should sell before the end of the year to lock in your gains and pay taxes on them at the capital gains rate of 0%. This will prevent you from paying a higher rate on those gains later. Conversely, if you lose money in a year, don't sell. You can sell and lock in losses during years when your taxes are high (presumably, after college) to reduce your tax burden in those years (this is called "tax loss harvesting"). Sounds like crazy contortions but the name of the game is (legally) avoiding taxes. This is at least as important to your overall wealth as the decision of which funds to buy. Ok now the financial advisor. It's up to you. You can make your own financial decisions and save the money but it requires you putting in the effort to be educated. For many of us, this education is fun. Also consider that if you use a regular broker, like Fidelity, you can call up and they have people who (for free) will give you advice very similar to what you will get from the advisor you referred to. High priced financial advisors make more sense when you have a lot of money and complicated finances. Based on your question, you don't strike me as having those. To me, 1% sounds like a lot to pay for a simple situation like yours. |
What is a “Junk Bond”? | A junk bond is, broadly, a bond with a non-negligible risk of default. ("Bond" ought to be defined elsewhere, but broadly it's a financial instrument you buy from a company or government, where they promise to pay you back the principal and some interest over time, on a particular schedule.) The name "junk" is a bit exaggerated: many of them are issued by respectable and reasonably stable businesses. junk bonds were required to do large leveraged buyouts. This means: the company issued fairly risky, fairly high-yield debt, to buy out equity holders. They have to pay a high rate on the debt because the company's now fairly highly geared (ie has a lot of debt relative to its value) and it may have to pay out a large fraction of its earnings as interest. What is a junk bond and how does it differ from a regular bond? It's only a matter of degree and nomenclature. A bond that has a credit rating below a particular level (eg S&P BBB-) is called junk, or more politely "non-investment grade" or "speculative". It's possible for an existing bond to be reclassified from one side to another, or for a single issuer to have different series some of which are more risky than others. The higher the perceived risk, the more interest the bond must pay offer in order to attract lenders. Why is there higher risk/chance of default? Well, why would a company be considered at higher risk of failing to repay its debt? Basically it comes down to doubt about the company's future earnings being sufficient to repay its debt, which could be for example: |
Main source of the shares/stocks data on the web | To expand on keshlam's answer: A direct feed does not involve a website of any kind. Each exchange publishes its order/trade feed(s) onto a packet network where subscribers have machines listening and reacting. Let's call the moment when a trade occurs inside an exchange's matching engine "T0". An exchange then publishes the specifics of that trade as above, and the moment when that information is first available to subscribers is T1. In some cases, T1 - T0 is a few microseconds; in other (notorious) cases, it can be as much as 100 milliseconds (100,000x longer). Because it's expensive for a subscriber to run a machine on each exchange's network -- and also because it requires a team of engineers devoted to understanding each exchange's individual publication protocols -- it seems unlikely that Google pays for direct access. Instead Google most likely pays another company who is a subscriber on each exchange around the world (let's say Reuters) to forward their incoming information to Google. Reuters then charges Google and other customers according to how fast the customer wants the forwarded information. Reuters has to parse the info it gets at T1, check it for errors, and translate it into a format that Google (and other customers) can understand. Let's say they finish all that work and put their new packets on the internet at time T2. Then the slow crawl across the internet begins. Some 5-100 milliseconds later your website of choice gets its pre-processed data at time T3. Even though it's preprocessed, your favorite website has to unpack the data, store it in some sort of database, and push it onto their website at time T4. A sophisticated website might then force a refresh of your browser at time T4 to show you the new information. But this forced refresh involves yet another slow crawl across the internet from where your website is based to your home computer, competing with your neighbor's 24/7 Netflix stream, etc. Then your browser (with its 83 plugins and banner ads everywhere) has to refresh, and you finally see the update at T5. So, a thousand factors come into play, but even assuming that Google is doing the most expensive and labor-intensive thing it can and that all the networks between you and Google and the exchange are as short as they can be, you're not going to hear about a trade -- even a massive, market-moving trade -- for anywhere from 500 milliseconds to 5 seconds after T0. And in a more realistic world that time will be 10-30 seconds. This is what Google calls "Realtime" on that disclaimer page, because they feel they're getting that info to you as fast as they possibly can (for free). Meanwhile, the computers that actually subscribe to an exchange heard about the trade way back at time T1 and acted on that information in a few microseconds. That's almost certainly before T2 and definitely way way before T3. The market for a particular instrument could change direction 5 times before Google even shows the first trade. So if you want true realtime access, you must subscribe to the exchange feed or, as keshlam suggests, sign up with a broker that provides its own optimized market feeds to you. (Note: This is not an endorsement of trading through brokers.) |
How can I lookup the business associated with a FEIN? | I think much of that info is hidden behind pay-walls. Here is one site I've found. http://www.feinsearch.com/ Another that is for non-profits only is guidestar. http://www.guidestar.org/rxg/products/nonprofit-data-solutions/product-information/guidestar-premium/advanced-nonprofit-search.aspx |
What's a reliable way for a non-permanent resident alien in the USA to get an auto loan? | From personal experience (I financed a new car from the dealer/manufacturer within weeks of graduating, still on an F1-OPT): |
Can signing up at optoutprescreen.com improve my credit score? | Sounds like a case of false causality. If somebody is taking the time to sign up at opt out sites, then that same person is probably making other smart decisions with their credit, causing scores to rise. Optoutprescreen.com does not help your score, the other actions taken might. People seeing different results can probably be tied to the timeframe they signed up. People who signed up then took care of their credit vs. people whose credit was already good and then signed up. A 10 pt bounce one way or the other is not significant. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | It also reduces risk from the bank's eyes. Believe it or not, they do lose out when people don't pay on their mortgages. Take the big 3 (Wells, Chase and BoA). If they have 50 million mortgages between the 3 of them and 20% of people at one point won't be able to pay their mortgage due to loss of income or other factors, this presents a risk factor. Although interest payments are still good, reducing their principal and interest keeps them tied down for additional (or sometimes shorter) time, but now they are more likely to keep getting those payments. That's why credit cards back in 07 and 08 reduced limits for customers. The risk factor is huge now for these financial institutions. Do your research, sometimes a refi isn't the best option. Sometimes it is. |
Restricting a check from being deposited via cell phone | I agree with you that smartphone deposits make you more vulnerable to a variety of issues. Checks are completely insecure, since anyone with your routing/account number can create a check, and individuals are less likely to shred or otherwise secure the check properly. Ways to control this risk are: |
Where do online stock brokers get their real-time data from? | Generally Google gets their data, directly from the exchanges (Nasdaq, NYSE). This is really expensive -- tens of thousands of dollars a month just for the license from the exchange, and lots of telecom costs on top of that. |
Can I withdraw from my Roth IRA retirement account to fund a startup? | Yes, it is possible to withdraw money from your Roth IRA before retirement (but I wouldn't necessarily advise you to do so.) Here's the good news, and the bad news: The good news: Unlike a traditional IRA, money contributed to a Roth IRA is done so on an after-tax basis, meaning you don't benefit from a tax deduction on contributions. So, the money you withdraw from your Roth IRA will not be taxed entirely as ordinary income. In fact, you are allowed to withdraw the amount of your original contributions (also known as basis) without any taxes or penalties. Let's imagine you originally deposited $9000 of that current $10K total value – then in such a case, $9000 could be withdrawn tax and penalty free. The bad news: When it comes to the investment earnings – the other $1000 in my example – it's a different story: Since you wouldn't be age 59 1/2 at the time of withdrawal, any money taken out beyond your original contributions would be considered a non-qualified withdrawal and subject to both ordinary income taxes plus a 10% early withdrawal penalty. Ouch! Perhaps you might want to restrict your withdrawal to your original contributions. I would imagine if you've had the account for such a short period of time that much or all of your account value is original contributions anyway. A good article about the rules for early IRA withdrawals is About.com's Tax Penalty for Early Distribution of Retirement Funds. Note: If your Roth IRA funds were the result of a rollover from another account type, other rules may apply. See Roth IRA (Wikipedia) for more detail; search for "rollover". Regarding the withdrawal process itself and the timing, you should check with your account custodian on how to proceed. |
Can a merchant charge you more in the US if you want to use a credit card? | I'm not sure about the laws in specific states. However it's part of their merchant agreement that they can not charge a fee for a customer paying with credit card. It's also against merchant agreements to require a minimum purchase to use a credit card, although this is less commonly enforced. Apparently (http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html) merchants can offer a cash discount. Offering payment by credit card, though practically a requirement in todays retail environment, is a privilege for the merchant. It's a way of making buying convenient for the customer. As a result, penalizing the customer in any way is not just against their agreement, but rather disingenuous as well. edit: here's a bit more information about what they can and can't do. Amex prohibits discrimination, so if a merchant can't do something to a Visa/MC customer they can't do it to an Amex customer either. http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html |
Pay for a cheap car or take out a loan? | This was a huge question for me when I graduated high school, should I buy a new or a used car? I opted for buying used. I purchased three cars in the span of 5 years the first two were used. First one was $1500, Honda, reliable for one year than problem after problem made it not worth it to keep. Second car was $2800, Subaru, had no problems for 18 months, then problems started around 130k miles, Headgasket $1800 fix, Fixed it and it still burnt oil. I stopped buying old clunkers after that. Finally I bought a Nissan Sentra for $5500, 30,000 miles, private owner. Over 5 years I found that the difference between your "typical" car for $1500 and the "typical" car you can buy for $5500 is actually a pretty big difference. Things to look for: Low mileage, one owner, recent repairs, search google known issues for the make and model based on the mileage of the car your reviewing, receipts, clean interior, buying from a private owner, getting a deal where they throw in winter tires for free so you already have a set are all things to look for. With that said, buying new is expensive for more than just the ticket price of the car. If you take a loan out you will also need to take out full insurance in order for the bank to loan you the car. This adds a LOT to the price of the car monthly. Depending on your views of insurance and how much you're willing to risk, buying your car outright should be a cheaper alternative over all than buying new. Save save save! Its very probably that the hassles of repair and surprise break downs will frustrate you enough to buy new or newer at some point. But like the previous response said, you worked hard to stay out of debt. I'd say save another grand, buy a decent car for $3000 and continue your wise spending habits! Try to sell your cars for more than you bought them for, look for good deals, buy and sell, work your way up to a newer more reliable car. Good luck. |
At what point should I begin paying off student loans? | Its almost always better to pay off loans sooner rather than later. Being debt free is amazingly liberating. However, in your case, I'd be reluctant to make significant headway on a loan repayment program. Here's why: The best investment you can make, right now, is in yourself. Completing your education should be the top priority. The next would be to meet the requirements of a job after received after school is complete. So what I would do is estimate the amount of money it would take to complete school. Add to that an estimate of an amount to move to a new city and setup a household. That amount should be held in reserve. Anything above that can used to pay down loans. Once you complete school and get settled into a job, you can then take that money and also throw it at your loans. |
What are these fees attached to mutual fund FSEMX? | FSEMX has an annual expense ratio of 0.1% which is very low. What that means is that each month, the FSEMX will pay itself one-twelfth of 0.1% of the total value of all the shares owned by the shareholders in the mutual fund. If the fund has cash on hand from its trading activities or dividends collected from companies whose stock is owned by FSEMX or interest on bonds owned by FSEMX, the money comes out of that, but if there is no such pot (or the pot is not large enough), then the fund manager has the authority to sell some shares of the stocks held by FSEMX so that the employees can be paid, etc. If the total of cash generated by the trading and the dividend collection in a given year is (say) 3% of the share value of all the outstanding mutual fund, then only 2.9% will be paid out as dividend and capital gain distribution income to the share holders, the remaining 0.1% already having been paid to FSEMX management for operating expenses. It is important to keep in mind that expenses are always paid even if there are no profits, or even if there are losses that year so that no dividends or capital gains distributions are made. You don't see the expenses explicitly on any statement that you receive. If FSEMX sells shares of stocks that it holds to pay the expenses, this reduces the share value (NAV) of the mutual fund shares that you hold. So, if your mutual fund account "lost" 20% in value that year because the market was falling, and you got no dividend or capital gains distributions either, remember that only 19.9% of that loss can be blamed on the President or Congress or Wall Street or public-sector unions or your neighbor's refusal to ditch his old PC in favor of a new Mac, and the rest (0.1%) has gone to FSEMX to pay for fees you agreed to when you bought FSEMX shares. If you invest directly in FSEMX through Fidelity's web site, there is no sales charge, and you pay no expenses other than the 0.1% annual expense ratio. There is a fee for selling FSEMX shares after owning them only for a short time since the fund wants to discourage short-term investors. Whatever other fees finance.yahoo.com lists might be descriptive of the uses that FSEMX puts its expense ratio income to in its internal management, but are not of any importance to the prudent investor in FSEMX who will never encounter them or have to pay them. |
why would closing price of a stock be different from different sources, and which would you take as the real price? | There is more than one exchange where stock can be traded. For example, there is the New York Stock Exchange and the London Stock Exchange. In fact, if you look at all the exchanges, there is essentially continuous trading 24/7 for many financial instruments (eg US government bonds). The closing price quoted in papers is usually the price at the close on the NYSE. However, options close after that and so there is after-the-close trading in many stocks with active options, so the price at the close of options trading at CBOE is often used. The "real" price is always changing. But for the purpose of discussion, using the closing price in NYSE (for NYSE listed stocks) is pretty standard and unlikely to be questioned. Likewise, using Bloomberg's price makes sense. Using some after-hours or small market quote could lead to differences with commonly accepted numbers - until tomorrow :) |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | Possibly not relevant to the original asker, but in the UK another advantage of using a credit card is that when making a purchase over £100 and paying by credit card you get additional protection on the purchase which you wouldn't get when paying by debit card. E.g. if you buy something costing £100 and the company goes bust before it's delivered, you can claim the money back from the credit card company. Whereas if you paid by debit card, you would potentially lose out. This protection is a legal requirement under Section 75 of the Consumer Credit Act 1974. |
UK: Personal finance book for a twenty-something | As you are in UK, you should think in terms of Tax Free (interest and accumulated capital gains) ISA type investments for the long term AND/OR open a SIPP (Self Invested Pension Plan) account where you get back the tax you have paid on the money you deposit for your old age. Pensions are the best bet for money you do not need at present while ISAs are suitable for short term 5 years plus or longer. |
How to spend more? (AKA, how to avoid being a miser) | @pyb is right - you should put an hourly dollar value on your time. Calculate a realistic number and keep it in the back of your mind. Then when you're looking for a discount or a saving, estimate the maximum amount that you'd be able to save. This should be a realistic proportion of the value of the item. From those figures you can get the maximum amount of time that you should spend on looking for that discount. Spend any more than that amount of time and you lose money even if you get the discount. So then you can end up with a few rules-of-thumb like "don't spend more than x minutes of time per dollar of possible savings". Then you can spend the spare time you've created on looking for savings on big-ticket items where the time is more efficiently used... or on studying to upgrade your earning potential... or on taking some time out to enjoy the world and sniff the flowers. :) |
A University student wondering if investing in stocks is a good idea? | Contrary to most other advise given here, I'd recommend (in your situation) not to invest in stock (yet). There are some 'hidden' cost to investing that will eat your profit and in the end, that's why you are investing. Banks will charge for buying, selling and maintaining stock as well as for cashing dividends. Depending on which bank or intermediary these costs will rise. So, my advise is to start playing with stock creating a virtual portfolio and track that. Just as duffbeer says, start saving. Also look at my answer here. |
What debts are both partners liable for in a 'community property' state? | (Yes, I know this is a seven year old question.) Does this only apply to debts that were taken on during marriage Yes or to all debts of both partners? No. The important thing to remember is that it's both debts and assets acquired during the marriage which are shared. This comes from the reality that men in the olden times were the ones in business, accumulating wealth, etc while the woman "made the home". The working assumption was that the woman who made the home was an equal partner with the man, since he benefited from a good home, and she benefited from his income. The fact that pre-marriage debts and assets were not community property also protected the woman, because she was able to then take back her dowry and use that to support herself. (N.B. - I live in a CP state.) |
What's a normal personal debt / equity ratio for a highly educated person? | What is your biggest wealth building tool? Income. If you "nerf" your income with payments to banks, cable, credit card debt, car payments, and lattes then you are naturally handicapping your wealth building. It is sort of like trying to drive home a nail holding a hammer right underneath the head. Normal is broke, don't be normal. Normal obtains student loans while getting an education. You don't have to. You can work part time, or even full time and get a degree. As an example, here is one way to do it in Florida. Get a job working fast food and get your associates degree using a community college that are cheap. Then apply for the state troopers. Go away for about 5 months, earning an income the whole time. You automatically graduate with a job that pays for state schools. Take the next three years (or more if you want an advanced degree) to get your bachelors. Then start your desirable career. What is better to have "wasted" approx 1.5 years being a state trooper, or to have a student loan payment for 20 years? There is not even pressure to obtain employment right after graduation. BTW, I know someone who is doing exactly what I outlined. Every commercial you watch is geared toward getting you to sign on the line that is dotted, often going into debt to do so. Car commercials will tell you that you are a bad mom or not a real man if you don't drive the 2015 whatever. Think differently, throw out your numbers and shoot for zero debt. EDIT: OP, I have a MS in Comp Sci, and started one in finance. My wife also has a masters. We had debt. We paid that crap off. Work like a fiend and do the same. My wife's was significant. She planned on having her employer pay it off for each year she worked there. (Like 20% each year or something.) Guess what, that did not work out! She went to work somewhere else! Live like you are still in college and use all that extra money to get rid of your debt. Student loans are consumer debt. |
Digital envelope system: a modern take | The whole point of the "envelope system" as I understand it is that it makes it easy to see that you are staying within your budget: If the envelope still has cash in it, then you still have money to spend on that budget category. If you did this with a bunch of debit cards, you would have to have a way to quickly and easily see the balance on that card for it to work. There is no physical envelope to look in. If your bank lets you check your balance with a cell-phone app I guess that would work. But at that point, why do you need separate debit cards? Just create a spreadsheet and update the numbers as you spend. The balance the bank shows is always going to be a little bit behind, because it takes time for transactions to make it through the system. I've seen on my credit cards that sometimes transactions show up the same day, but other times they can take several days or even a week or more. So keeping a spreadsheet would be more accurate, or at least, more timely. But all that said, I can check my bank balance and my credit card balances on web sites. I've never had a desire to check from a cell phone but at least some banks have such apps -- my daughter tells me she regularly checks her credit card balance from her cell phone. So I don't see why you couldn't do it with off-the-shelf technology. Side not, not really related to your question: I don't really see the point of the envelope system. Personally, I keep my checkbook electronically, using a little accounting app that I wrote myself so it's customized to my needs. I enter fixed bills, like insurance premiums and the mortgage payment, about a month in advance, so I can see that that money is already spoken for and just when it is going out. Besides that, what's the advantage of saying that you allot, say, $50 per month for clothes and $100 for gas for the car and $60 for snacks, and if you use up all your gas money this month than you can't drive anywhere even though you have money left in the clothes and snack envelopes? I mean, it makes good sense to say, "The mortgage payment is due next week so I can't spend that money on entertainment, I have to keep it to pay the mortgage." But I don't see the point in saying, "I can't buy new shoes because the shoe envelope is empty. I've accumulated $5000 in the shampoo account since I went bald and don't use shampoo any more, but that money is off limits for shoes because it's allocated to shampoo." |
How to transfer money to yourself internationally? | I use XE.com for almost the same purpose. They have free transfer options, such as ACH withdrawals and deposits. I normally do a online bill payment through my international bank to XE, and have them deposit it in the US via ACH. It takes 1-3 business days, and there's no fee beyond their small percentage (about 1.25%) on top of the exchange rate. |
Can I sell a stock immediately? | You can always trade at bid or ask price (depending if you are selling or buying). Market price is the price the last transaction was executed at so you may not be able to get that. If your order is large then you may not even be able to get bid/ask but should look at the depth of the order book (ie what prices are other market participants asking for and what is the size of their order). Usually only fast traders will trade at bid/ask, those who believe the price move is imminent. If you are a long term trader you can often get better than bid or ask by placing a limit order and waiting until a market participant takes your offer. |
What should a 21 year old do with £60,000 ($91,356 USD) inheritance? | It's important to consider your Investor Profile when deciding the right kind of vehicle for your finances. You are a young guy, with a considerable earned income and no dependents (sorry, this was not clear from the question.) This means that you are able to take a lot of risks that people who also have a family to think about, might not. == high risk tolerance You should definitely not put your money in a Wealth Management fund or Mutual Fund or any other 'hands-off' vehicle. These typically have worse returns than the FTSE itself. Their popularity is due to an amazing marketing job and the fact that people in general want to believe there is an easy way to grow their money. Probably the best vehicle for your money is property, so the first thing you should do with the money is hire a competent accountant and solicitor. |
What can I replace Microsoft Money with, now that MS has abandoned it? | How complicated is your budget? We have a fairly in depth excel spreadsheet that does the trick for us. Lots of formulas and whatnot for calculating income, outgo, expected and actual expenses, expenses budgeted over time (i.e. planned expenses that are semi-annual or annual) as well as the necessary emergency funds based on expenses. Took me a few hours to initially create and many tweaks over months to get just right but it's reliable and we know we'll never lose support for it. I'd be willing to share it if desired, I'll just have to remove our personal finance figures from it first. |
Should you co-sign a personal loan for a friend/family member? Why/why not? | I know this question has a lot of answers already, but I feel the answers are phrased either strongly against, or mildly for, co-signing. What it amounts down to is that this is a personal choice. You cannot receive reliable information as to whether or not co-signing this loan is a good move due to lack of information. The person involved is going to know the person they would be co-signing for, and the people on this site will only have their own personal preferences of experiences to draw from. You know if they are reliable, if they will be able to pay off the loan without need for the banks to come after you. This site can offer general theories, but I think it should be kept in mind that this is wholly a personal decision for the person involved, and them alone to make based on the facts that they know and we do not. |
If accepting more than $10K in cash for a used boat, should I worry about counterfeiting? | When you operate outside of the law, you bear the risks of that decision. When you operate within the law, you have a number of avenues, such as the courts and police to mediate disputes or other problems. |
How much money should I put on a house? | I Usually would not say this but if you can just put down 20% I would do that and get a 15 year mortgage. The rates are so low on 15 year mortgage that you should be able to make more than the 3% in the market per year and make some money. I wouldn't be surprised if for 1/2 of the term of your loan you will be able to make that just in interest. Basically I have done this for my house and my rental properties. So I have put my money where my mouth is on this. I have made over 9% each of the last three years which has made me $12,000 dollars above and beyond over what I would have paid in interest per year. So it a decision that net me $36,000 for doing nothing. Now the market is going to be down some of those years so lets see how it works out but I have history on my side. Its not about timing the market its about time in the market. And 15 years in the market is a pretty safe bet albeit not as safe as just dumping you money in the mortgage. |
which types of investments should be choosen for 401k at early 20's? | If you don't want to pay much attention to your investments, target date funds -- assuming you find one (like Vanguard's) with no management fees beyond those acquired from the underlying funds -- are usually a great choice: when the target date is far off, they invest almost entirely (usually 90% or so) in (mutual funds that in turn consist of many) stocks, with the remainder in bonds; as the date gets closer, the mix is automatically shifted to more bonds and less stocks (i.e. less risk, but less potential return too). |
Which countries allow eChecks? | eChecks (and ACH) are a (desperate?) try of the US banking system to get into the 21st century. All EU countries (and some others) have direct deposits and transfers as the standard way of transferring money since about 20 years, and since about 5 years it is cost-free and one-day across all the EU. The rest of the world runs mostly country specific system, as there is not that large a demand for cross country shifting, and exchange rates are also an issue in any such transaction. Because they have different ways that work fine since decades, other countries will consider the eCheck idea as a step backwards and will probably ignore it, so your answer is 'none'. International companies work with banks in a different relationship than retail customers, so they can do things you and me cannot do - depending on size and volume. Some large companies get a banking license and then handle their own stuff; medium sized companies make favorable contracts with banks (they are golden goose customers - never an issue, no brick and mortar presence needed, banks love them), or they simply suck up the transfer cost (if you move millions, who cares about a 40 $ fee). Small businesses whine and live with what they get... |
Is there any truth to the saying '99% of the world's millionaires have become rich by doing real estate'? | This quote has it almost backwards. Thomas J. Stanley's recent book (he's one of the duo who researched and wrote about The Millionaire Next Door) claims that the top occupation of millionaires is "business owner / self-employed" (28%). "Real estate investor" is lumped in with "other" (9%), and if the ordering is correct in the list, it's no more than 2% of the total. (source) |
Best way to buy Japanese yen for travel? | You don't. When you get to Japan, use your ATM card to withdraw local currency. My bank (ETrade) doesn't charge me int'l fees. |
Why can't house prices be out of tune with salaries | The three basic needs are food, clothing, and shelter. Housing falls into the third category. Because it is "basic," housing takes up a large part of one's disposable income. The rule of thumb is that you shouldn't spend more than 25% of your income on rent or mortgages. And that is income BEFORE taxes. Anything much more than that takes up too much of one's budget. You simply CAN'T double housing's share of the budget from 25% to 50%. Whereas, it's easy to go from 1% to 2% for say, a cellphone upgrade. In the long run, housing prices are constrained by the size of people's housing budgets, which in turn are tied to incomes. Nowadays, that includes FOREIGN buyers. So there may be a case where west coast housing prices are driven up by Asian buyers, or Florida housing by buyers from Latin America, driving Americans out of local markets. |
Are there special exceptions to the rule that (US) capital gains taxes are owed only when the gain materializes? | In addition to the expatriation case already mentioned by Ben Miller, traders/investors are required to use mark-to-market accounting on certain investments. These go by Section 1256 contracts due to the part of the law that defines them. Mark-to-market is also required on straddles (combination of a long and and a short position in equities that are expected to vary inversely to each other). Mark-to-market means that you have to treat the positions as if you closed them at their end-of-year market value (even if you still have the position across the new year). |
Why are interest rates on saving accounts so low in USA and Europe? | There is really much simpler explanation for the interest rate differences in different countries. It is the interest rate arbitrage. It is a very well explored economic concept, so you can look it up on the Internet, in case you want to know more. 1) Interest rates for the same currency in different countries Basically, as one smart person here pointed out, there is only one price of money in free market economy. It happens, because investors can move their money unrestrictedly anywhere in the World to capitalize on the local interest rates advantage. For instance, if I can take a loan in the USA at 3-4% annual interest and receive 5-6% annual income on my dollar deposit in Russia, I would take a loan in the US and open a deposit in Russia to enjoy a risk free interest rate differential income of 2% (5-6% - 3-4% ~ 2%). So, would any reasonable person. However, in real World very few banks in Russia or anywhere would pay you an an interest rate higher than it can borrow money at. It'd probably lose money if it'd do so. Anyways, the difference between the risk free rate and interest rate on the dollar deposit can be attributed to the risk premium of this particular bank. The higher expected return, the greater risk premium. If there is a positive difference in the interest rates on the dollar deposits in different countries, it will almost entirely accounted for the risk premium. It is generally much riskier to keep money in, say Russian bank, than American. That's why investors want greater return on their dollar deposits in Russian banks than in American. Of course, if you'd want to park your USD in Russian bank you'd also have to consider transaction costs. So, as you may have already guessed, there is no free lunch. 2) Interest rates in different currencies for different countries If we are talking about the interest rates in different sovereign currencies, it is a somewhat similar concept, only there is more risk if you keep money in local currency (risk premium is much higher). Probably, the biggest component of this risk is inflation (that is only attributed to the prices in local currency). For that reason, current interest rates on deposits in Russian Rubles are at 10-12%, but only 1-3% in the US Dollars. An economic concept that discusses this phenomenon in great detail is Interest Rate Parity. Hope this was helpful. P.S. It doesn't look quite realistic that you can get an 8% annual income for USD deposit in Russia with the interest rates in the U.S. being at 1-2%. At present moment, a 30-year mortgage annual interest rate in the US is at ~2-3% and an annual interest rates for dollar deposits in Sberbank (one of the safest Russian banks = very little risk premium) is at 1-3%. So, arbitrage is impossible. |
What forms of payment am I compelled to accept? | When you're selling something through a provider, like Craig's List or newspapers, the only thing that may limit your choices is the provider. They may refuse your post if it's against their rules or the law. But luckily they usually don't limit or enforce certain payment choices. These private business providers have the right to do so if they want. You don't need to be their customer. They may state their terms for using the service and even refuse service (before any payment is made). The fun part is that you may do so as well. Just remember to state your terms in your post so the prospective buyers are aware of them. I've found it best to put payment and delivery terms in separate lines so that they are easily noticeable, for example: Nice victorian handbasket with gold embroidery, only used once. Signed by the original author. Comes with a certificate of authenticity. No delivery, only cash payments. |
Can a company control its stock through contracts with stockholders? | Your first scenario, involving shareholders in a private corp being limited by a contractual agreement, is common in practice. Frequent clauses include methods of valuing the shares if someone wants to sell, first right of refusal [you have to attempt to sell to the other shareholders, before you can sell to a 3rd party], and many others. These clauses are governed by contract law [ie: some clauses may be illegal in contract law, and therefore couldn't be applied here]. A Universal Shareholders' Agreement is just the same as the above, but applied to more people. You would never get an already public company to convert to a universal shareholders' agreement - because even 1 share voting 'no' would block it [due to corporate law limiting the power of a corporation from abusing minority shareholder value]. In practice, these agreements universally exist at the start of incorporation, or at least at the first moment shares become available. An example is the Canadian mega-construction company PCL*, which is employee-owned. When the original owner transferred the corporation to his employees, there was a USA in place which still today governs how the corporation operates. In theory you could have a 'public company' where most shares are already owned by the founders, and 100% of remaining shares are owned by a specific group of individuals, in which case you may be able to get a USA signed. But it wouldn't really happen in practice. *[Note that while PCL is broadly owned by a large group of employees, it is not a 'public company' because any random schmuck can't simply buy a share on the Toronto Stock Exchange. I assume most exchanges would prevent corporations from being listed if they had ownership restrictions like this]. |
Credit and Debit | In view of business, we have to book the entries. Business view, owner and business are different. When capital is invested in business by owner, in future business has to repay it. That's why, capital always credit. When we come about bank (business prospective) - cash, bank, fd are like assets which can help in the business. Bank is current asset (Real account) - Debit (what comes into the business) Credit (what goes out of the business) Hence credit and debit differs from what type of account is it.... credit - when business liables debit - what business has and receivables |
Can I get a dividend “free lunch” by buying a stock just before the ex-dividend date and selling it immediately after? [duplicate] | Not minutes, but hours. The "ex-dividend" date is the deadline for acquiring a stock to receive a dividend. If you hold a stock at the beginning of this day, you will receive the dividend. So you could buy a stock right at the end of the day on the day before the ex-dividend date, and sell it the next day (on the ex-dividend date), and you would get your dividend. See this page from the SEC for more information. The problem with this strategy, however, is that the value of the stock typically drops by the same amount as the dividend on that day. If you take a look at the historical price of the stock you are interested in, you'll see this. Of course, it makes sense why: a seller knows that selling before the date results in a loss of the dividend, so they want a higher price to compensate. Likewise, a buyer on or after the date knows that the dividend is already gone, so they want to pay a lower price. |
A calculator that takes into account portfolio rebalancing? | Quicken has tools for this, but they have some quirks so i hesitate to actually recommend it on that basis. |
Is it possible to dispute a wash sale? | The IRS has been particularly vague about the "substantially identical" investment part of the wash rule. Many brokers, Schwab for instance, say that only identical CUSIPs (exactly the same ETF) matter for the wash rule in their internal calculations, but warn that the IRS might consider two ETFs over the same index to be substantially identical. In your case, the broker has chosen to call these a wash despite even having different underlying indices. Talking to the broker is the first step as they will report it to the IRS. Though technically you have the final say in your taxes about the cost basis, discussing this with the IRS could be rather painful. First though it is probably worth checking with your broker about exactly what happened. There are other wash sale triggers that frequently trip people up that may have been in play here. |
What options do I have at 26 years old, with 1.2 million USD? | Something not in answers so far: define your goals. What is important to you? My goals, if I were in your shoes, would include a debt-free home, passive (investment) income so I would not have to work, and have health insurance covered. I could think of many more details, and already have, but you get the idea. To help determine which investment information to learn first, consider how much risk you can tolerate. I know that's vague at this point, but if you're looking for safe investments first, you could learn about mutual funds, and then index funds specifically. At the risky extreme, you could learn about stock options, but I would not recommend such risk. |
If throwing good money after bad is generally a bad idea, is throwing more money after good Ok? | The response to this question will be different depending which of the investment philosophies you are using. Value investors look at the situation the company is in and try to determine what the company is worth and what it will be worth in the future. Then they look at the current stock price and decide whether or not the stock is priced at a good deal or not. If the stock price is priced lower than they believe the company is worth, they would want to buy stock, and if the price rises above what they believe to be the true value, they would sell. These types of investors are not looking at the history or trend of what the price has done in the past, only what the current price is and where they believe the price should be in the future. Technical analysis investors do something different. It is their belief that as stock prices go up and down, they generally follow patterns. By looking at a chart of what a stock price has been in the past, they try to predict where it is headed, and buy or sell based on that prediction. In general, value investors are longer-term investors, and technical analysis investors are short-term investors. The advice you are considering makes a lot of sense if you are using technical analysis. If you have a stock that is trending down, your strategy probably tells you to sell; buying more in the hopes of turning things around would be seen as a mistake. It is like the gambler in Vegas who keeps playing a game he is losing, hoping that his luck changes. However, for the value investor, the historical price of a stock, and even the amount you currently have gained or lost in the stock, are essentially ignored. All that matters is whether or not the stock price is above or below the true value determined by the investor. For him, if the stock price falls and he believes the company still has a high value, it could be a signal to buy more. The above advice doesn't really apply for them. Many investors don't follow either of these strategies. They believe that it is too difficult and risky to try to predict the future price of an individual stock. Instead, they invest in many companies all at once using index mutual funds, believing that the stock market as a whole always heads up over a long time frame. Those investors don't care at all if the prices of stock are going up or down. They simply keep investing each month, and hold until they have another use for the money. The above advice isn't useful for them at all. No matter which kind of investing you are doing, the most important thing is to pick a strategy you believe in and follow the plan without emotion. Emotions can cause investors to make mistakes and start buying when their strategy tells them to sell. Instead of trying to follow fortune cookie advice like "Don't throw good money after bad," choose an investment strategy, make a plan, test it, and follow it, cautiously (after all, it may be a bad plan). For what it is worth, I am the third type of investor listed above. I don't buy individual stocks, and I don't look at the stock prices when investing more each month. Your description of your own strategy as "buy and hold" suggests you might prefer the same approach. |
Is there an academic framework for deciding when to sell in-the-money call options? | based on my understanding of your query...well you need to understand ATM and ITM options. The delta and gamma factor specifically. Usually delta of ATM is around 0.5 while ITM option is above than that say 0.6 or 0.8 or 0.9 and deep ITM is very close to 1. for every movement of 1 buck the ITM will move say 1.6, ATM 0.5 and OTM 0.3 approx Say a ABC stock price is Rs. 300 so if you check option chart you try to see which one is closer. Suppose you find strikeprice of 320 / 300 / 280. So 320 is ITM, 300 is ATM and 280 is OTM for call options. So will the delta value (e.g 0.66 / 0.55 / 0.35). So suppose if stock price rise by 7% i.e Rs. 321 then strikeprice will rise simultaneously. Say ATM CE300 is rs.10 it will start rising by 0.55 i.e. Rs.10.55. The moment the share price move from Rs.300 to Rs.320 your ATM will turn to ITM. Now the tricker part if you buy OTM and the share price rise by 15% your OTM will now become ITM and your profit will roll around 100% to 120% approx. Hope it answers your query |
Merits of buying apartment houses and renting them | Hitting the 25% marginal rate does not mean all of your earnings are taxed at 25%, only those that exceed the top of the 15% bracket. You can deduct any expenses for upgrading or repairing your apartments, those are subtracted from the earnings before tax is calculated as income, so you will probably stay in a lower marginal rate. Property tax will hit you annually, and capital gains tax will hit you when you sell them at the end. If you already have experience with this business in your home country, then this sounds like a good option for you. The only caution that I would give you is to find an accountant to help you with your taxes and pay for a consultation before you get started so that you know what to track that will help him/her minimize your tax bill. |
how does one start an investing club (as a company)? | As for the letting the "wise" people only make the decisions, I guess that would be a bit odd in the long run. Especially when you get more experienced or when you don't agree with their decision. What you could do, is make an agreement that always 3/4 (+/-) of the partners must agree with an investment. This promotes your involvement in the investments and it will also make the debate about where to invest more alive, fun and educational). As for the taxes I can't give you any good advice as I don't know how tax / business stuff works in the US. Here in The Netherlands we have several business forms that each have their own tax savings. The savings mostly depend on the amount of money that is involved. Some forms are better for small earnings (80k or less), other forms only get interesting with large amounts of money (100k or more). Apart from the tax savings, there could also be some legal / technical reasons to choose a specific form. Again, I don't know the situation in your country, so maybe some other folks can help. A final tip if your also doing this for fun, try to use this investment company to learn from. This might come in handy later. |
Can I pay off my credit card balance to free up available credit? | Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes, but you should only do that if you expect an expense that is larger than your limit allows. Then, provide an extra payment before your expense occurs since it will take longer for the issuer to apply it to the outstanding balance. For instance, when going on holiday you could deposit additional money to increase your balance temporarily. That said if your goal is to improve your credit score I would recommend using the card, staying within your limit and pay it off every month. The 2 largest factors going into calculating your credit score are: By paying off the balance each month you After 6-9 months you can probably get a bigger limit, to improve your score. I wouldn't change to a different card or get a second one, as some issuers will run a check on your creditscore that lowers it temporarily. Also: you're entitled to a free credit report each year. I'd recommend asking for one every year so you can keep track on how your credit score improves. It also gives you the opportunity to check for mistakes on your report. Check here for more information: http://www.myfico.com/crediteducation/whatsinyourscore.aspx |
How converted stock is taxed due to an acquisition | I don't think its a taxable event since no income has been constructively received (talking about the RSU shareholders here). I believe you're right with the IRC 1033, and the basis of the RSU is the basis of the original stock option (probably zero). Edit: see below. However, once the stock becomes vested - then it is a taxable event (not when the cash is received, but when the chance of forfeiture diminishes, even if the employee doesn't sell the stock), and is an ordinary income, not capital. That is my understanding of the situation, do not consider it as a tax advice in any way. I gave it a bit more though and I don't think IRC 1033 is relevant. You're not doing any exchange or conversion here, because you didn't have anything to convert to begin with, and don't have anything after the "conversion". Your ISO's are forfeited and no longer available, basically - you treat them as you've never had them. What happened is that you've received RSU's, and you treat them as a regular RSU grant, based on its vesting schedule. The tax consequences are exactly as I described in my original response: you recognize ordinary income on the vested stocks, as they vest. Your basis is zero (i.e.: the whole FMV of the stock at the time of vesting is your ordinary income). It should also be reflected in your W2 accordingly. |
What should we consider when withdrawing a large amount of money from a bank account? | withdraw in cash - bank reports it to IRS no matter what. Would this affect my tax filing in the coming year? No, and no. The bank doesn't report to the IRS. In the US - the bank will probably report to FinCEN. It has nothing to do with your tax return. withdraw in check - bank does not seem to report it. Is this correct? Doesn't have to. Still might, if they think it is a suspicious/irregular activity. wire-transfer to another person's account - would this always be slapped with a "gift tax"? If this is a gift it would. Regardless of how you transfer the money. Is it? Answers to your follow up questions: In the US, what documents do we need to prepare in case our large sum withdraw from the bank triggers a flag in relevant government (local and/or federal) divisions and they decide to investigate? Depending on what the investigators request. FinCEN would investigate money laundering, the IRS would investigate tax evasion, the FBI would investigate terrorism sponsorship, etc. Depending on who's investigating and what the suspicions are - different documents may be required. But the bottom line is that you should be able to explain the source of the funds and the destination. For example "I found $1M in cash and sent it to some drug lord because he's such a good friend of mine" will probably not fly. Does the (local/federal) government care if we stash our money (in cash or check) under our mattress, if we purchase foreign properties (taxable? documents needed for proof?), or if we give it away (to individuals or organizations - individual: a gift tax, organization: tax waivable) ? The government cares about taxes, and illegal activities. Stashing money under a mattress is not illegal, but earning cash and not paying income tax on it usually is. In many cases money stashed under the mattress was obtained illegally and/or income taxes were not paid. It seems that no matter what we do (except spreading thin our assets to multiple accounts in multiple banks), the government will always be notified of any large bank transaction and we would be forever flagged since. Is this correct ? Yes, reportable transactions will be reported. Also spreading around in multiple accounts/transactions to avoid reporting is called "structuring" and is on its own a crime. This is for cash/cash equivalent transactions only, of course. Not sure about the "forever flagged since", that part is probably sourced in your imagination. |
What's an Exchange-Traded Fund (ETF)? | Wikipedia has a fairly detailed explanation of ETFs. http://en.wikipedia.org/wiki/Exchange-traded_fund |
How exactly is implied volatility assigned to an option's strike price? | As I understand it, Implied Volatility represents the expected gyrations of an options contract over it's lifetime. No, it represents that expected movement of the underlying stock, not the option itself. Yes, the value of the option will move roughly in the same direction the value of the stock, but that's not what IV is measuring. I even tried staring at the math behind the Options pricing model to see if that could make more sense for me but that didn't help. That formula is correct for the Black-Scholes model - and it is not possible (or at least no one has done it yet) to solve for s to create a closed-form equation for implied volatility. What most systems do to calculate implied volatility is plug in different values of s (standard deviation) until a value for the option is found that matches the quoted market value ($12.00 in this example). That's why it's called "implied" volatility - the value is implied from market prices, not calculated directly. The thing that sticks out to me is that the "last" quoted price of $12 is outside of the bid-ask spread of $9.20 to $10.40, which tells me that the underlying stock has dropped significantly since the last actual trade. If the Implied Vol is calculated based on the last executed trade, then whatever algorithm they used to solve for a volatility that match that price couldn't find a solution, which then choose to show as a 0% volatility. In reality, the volatility is somewhere between the two neighbors of 56% and 97%, but with such a short time until expiry, there should be very little chance of the stock dropping below $27.50, and the value of the option should be somewhere around its intrinsic value (strike - stock price) of $9.18. |
Non-owner car insurance and registration | this is a bit unusual, but not unheard of. i have known more than one car whose owner was not its driver. besides the obvious risk that the legal owner of the car will repossess it, this seems fairly safe. your insurance should cover any financial liability that you incur during an accident. even if the car is repossessed by the owner, you are only out the registration fees. i would suggest you avoid looking this gift horse in the grill. her father on the other hand might be in for some drama and financial mess if he has a falling-out with his "friend". this arrangement reminds me of divorces where one spouse owns the car, but the other drives it and pays the loan. usually, when the relationship goes south, one spouse is forced to sell the car at a loss. |
Should I finance a new home theater at 0% even though I have the cash for it? | I bought a Thinkpad in Dec 2007 using BillMeLater, which was working with IBM/Lenovo at that time. I was getting the notebook at the lowest price available, from the manufacturer. I had the money to pay for it -- around $1400. But I went ahead and took the offer from BillMeLater. It was essentially a 12-month zero-interest credit card balance transfer loan. Sketchy bit its very nature. They spammed my inbox with solicitations, which was annoying. But I set my bank to pay the monthly amount (or slightly over, since it decreases each month) and to make the final payoff -- all at the time of purchase. This worked just fine -- but I still had spam from BillMeLater for quite a while. I still ran a slight risk that something would go wrong, at which point I'd face interest charges -- but I would then have paid off the item plus those interest charges. Luckily I avoided that. I'm not sure I'd bother doing this again, but if the sticker price was high enough, I might be tempted.... |
High credit utilization, some high interest - but credit score not overly bad. How to attack debt in this situation? | You need to pay off the entire balance of 7450 as soon as possible. This should be your primary financial goal at this point above anything else. A basic structure that you can follow is this: Is the £1500 balance with the 39.9% interest rate the obvious starting point here? Yes, that is fine. But all the cards and overdraft debts need to be treated with the same urgency! What are the prospects for improving my credit score in say the next 6-12 months enough to get a 0% balance transfer or loan for consolidation? This should not be a primary concern of yours if you want to move on with your financial life. Debt consolidation will not help you achieve the goals you have described (home ownership, financial stability). If you follow the advice here, by the time you get to the point of being eligible, you may not see enough savings in interest to make it worth the hassle. Focus on the hard stuff and pay off the balances. Is that realistic, or am I looking at a longer term struggle? You are looking at a significant struggle. If it was easy you would not be asking this question! The length of time will be determined by your choices: how aggressively you will cut your lifestyle, take on extra jobs, and place additional payments on your debt. By being that extreme, you will actually start to see progress, which will be encouraging. If you go in half-committed, your progress will show as much and it will be demotivating. Much of your success will hinge on your mental and emotional toughness to push through the hard work of delaying pleasure and paying off these balances. That is just my personal experience, so you can take it or leave it. :) The credit score will take care of itself if you follow this method, so don't worry about it. Good Luck! |
Confused about employee stock options: How do I afford these? | nan |
Put idle savings to use while keeping them liquid | I suppose it depends on how liquid you need, and if you're willing to put forth any risk whatsoever. The stock market can be dangerous, but there are strategies out there that will allow you to insure yourself against significant loss, while likely earning you a decent return. You can buy and sell options along with stocks so that if the stock drops, your loss is limited, and if it goes up or even stays where it's at, you make money (a lot more than 1% annually). Of course there's risk of loss, but if you plan ahead, you can cap that risk wherever you want, maybe 5%, maybe 10%, whatever suits your needs. And as far as liquidity goes, it should be no more than a week or so to close your positions and get your money if you really need it. But even so, I would only recommend this after putting aside at least a few thousand in a cash account for emergencies. |
Premium classification when selling covered calls in a traditional IRA? | If you hold stock in a traditional IRA and sell a covered call against that stock, the premium received for writing that call belongs to the IRA just as would any other gain, dividend, or interest. It is not a contribution but simply adds to the balance in the IRA. The nature of the gain (capital or ordinary) is not relevant since all parts of the IRA balance are treated the same when funds are (eventually) withdrawn. |
Should I get cash from credit card at 0% for 8 months and put it on loans? | Do you know how many people end up with an 18-21% rate on their credit card? They started off with low teaser rates. There was an article about it recently on Yahoo. Mainly this comes from a lack of discipline, or an unforeseen emergency. However, lets assume, that you are a bit uncommon and have iron discipline. It comes down to a math question. What is the rate on your student loan? I am going to assume 6%, and lets say that you are now paying interest. So there is 7 months between now an then, you would pay $140 (4000 * .06/12 * 7) in interest if you left it on the student loan. Typically there is not really a free lunch with the zero percent interest rate CC. They often charge a 3% balance transfer fee, so you would pay that on the entire amount, about $120. Is it worth the $20? I would say not. However, those simple calculations are not really correct. Since you would have to pay the CC $588.6/month to take care of this, you have to shrink the balance on the student loan to do a true apples to apples comparison. So doing a little loan amortization, you can retire $4000 on the student loan only paying $583/month, and paying a total of $80.40 in interest. So it would cost you money to do what you are suggesting if there is a 3% transfer fee. Even if there is no transfer fee, you only save about $80 in interest. If it was me, I would direct my energy in other areas, like trying to bring in more money to make this student loan go away ASAP. Oh and GO STEELERS! |
Micro-investing: How to effectively invest frequent small amounts of money in equities? | (For people looking at this question many years later...) Schwab and Fidelity offer a wide selection of commission-free ETFs. You need an initial purchase amount, though, of (when last I checked at Schwab) $1,000. |
Why are US target retirement funds weighted so heavily towards US stocks? | Excellent question, though any why question can be challenging to answer because it depends on the financial products in question. At least, I haven't seen many target date retirement funds that include a high percent of foreign stocks, so below explains the ones I've seen which are primarily US stocks. The United States (before the last twenty years) has been seen as a country of stability. This is not true anymore, and it's difficult for my generation to understand because we grew up in the U.S.A being challenged (and tend to think that China and India have always been powers), but when we read investors, like Benjamin Graham (who had significant influence with Warren Buffett), we can see this bias - the U.S.A to them is stable, and other countries are "risky." Again, with the national debt and the political game in our current time, it does not feel this way. But that bias is often reflect in financial instruments. The US Dollar is still the reserve currency, though it's influence is declining and I would expect it to decline. Contrary to my view (because I could be wrong here) is Mish, who argues that no one wants to have the reserve currency because having a reserve currency brings disadvantages (see here: Bogus Threats to US Reserve Currency Status: No Country Really Wants It!; I present this to show that my view could be wrong). Finally, there tends to be the "go with what you know." Many of these funds are managed by U.S. citizens, so they tend to have a U.S. bias and feel more comfortable investing their money "at home" (in fact a famous mutual fund manager, Peter Lynch, had a similar mentality - buy the company behind the stock and what company do we tend to know best? The ones around us.). One final note, I'm not saying this mentality is correct, just what the attitude is like. I think you may find that younger mutual fund managers tend to include more foreign stocks, as they've seen that different world. |
How smart is it to really be 100% debt free? | This is a "stress" period, much like the 1930s and 1970s. At a time like this, it is smart to be debt free, and to have money saved for the likely emergencies. There are growth periods like those of the 1980s and 1990s, probably returning in the 2020s and 2030s. At such times, it makes sense to play it a little "looser" and borrow money for investments. But the first order of business in answering this question is to look around you and figure out what is going on in the world (stress or growth). |
What is the opposite of a sunk cost? A “sunk gain”? | The opposite of a cost is an investment. Buying a car is an expense, usually a sunk cost, whereas purchasing real-estate, e.g. productive farmland, is an investment. (Some investments are wasting assets, as the value decreases over time, but they are still investments with market value, not costs.) "Sunk cost" isn't a fallacy. It just means an expenditure that one cannot expect to recoup. The action item is, "Don't throw good money after bad." The opposite of a sunk cost is an investment. |
Paid by an American company but working from France: where should I pay taxes? | There's nothing wrong with your reasoning except that you expect the tax laws to make perfect sense. More often than not they don't. I suggest getting in touch with a professional tax preparer (preferably with a CPA or EA designation), who will be able to understand the issue, including the relevant portions of the French-US tax treaty, and explain it to you. You will probably also need to do some reporting in France, so get a professional advice from a French tax professional as well. So, in my tax return, can I say that I had no US revenue at all during this whole year? I doubt it. |
What are the differences between gold/siver “coin” vs. “round”? | littleadv gave a great answer, but neglected to mention one thing. Modern minted coins usually only contain a (high) percentage of a precious metal. For example pre-1965 quarters are 90% silver and 10% other, to maintain strength and durability. Rounds of silver bullion are usually .9999%, or fine, silver, which is considerably softer. |
Settling house with husband during divorce. Which of these two options makes the most sense? | Both seem to be reasonable. To decide you need to guess if the value of the house will go up or down between now and when you sell. If you think the value will go up - reach a calculation agreement now. If you think the value will go down - wait until the house is actually sold. So ya pays yer money, and ya takes yer chances... I think I understand the two scenarios Unless you are absolutely confident that you understand both scenarios - make sure your lawyer gets involved and explains them to you until you do understand. |
60% Downpayment on house? | If you decide you need the extra money, you can always go refinance and get more cash out. At the end of the day, though, if you pay off your house sooner you can invest more of your income sooner; that's just a matter of discipline. |
Is CLM a stock or an ETF? | Ask your trading site for their definition of "ETF". The term itself is overloaded/ambiguous. Consider: If "ETF" is interpreted liberally, then any fund that trades on a [stock] exchange is an exchange-traded fund. i.e. the most literal meaning implied by the acronym itself. Whereas, if "ETF" is interpreted more narrowly and in the sense that most market participants might use it, then "ETF" refers to those exchange-traded funds that specifically have a mechanism in place to ensure the fund's current price remains close to its net asset value. This is not the case with closed-end funds (CEFs), which often trade at either a premium or a discount to their underlying net asset value. |
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. |
If a stock doesn't pay dividends, then why is the stock worth anything? | It's important to remember what a share is. It's a tiny portion of ownership of a company. Let's pretend we're talking about shares in a manufacturing company. The company has one million shares on its register. You own one thousand of them. That means that you own 1/1000th of the company. These shares are valued by the market at $10 per share. The company has machinery and land worth $1M. That means that for every dollar of the company you own, 10c of that value is backed by the physical assets of the company. If the company closed shop tomorrow, you could, in theory at least, get $1 back per share. The other $9 of the share value is value based on speculation about the future and current ability of the company to grow and earn income. The company is using its $1M in assets and land to produce goods which cost the company $1M in ongoing costs (wages, marketing, raw cost of goods etc...) to produce and make $2M per year in sales. That means the company is making a profit of $1M per annum (let's assume for the sake of simplicity that this profit is after tax). Now what can the company do with its $1M profit? It can hand it out to the owners of the company (which means you would get a $1 dividend each year for each share that you own) or it can re-invest that money into additional equipment, product lines or something which will grow the business. The dividend would be nice, but if the owners bought $500k worth of new machinery and land and spent another $500k on ongoing costs and next year we would end up with a profit of $1.5M. So in ten years time, if the company paid out everything in dividends, you would have doubled your money, but they would have machines which are ten years older and would not have grown in value for that entire time. However, if they reinvested their profits, the compounding growth will have resulted in a company many times larger than it started. Eventually in practice there is a limit to the growth of most companies and it is at this limit where dividends should be being paid out. But in most cases you don't want a company to pay a dividend. Remember that dividends are taxed, meaning that the government eats into your profits today instead of in the distant future where your money will have grown much higher. Dividends are bad for long term growth, despite the rather nice feeling they give when they hit your bank account (this is a simplification but is generally true). TL;DR - A company that holds and reinvests its profits can become larger and grow faster making more profit in the future to eventually pay out. Do you want a $1 dividend every year for the next 10 years or do you want a $10 dividend in 5 years time instead? |
Planning to invest in stock, age 16 | First of all, since you're 16 - you will not invest in anything. You cannot, you're a minor. You cannot enter contracts, and as such - you cannot transact in property. Your bank accounts are all UGMA accounts. I.e.: your guardian (or someone else who's the trustee on the account) will be the one transacting, not you. You can ask them to do trades, but they don't have to. They must make decisions in your best interest, which trades may not necessarily be. If however they decide to make trades, or earn interest, or make any other decision that results in gains - these are your gains, and you will be taxed on them. The way taxes work is that you're taxed on income. You're free to do with it whatever you want, but you're taxed on it. So if you realized gains by selling stocks, and reinvested them - you had income (the gains) which you did with whatever you felt like (reinvested). The taxman doesn't care what you did with the gains, the taxman cares that you had them. For losses it is a bit more complicated, and while you can deduct losses - there are limitations on how much you can deduct, and some losses cannot be deducted at all when realized (like wash sale losses or passive activity losses). When you have stock transactions, you will probably need to file a tax return reporting the transactions and your gains/losses on them. You may end up not paying any tax at all, but since the broker is reporting the transactions - you should too, if only to avoid IRS asking why you didn't. This, again, should be done by your guardian, since you personally cannot legally sign documents. You asked if your gains can affect your parents' taxes. Not exactly - your parents' taxes can affect you. This is called "Kiddie Tax" (unofficially of course). You may want read about it and take it into account when discussing your investments with your guardian/parents. If kiddie tax provisions apply to you - your parents should probably discuss it with their tax adviser. |
Safe method of paying for a Gym Membership? | I've worked in gyms for 9 years. Here's a few things I've seen: 1)Contracts aren't necessarily a terrible thing if you know that you are going to stay for a while, just know the terms you're signing up for. 2)Be aggressive and relentless with the membership salesman, don't be afraid to put your own price out there and if you don't get it walk away. Don't want the super high sign-up fee, say you wont join unless that is gone or lower. (often these sign-up fees are commissions for the salesman, one time i had a guy slip me a $100 under the table to drop the sign-up fee and monthly rate saving him at least $500 a year) 3)Pick newer gyms because they will be more in a need of new memberships thus giving in to lower prices. 4)If you don't want to sign a contract just say so, you'd be amazed how often someone gets out of signing a contract just because they asked and threatened not to join because of it. 5)Be aware of annual fees, a trend in the industry now is to have a super low membership dues but charge the member an annual "gym improvement" or "rate guarantee fee". 6)Join with a buddy, ask for a buddy discount if you sign-up at the same time. 7)Finally consider why you are joining a gym, I've seen it so often that someone joins a gym and then gets frustrated because they never use it because they weren't getting the results you wanted. Maybe your better off spending a little more and going to a private personal training studio or a group exercise studio. Independent bootcamps are a hot now. Ultimately it's about you getting what you want out of it, so do what is going to give you the best chance to get the results you want. |
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