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Is it prudent to sell a stock on a 40% rise in 2 months | Did you buy near the bottom? Suppose you did then the price is still 16% below. 50% fall and then 40% increase leaves a 16% gap. So there could still be upside. However, it appears that you are talking about a small-cap that is volatile. I wouldn't hold it. I would take the money and invest elsewhere. If you have a lot of shares and brokerage is less then sell 60% now and the remaining 40% on either 10-15% jump in price or if it falls by 5% from now. Too risky to hold longer-term. |
How much time would I have to spend trading to turn a profit? | It depends on how you define trading. If you're looking at day-trading, where you're probably going to be in a highly-leveraged position for minutes or hours, the automated traders are probably going to kill you. But, if you have a handful (less than a dozen) equities, and spend about an hour or so every week conducting research, you have a good chance of doing pretty well. You need to understand the market, listen to the earnings calls, and understand the factors that contribute to the bottom line of your investments. You should not be trading for the sake of trading, you're trading to try to achieve the best returns. Beware of dogmatists and people selling products that align with their dogma. Warren Buffet invests in companies for an extremely long investment window. Mr. Buffet also expends significant resources to gain a deep understanding of the fundamentals of the businesses that he invests in and the factors affecting those fundamentals. Buffet does not buy an S&P 500 index fund and whistle dixie. |
15 year mortgage vs 30 year paid off in 15 | Besides the reason in @rhaskett's answer, it is important to consider that paying off a 30-year mortgage as if it was a 15-year is much more inconvenient than just paying the regular payments of a 15-year mortgage. When you pay extra on your mortgage, some lenders do not know what to do with the extra payment, and need to be told explicitly that the extra needs to be applied toward the principal. You might need to do this every month with every payment. In addition, some lenders won't allow you to set up an automatic payment for more than the mortgage payment, so you might need to explicitly submit your payment with instructions for the lender each month, and then follow up each month to make sure that your payment was credited properly. Some lenders are better about this type of thing than others, and you won't really know how much of a hassle it will be with your lender until you start making payments. If you intend to pay it off in 15 years, then just get the 15-year mortgage. |
Is there any reason not to put a 35% down payment on a car? | If you are going to finance a used car, it is frequently best to arrange financing before you even pick out the car. The easiest way I recommend is to talk to a local credit union or two. They'll be able to tell you your interest rate and terms without having to talk to the dealer at all. Most likely, they'll be significantly better than the dealer at getting a good interest rate. As far "what is a good rate?", check out bankrate for average loan rates: http://www.bankrate.com/auto.aspx Today's numbers look like 2.87% is the average for a 48-month used car loan. That means if the bank comes back with something ridiculous like 9% or 10% you know they are way overcharging you. I know someone who got a first-time-buyer rate from Ford and ended up with a 19.99% rate. I could literally buy the car on my credit card and end up in a better spot. Honestly though, if you are 18 and have $5500 to put towards a car, I'd buy a $4500 car and save $1000 for repairs and maintenance. After you have the car, put $250 every month for a "car payment" into a savings account for your next car. |
Question on buying selling and buying again | Firstly 795 is not even. Secondly - generally you would pay tax on the sale of the 122 shares, whether you buy them back or not, even one minute later, has nothing to do with it. The only reason this would not create a capital gains event is if your country (which you haven't specified) has some odd rules or laws about this that I, and most others, have never heard of before. |
How to finance necessary repairs to our home in order to sell it? | A typical HELOC will have about $300 in fees to open it. From there, it's up to you how much or how long to use it. I'd shop around to find the bank that offers the right product for you. |
Are there any risks from using mint.com? | Here's a very simple answer, ask your broker/bank. Mine uses ofx. When asked if they would reimburse me for any unauthorized activity, the answer was no. Simple enough, the banks that use it don't feel its secure enough. |
Claiming income/deductions on an illegal apartment | A basement unit would typically rent for less than similar space on a higher floor. Taxwise, you should be claiming the income, and expenses via schedule E, as if it were legal. Keep in mind, Al Capone was convicted on tax evasion not his other illegal activities. As long as you treat it as a legitimate business, a rental unit, you will be good with the IRS. The local building department will fine you if they find out. |
I cosigned for a friend who is not paying the payment | I'm sorry you are going through this, but what you are dealing with is exactly is how cosigning works. It is among other reasons why you should never cosign a loan for someone unless you are 100% prepared to pay the loan on their behalf. Unfortunately, the main "benefit" to cosigning a loan is to the bank - they don't care who makes payments, only that someone does. It is not in their interest to educate purchasers who can easily get themselves into the situation you are in. What your options are depends a fair bit on the type of loan it is. The biggest problem is that normally as cosigner you cannot force your friend to do anything. If it is for a car, your best bet is to convince them to sell the car and hopefully recoup more than the cost of the loan. Many workplaces have some sort of free service to provide counseling/guidance on this sort of thing. Look into your employee benefits as you may have some free services there. You can sue your friend in small claims court, but keep in mind: It also depends on how big the loan is relative to your income. While it might feel good to sue your friend in small claims court, if it's for $500 it probably isn't worthwhile - but if your friend just stopped paying off their $30k vehicle assuming you will pay for it, even though they can pay for it themselves? |
What are the top “market conditions” to follow? | If you're investing for the long term your best strategy is going to be a buy-and-hold strategy, or even just buying a few index funds in several major asset classes and forgetting about it. Following "market conditions" is about as useful to the long term trader as checking the weather in Anchorage, Alaska every day (assuming that you don't live in Anchorage, Alaska). Let me suggest treating yourself to a subscription to The Economist and read it once a week. You'll learn a lot more about investing, economics, and world trends, and you won't be completely in the dark if there are major structural changes in the world (like gigantic housing bubbles) that you might want to know about. |
How does order matching happen in stock exchanges? | To answer your question in its entirety there's more information we need (exchange, session, traded security, order type, etc.). Most exchanges support partial fills, that is your order will be partially executed and modified. In your example, you'd get an execution of 10 shares at $100, and your order ticket will be modified to $100 for 990 shares. Like John Bensin explained, there are ways to prevent partial filling through order modifiers (e.g. Fill-or-Kill). My addition here is, there are also ways to prevent the other bit, i.e. do the partial fill but don't keep a modified order in the system. You'd have to mark the order Immediate-or-Cancel (IoC). In your case you'd be partially filled (10 @$100) and that's it. For the remaining 990 shares you'd have to enter a new order. |
Should I buy a home or rent in my situation? | You said 2 things that made me think you are one of the rare young couples barely making it but should attempt to buy rather than rent anyway.... Around my area, renting a place is about equivalent to just paying a monthly mortgage of a 30yr 3.5% APR of a home priced at around $250,500. and... Our ideal price range would be $100,000-160,000 with a 25-30yr mortgage at 3.5 - 5.4% The other answers suggesting that you should rent and the reasons given were excellent ones but because of those 2 points you made, this tells me that you would be willing to live in a much much more basic house if you owned rather than rented. Many renters rent rather than buy because they want a really nice place for their money and are willing to spend what it takes to get a nice place, but not you. If you buy, you would be willing to take a place worth half or even less than half what you would get if you rented. That tells me you might accept a place that needs a little work. Perhaps you and/or your fiancée have some skills needed to do a little of the work yourself. I hope you decide to buy rather than rent if you can swing it, and instead of taking a 2nd job, spend all your spare time working on your little investment. It's possible that by the time you're done fixing that house up some, through your own creative efforts or through the help you might get from your friends, you could end up with a $250,000 house, own it, and reap all the great benefits of owning rather than renting...or...better yet, sell that place for a nice profit, then turn around and buy the next one already fixed up with your newly acquired great credit to help you with the new mortgage, and ready for you to move in and enjoy. It's how my wife and I got started (only we didn't have the benefit of historically low interest rates) and if we can do it, I believe you can too. Here are a couple tips that might help out....1) Don't spend a lot of money to fix the place...try to find the time to do the simpler tasks yourself. If you don't have the skills, you can learn them on youtube or by picking the brains of all the great willing people working at your local discount home project superstore. 2) Cosmetics go a long way towards increasing the value of a house. a) needs paint and b) needs carpet but not a) major structural damage and b) needs roof. Regarding some of your other points... HOA, hopefully if you buy in a formal community, the HOA should be less than $200. If it's more than that, it might be harder to do as I suggest. Closing Costs, probably more like 4 - 5% Taxes, monthly if included in mortgage, normally quarterly or semi-annually if not Utilities...you're budgeting quite high for that. Depending on your area, you might only spend an average of $200/month, maybe even less. Insurance...see answer for taxes Regular maintenance, $1K a year might be about right but we better include irregular also, which comes up more often than you might think when owning, let's say $2 - $3 a year. Unexpected costs. Expect the unexpected but if the place needs a new roof or something big like that, then you didn't do your homework before buying. |
How should I utilize my money as I begin grad school? | For some ideas on investing priority guidelines, see Oversimplify it for me: the correct order of investing. Congratulations on being debt free! My advice to you is to do what you can to remain debt free. You could certainly invest the money; it will earn much more over the long-term in a stock mutual fund than it would left in a savings account. However, if you need any of this money in the next few years, it would be a shame if it lost money in the short-term. How much do you need to finish grad school? Don't invest that money in the stock market, because you will need it over the next few years. Likewise, think about other expenses that are coming up. Will your car need to be replaced in the next couple of years? Will you have enough income to meet your living expenses while you are in grad school, or will you need some of this to money to help with that? Finally, it would be good to keep some extra as an emergency fund, so you can easily pay for any unexpected expenses that come up. If you can make it through grad school debt free, you will be much better off than if you invest all the money but take out student loans in the process. After you've accounted for all of that, whatever is left of the money could definitely be invested. If your goal is to start a retirement fund, an index mutual fund invested inside a Roth IRA is a great place to start. |
Can I register for VAT to claim back VAT without selling VAT applicable goods? (UK) | As far as I know any business can register for VAT regardless of the nature of the business. If all the goods you sell (or services you provide) are VAT-exempt or zero-rated then you will get refunds from HMRC on VAT your business pays. Any business whose non-VAT exempt turnover (which would include zero-rated goods and services provided) exceeds the registration threshold must register, again even if that means they are "forced" to claim refunds. So the only question would be whether your rather nebulous activities were enough to qualify you as a business or organisation to which the VAT regime applies at all. The one-liner answer to that is generally, if goods or services are provided in return for a charge, there’s a business activity for VAT purposes Inevitably there's a much bigger body of statute and case law and it won't always be obvious whether the one-liner answer applies or not to a particular activity so it may be necessary to seek specialist advice. |
Is the MBA an overrated degree/qualification? | The quality of the MBA is really what decides if it's worth it. You have to make sure the school where you are going to is highly regarded or even prestigious. There is a big difference between what you find prestigious and others find prestigious. The student believing it is an awesome school is not enough, the companies and recruiters must believe it too. Make sure you do your homework on the ranking of the MBA program. Additionally, your undergraduate plays a role how well your MBA is perceived. A decent undergraduate degree complemented with an MBA from a highly ranked school will put you in a trajectory for a high salary and a management position. |
Comparing/reviewing personal health insurance plans for the self-employed | I was in your situation a few years ago and I discovered something that worked perfectly for me - a local health insurance broker. I met with her, discussed my needs, reviewed the options with her, then acted. She received a commission from the insurer, so it cost me nothing. I would certainly follow a similar approach again. |
Insurance, healthcare provider, apparent abuse, lack of transparency | I wouldn't classify your treatment as abuse. Medical billing has become more complex not less complex. You need to learn to ask even more questions regarding expenses, you probably need to see these price quotes in writing. You did several things correctly. Staying in-network generally is best because many plans have two deductible limits: In-network, and out-of-network. You need to make sure that the insurance company does credit you with having paid the new patient fee. That will qualify as an expense toward the deductible and your maximum out of pocket for the year. Some doctors offices don't send to insurance companies items that they know will not be covered, not remembering that these costs are critical under the High deductible plans with a health savings account. Doctors offices have problems determining how much the cost to you will be. It depends not just on the insurance company but also which type of plan you have, which sub-plan you have, and are you covered by more than one plan. Not to mention individual deductibles, family deductibles, and annual out-of-pocket amount. All this is wanted prior to the doctor seeing the patient. Most doctors offices will work with you, they know that each insurance plan treats each medical billing code differently, sometimes they make a mistake. Talk to them. |
Is it adventageous to expedite my wedding before the new year for tax savings? | Yes on taxes. It depends on the other point. As you already see from Ben's comment, if you're both very Western in your culture, you may want to consider Ben's advice because while you will save money, it may not be considered a healthy way to start a relationship. Western culture tends to see marriage as more of a "do it for love" whereas other cultures may view marriage more pragmatically and take economics and finance as a major consideration. For instance, a friend of mine married his spouse and it was 100% pragmatic - considering taxes and laws, driving most of his family insane because "it doesn't sound very loving" (these were the exact words). Unfortunately, this created tension later on because family on both sides kept telling both of them that the other didn't love the partner and they used how their marriage started as proof. As surprising as it is to me (non-Western), many Americans are horrified at people marrying at the JOP or other pragmatic ways, even if it saves them thousands. Answering questions about relationships is very difficult because often the issue is less about money and more about culture. If you're both from pragmatic cultures where economics and finance weigh strongly and you don't see possible issues with family (and really be honest on this point), then consider the financial advantages. |
Why would I buy a bond with a negative yield? | Perhaps something else comes with the bond so it is a convertible security. Buffett's Negative-Interest Issues Sell Well from 2002 would be an example from more than a decade ago: Warren E. Buffett's new negative-interest bonds sold rapidly yesterday, even after the size of the offering was increased to $400 million from $250 million, with a possible offering of another $100 million to cover overallotments. The new Berkshire Hathaway securities, which were underwritten by Goldman, Sachs at the suggestion of Mr. Buffett, Berkshire's chairman and chief executive, pay 3 percent annual interest. But they are coupled with five-year warrants to buy Berkshire stock at $89,585, a 15 percent premium to Berkshire's stock price Tuesday of $77,900. To maintain the warrant, an investor is required to pay 3.75 percent each year. That provides a net negative rate of 0.75 percent. |
Is diversification better | There are probably 3-4 questions here. Diversification - A good index, a low cost S&P fund or ETF can serve you very well. If you add an extended market index or just go with "Total market", that might be it for your stock allocation. I've seen people with 5 funds, and it didn't take much analysis to see the overlap was so significant, that the extra 4 funds added little, and 2 of the 5 would have been it. If you diversify by buying more ETFs or funds, be sure to see what they contain. If you can go back in time, buy Apple, Google, Amazon, etc, and don't sell them. Individual stocks are fun to pick, but unless you put in your homework, are tough to succeed at. You need to be right at the buy side, and again to know if, and when, to sell. I bought Apple, for example, long ago, pre-last few splits. But, using responsible a approach, I sold a bit each time it doubled. Has I kept it all through the splits, I'd have $1M+ instead of the current $200K or so of stock. Can you tell which companies now have that kind of potential for the future? The S&P has been just about double digit over 60 years. The average managed fund will lag the S&P over time, many will be combined with other funds or just close. Even with huge survivor bias, managed funds can't beat the index over time, on average. Aside from a small portion of stocks I've picked, I'm happy to get S&P less .02% in my 401(k). In aggregate, people actually do far worse due to horrific timing and some odd thing, called emotions. |
Automatic transaction on credit card to stay active | I agree with the rest of the answers -- you're probably better off just using it for some predictable flat-rate recurring monthly service like NetFlix, or making a charitable donation if you're into that sort of thing. But since that wasn't what you asked, I'll try to provide an answer: If you don't mind throwing away money, send money to yourself using PayPal. Here's how: Set up a PayPal Business Account, and use your personal PayPal account to send funds to it by setting up a PayPal subscription. PayPal says "You can have one Consumer account and one Business account." A PayPal Payments Standard business account has no monthly fee -- only transaction fees. According to PayPal, "in order to set up a repeating payment, [you] would need to create a Subscription or Recurring Payments button from the Merchant Services tab" (in the Business Account). You would then click the link/button to set up the subscription from your personal PayPal account, to make it send money to your Business account on an automatic schedule. You can then, at your own leisure, send the money back to your personal account without paying a second transaction fee, then finally send it back to your bank account. Or, if your bank account is not yet tied to your personal account, you can tie it to the business account instead, and deposit the funds into your bank account. Unfortunately, this step can't be automated. Again, to reiterate, you're much better off just using it for something recurring. |
Which graduate student loans are preferable? | Of course, the situation for each student will vary widely so you'll have to dig deep on your own to know what is the best choice for your situation. Now that the disclaimer is out of the way, the best choice would be to use the Unsubsidized Stafford loan to finance graduate school if you need to resort to loans. The major benefits to the Unsubsidized Stafford are the following: You'll be forced to consider other loan types due to the Unsubsidized Stafford loan's established limits on how much you can borrow per year and in aggregate. The borrowing limits are also adjustable down by your institution. The PLUS loan is a fallback loan program designed to be your last resort. The program was created as a way for parents to borrow money for their college attending children when all other forms of financing have been exhausted. As a result you have the following major disadvantages to using the PLUS loan: You do have the bonus of being able to borrow up to 100% of your educational costs without any limits per year or in aggregate. The major benefit of keeping your loans in the Direct Loan program is predictability. Many private student loans are variable interest rate loans which can result in higher payments during the course of the loan. Private loans are also not eligible for government loan forgiveness programs, such as for working in a non-profit for 10 years. |
Can the Securities Investor Protection Corporation (SIPC) itself go bankrupt? | SIPC is a corporation - a legal entity separate from its owners. In the case of SIPC, it is funded through the fees paid by its members. All the US brokers are required to be members and to contribute to SIPC funds. Can it go bankrupt? Of course. Any legal entity can go bankrupt. A person can go bankrupt. A country can go bankrupt. And so can anything in between. However, looking at the history of things, there are certain assumptions that can be made. These are mere guesses, as there's no law about any of these things (to the best of my knowledge), but seeing how things were - we can try and guess that they will also be like this in the future. I would guess, that in case of a problem for the SIPC to meet its obligation, any of the following would happen (or combinations): Too big to fail - large insurance companies had been bailed out before by the governments since it was considered that their failure would be more destructive to the economy than the bailout. AIG as an example in the US. SIPC is in essence is an insurance company. So is Lloyd's of London. Breach of trust of the individual investors that can lead to a significant market crash. That's what happened in the US to Fannie Mae and Freddie Mac. They're now "officially" backed by the US government. If SIPC is incapable of meeting its obligation, I would definitely expect the US government to step in, even though there's no such obligation. Raising funds through charging other members. If the actuary calculations were incorrect, the insurance companies adjust them and raise premiums. That is what should happen in this case as well. While may not necessarily solve a cashflow issue, in the long term it will allow SIPC to balance, so that bridge loans (from the US government/Feds/public bonds) could be used in between. Not meeting obligations, i.e.: bankruptcy. That is an option, and insurance companies have gone bankrupt before. Not unheard of, but from the past experience - again, I'd expect the US government to step in. In general, I don't see any significant difference between SIPC in the US and a "generic" insurance coverage elsewhere. Except that in the US SIPC is mandatory, well regulated, and the coverage is uniform across brokerages, which is a benefit to the consumer. |
How can I find out which ETFs has holdings in a particular stock? | This ETFchannel.com page shows which ETFs hold Wells Fargo and you can search other stocks the get the same information on that site. This the same information for Google This even tells you what percentage of an ETF is a particular stock. Be warned that this site is not entirely free. You will be limited to 6 pages in 6 hours unless you pay for a subscription. Additionally ETFdb.com offers a similar tool. |
Formula to determine readiness to retire based on age, networth and annual expense | The standard interpretation of "can I afford to retire" is "can I live on just the income from my savings, never touching the principal." To estimate that, you need to make reasonable guesses about the return you expect, the rate of inflation, your real costs -- remember to allow for medical emergencies, major house repairs, and the like when determining you average needs, not to mention taxes if this isn't all tax-sheltered! -- and then build in a safety factor. You said liquid assets, and that's correct; you don't want to be forced into a reverse mortgage by anything short of a disaster. An old rule of thumb was that -- properly invested -- you could expect about 4% real return after subtracting inflation. That may or may not still be correct, but it makes an easy starting point. If we take your number of $50k/year (today's dollars) and assume you've included all the tax and contingency amounts, that means your nest egg needs to be 50k/.04, or $1,250,000. (I'm figuring I need at least $1.8M liquid assets to retire.) The $1.5M you gave would, under this set of assumptions, allow drawing up to $60k/year, which gives you some hope that your holdings would mot just maintain themselves but grow, giving you additional buffer against emergencies later. Having said that: some folks have suggested that, given what the market is currently doing, it might be wiser to assume smaller average returns. Or you may make different assumptions about inflation, or want a larger emergency buffer. That's all judgement calls, based on your best guesses about the economy in general and your investments in particular. A good financial advisor (not a broker) will have access to better tools for exploring this, using techniques like monte-carlo simulation to try to estimate both best and worst cases, and can thus give you a somewhat more reliable answer than this rule-of-thumb approach. But that's still probabilities, not promises. Another way to test it: Find out how much an insurance company would want as the price of an open-ended inflation-adjusted $50k-a-year annuity. Making these estimates is their business; if they can't make a good guess, nobody can. Admittedly they're also factoring the odds of your dying early into the mix, but on the other hand they're also planning on making a profit from the deal, so their number might be a reasonable one for "self-insuring" too. Or might not. Or you might decide that it's worth buying an annuity for part or all of this, paying them to absorb the risk. In the end, "ya pays yer money and takes yer cherce." |
First time homeowner and getting a mortgage? | I second the suggestions for your local credit union and asking co-workers who might also be in the process of a home purchase. Additionally, you want to educate yourself as much as possible so that you can ask questions about the calculations responsible for the differences. I got different values starting from the various online automatic quotes all the way through to the GFE and it was not obvious to me. You can also sign-up for free workshops for first time home buyers, though most of the material will be a breeze it helps you get worksheets going and lists going for documentation that you need to gather. You might want to start at the HUD site and explore. Especially the Borrower's Rights. The cost booklet was very helpful for me to interpret the GFE, but honestly I didn't appreciate it the first time it was handed to me. Finally, you might meet qualifications to take advantage of FHA programs; the waitlists discourage everyone including the loan brokers, but you want to at least be aware of programs that can help. |
Sanity check on choosing the term for a mortgage refinance | Have you looked at conventional financing rather than VA? VA loans are not a great deal. Conventional tends to be the best, and FHA being better than VA. While your rate looks very competitive, it looks like there will be a .5% fee for a refinance on top of other closing costs. If I have the numbers correct, you are looking to finance about 120K, and the house is worth about 140K. Given your salary and equity, you should have no problem getting a conventional loan assuming good enough credit. While the 30 year is tempting, the thing I hate about it is that you will be 78 when the home is paid off. Are you intending on working that long? Also you are restarting the clock on your mortgage. Presumably you have paid on it for a number of years, and now you will start that long journey over. If you were to take the 15 year how much would go to retirement? You claim that the $320 in savings will go toward retirement if you take the 30 year, but could you save any if you took the 15 year? All in all I would rate your plan a B-. It is a plan that will allow you to retire with dignity, and is not based on crazy assumptions. Your success comes in the execution. Will you actually put the $320 into retirement, or will the needs of the kids come before that? A strict budget is really a key component with a stay at home spouse. The A+ plan would be to get the 15 year, and put about $650 toward retirement each month. Its tough to do, but what sacrifices can you make to get there? Can you move your plan a bit closer to the ideal plan? One thing you have not addressed is how you will handle college for the kids. While in the process of long term planning, you might want to get on the same page with your wife on what you will offer the kids for help with college. A viable plan is to pay their room and board, have them work, and for them to pay their own tuition to community college. They are responsible for their own spending money and transportation. Thank you for your service. |
Moving a personal business to a LLC accounting in California | You can move money in and out of the business at will, just keep track of every transaction. Ideally you'd use an accounting software like QuickBooks or similar. Create a Capital Contributions account and every time you put money into the business checking account record it as a Capital Contribution. Likewise, if you take money out of the business, it comes from your capital accounts. (You can create a separate Capital Distributions account in your accounting software, or just use a single account for contributions and distributions). Money coming in and out of those capital accounts is not taxable because you will pay taxes based on net earnings regardless of whether or not you have distributed any profits. So there's no need to make a loan to the company, which would have tax consequences. To reimburse yourself for purchases already made, submit an expense report to the company. If the company is unfunded right now, you can make a capital contribution to cover current expenses, submit the expense report, and wait until you have some profits before paying out the expense report or making any distributions. Welcome to entrepreneurship. |
What are the contents of fixed annuities? | For a variable annuity, you need to know the underlying investments and how your returns are credited to your account. For a fixed annuity, the issuer is responsible for the commitment to provide the promised rate to you. In a sense, how they invest isn't really your concern. You should be concerned about the overall health of the company, but in general, insurance companies tend to know their business when they stick to their strengths: writing insurance on groups and producing annuity contracts. I don't care for VAs or the fixed annuities you asked about, but I don't believe they resemble a ponzi scheme, either. |
How come we can find stocks with a Price-to-Book ratio less than 1? | Note that the formula for Price to Book ratio is: Stock Price / {[Total Assets - (Intangible Assets + Liabilities)] / Stock Outstanding} http://www.investopedia.com/terms/p/price-to-bookratio.asp http://www.investopedia.com/articles/fundamental/03/112603.asp There's a number of factors that could lead to a lower than 1. The primary reason, imho, could be the company is in a state of retiring stock with debt. The company is selling penny stocks (only to get people more interested in it's later development) which are inherently undervalued. There may be other reasons, but definitely check out both articles. |
What is title insurance, and should I get title insurance for my home? | Here is a pretty exhaustive article on that question. Long story short, it is an insurance policy against the possibility that the person selling the property to you doesn't legally own it. If there was some mistake or fraud along the way the proper owner could theoretically repossess the property without you getting your money back. If you are financing the property, it is almost a certainty that the lender will require you to buy it whether you want it or not. |
Should I avoid credit card use to improve our debt-to-income ratio? | For scoring purposes, having a DTI between 1-19% is ideal. From Credit Karma: That being said, depending on the loan type you looking at receiving (FHA, VA, Conventional, etc), there are certain max DTIs that you want to stay away from. As a rule, for VA, you want to try to stay away from 41% DTI. Exceptions are made for people with sufficient funds in the bank (3-9 months) to go to higher DTIs. If you keep a 19% utilization overall, that will get you a higher score but it will also show that you have a monthly payment on a particular revolving credit account. While the difference between 729 and 745 seems like a lot of points, there are rules as to how the interest rates are determined. So you will find that many banks have the same or similar rates due to recent legislation in Dodd-Frank. In the days of subprime mortgages, this was not the case. Adjustable rate mortgages did not necessarily go away, the servicer just has to make sure that the buyer can weather the full amount once it reaches maturity, not the lower amount. That is what got a lot of people in trouble. From "how interest rates are set": Before quoting you an interest rate, the loan officer will add on how much he and his branch want to earn. The branch or company sets a policy on how little that can be (the minimum amount the loan officer adds on to his cost) but does not want to overcharge borrowers either (so they set a maximum the loan officer can charge) Between that minimum and maximum, the loan officer has a great deal of flexibility. For example, say the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, seven percent will cost you zero points. Six and three-quarters percent will cost you one point. In our example, at 7.125% the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fees (processing, documents, etc), which is how you get a "no fees -no points" mortgage. You just pay a higher interest rate. Where this scoring helps you is in credit card interest rates and auto loan and personal loan rates, which have different rate structures. My personal opinion is to avoid the use of the credit cards. Playing games to try to maximize your score in this situation won't help you when you are talking about 20 points potentially. If you were at the bottom level and were trying to meet a minimum score to qualify, then I would recommend you try to game this scoring system. Take the extra money you would put on a credit card and save it for housing expenses. Taking the Dave Ramsey approach, you should have at least $1000 in emergency funds as most problems you encounter will be less than $1000. That advice rings true. |
Can I register for VAT to claim back VAT without selling VAT applicable goods? (UK) | IANAL, I have not been VAT registered myself but this is what I have picked up from various sources. You might want to confirm things with your solicitor or accountant. As I understand it there is a critical difference between supplying zero-rated goods/services and supplying exempt goods/services. If the goods/services are zero-rated then the normal VAT rules apply, you charge VAT on your outputs (at a rate of 0%) and can claim back VAT on your inputs (at whatever rate it was charged at, depending on the type of goods.. If the goods/services are exempt you don't charge and VAT on your outputs and can't claim back any VAT on your inputs. (Things get complicated if you have a mixture of exempt and non-exempt outputs) According to http://oko.uk/blog/adsense-vat-explained adsense income is a buisness to buisness transaction with a company in another EU country and so from a supplier point of view (you are the supplier, google is the customer) it counts as a zero-rated transaction. |
My bank often blocks my card during purchases - what is the most reliable bank card? (UK) | This question is likely to be closed as a product recommendation request. But if you are willing to change the question a bit, perhaps to "How do I avoid having my debit card declined when I know I have good funds" it becomes a reasonable general question. And my answer follows. I can tell you the same thing happens to those of us with credit cards. It can happen when your buying pattern changes. Suddenly buying a lot of merchandise, especially away from home. Nothing like having your card declined while with relatives you visit or while on vacation. I'd talk to the bank and ask for advice how to avoid this. I've called my card issuer to tell them I'll in X city for these dates, to expect charges from there. That seems to work well. |
Why would a car company lend me money at a very low interest rate? | In addition to the other answers, also consider this: Federal bond interest rates are nowhere near the rates you mentioned for short term bonds. They are less than 1% unless you're talking about terms of 5-10 years, and the rates you mentioned are for 10 to 30-years terms. Dealer financed car loans are usually 2-5 years (the shorter the term - the lower the rate). In addition, as said by others, you pay more than just the interest if you take a car loan from the dealer directly. But your question is also valid for banks. |
Any good software for value investment? | I hope people don’t see this as being facetious but invest some time in learning to do that with Excel. Most financial information websites (Yahoo, MSN, etc.) will allow you to extract all the data you need into excel. This way you can learn to do analysis with something that isn’t a "black box" (as to mean you don’t know the exact equations behind the outputs) whereas with excel you can delve into and really understand the equations behind the numbers you are looking at. If you use Bloomberg it does all that for you but if you are just starting out you may not truly understand what it means and how everything is connected. If you create the same with excel you have no choice but to deeply understand because you built it from scratch! I'm certian there are plenty of tutorials to help you out there as every analyst who has worked in finance since the advent of excel has had to create these at one time or another. Good luck! |
Why haven't there been personal finance apps or softwares that use regression modeling or A.I.? | How would they make money from it? They sell you the software for $100 (US example; could as easily be 100 Euros or 10,000 Japanese Yen). You use it to make recommendations on your blog. Your blog becomes rich from advertising. They sold $100 worth of software. If they spent $1 million in labor developing it, they're way behind. Another problem is that the software would stop working and need adjusted periodically. This is easy to do on a server but annoying on a PC. And who pays for the adjustments? Put both those things together, and it's a lot easier to do on a server. Another advantage is that a server can get a better data feed as well. Pay a premium for the detailed information rather than relying on public sources. And people are used to renting server access where they expect to buy software once. Another issue is that they are unlikely to beat the market this way. Yes, AIs have done so. But that's the latest AI, constantly adjusted. This is going to be a previous generation AI. It's more likely to match the market. And we already have a way to match the market: an index fund. If someone had a brilliant AI, the best use would probably be to sell it to a fund manager. The fund manager could then use the AI to find opportunities for its existing investors. Note that a $10 billion fund with a 10% return that gives a .1% commission would be paying $1 million. And that has no marketing or packaging overhead. Think $10 billion is a lot? Fidelity has $2 trillion. |
Need exit strategy for aging mother who owns aging rental properties, please | I debated whether to put this in an answer or a comment, because I'm not sure that this can be answered usefully without a lot more information, which actually would then probably make it a candidate for closing as "too localized". At the very least we would need to know where (which jurisdiction) she is located in. So, speaking in a generic way, the options available as I see them are: Contact the mortgage companies and explain she can't continue to make payments. They will likely foreclose on the properties and if she still ends up owing money after that (if you are in the US this also depends on whether you are in a "non-recourse" state) then she could be declared bankrupt. This is rather the "nuclear option" and definitely not something to be undertaken lightly, but would at least wipe the slate clean and give her some degree of certainty about her situation. Look very carefully at the portfolio of properties and get some proper valuations done on them (depending on where she is located this may be free). Also do a careful analysis of the property sales and rental markets, to see whether property prices / rental rates are going up or down. Then decide on an individual basis whether each property is better kept or sold. You may be able to get discounts on fees if you sell multiple properties in one transaction. This option would require some cold hard analysis and decision making without letting yourselves get emotionally invested in the situation (difficult, I know). Depending on how long she has had the properties for and how she came to own them, it MIGHT be an option to pursue action against whoever advised her to acquire them. Clearly a large portfolio of decaying rental properties is not a suitable investment for a relatively elderly lady and if she only came by them relatively recently, on advice from an investment consultant or similar, you might have some redress there. Another option: could she live in one of the properties herself to reduce costs? If she owns her own home as well then she could sell that, live in the one of the rentals and use the money saved to finance the sale of the other rentals. Aside from these thoughts, one final piece of advice: don't get your own finances tangled up in hers (so don't take out a mortgage against your own property, for example). Obviously if you have the leeway to help her out of your budget then that is great, but I would restrict that to doing things like paying for grocery shopping or whatever. If she is heading for bankruptcy or other financial difficulties, it won't help if you are entangled too. |
Receive money from US Client to Myself in India by selling services | Depending on how tech savvy your client is you could potentially use bitcoin. There is some take of indian regulators stopping bitcoin exchanges, meaning it might be hard to get your money out in your local country but the lack of fees to transfer and not getting killed on the exchange rate every time has a huge impact, especially if your individual transaction sizes are not huge. |
I have about 20 000 usd. How can invest them to do good in the world? | One of the best things you can do for this purpose, while getting a modest ROI on a passive investment, is invest in a company that profitably does whatever you want to see more of. For example, you could invest in a for-profit company that sells needed goods to low-income people at lower prices. Something like Wal-Mart, which is one of the most effective anti-poverty engines in the US. You might also say the same of something like Aldi (owner of Aldi stores and Trader Joe's), which is a discount store chain. This is true even though a company like Wal-Mart is seeking to make money first. Its customer base tends to skew heavily towards low-income consumers, and historically to rural and elderly consumers. When Wal-Mart is able to provide food, clothing, appliances and the like to poor people at a lower cost, it is making it marginally less painful to have a low income. Peter Suderman can explain why Wal-Mart is a humanitarian enterprise: Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food. The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile. So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food. As Suderman points out, this view of Wal-Mart dramatically lowering prices that low-income people pay for food was corroborated by an Obama adviser. That's just one company. You can pick the industry and company that best suits your personal preferences. Alternatively, you could invest in something like Whole Foods, a company with multiple missions to improve the planet and the community, in addition to the more typical mission of being a prosperous retail chain. Of course, as a general proposition, a less than entirely altruistic, charity-inclined investment doesn't need to be targeted at those with low incomes or at saving the planet. You could invest in almost anything you think is good (yachts, yo-yos, violins, energy production, industrial inputs, music performances) and the company will take care of making more of that good thing. You didn't say whether your goal was to help the poor, the planet, arts, sciences, knowledge, community, or whatever. What I understand you to be saying is you are willing to accept a lower ROI in exchange for some warm-fuzzies from your investment. That seems perfectly valid and reasonable to me, but it makes it much more subjective and particular to your tastes. So you'll need to pick something that's meaningful to you. If you're going to trade ROI for positive feelings, then you should pick whatever gives you your optimal blend of emotions and returns. Alternatively, you could invest in something stable and predictable to beat inflation (some sort of index or fund) and then annually use some portion of those profits to simply give to the charity of your choice. Your investment and your charity do not necessarily need to be the same vehicle. |
Should Emergency Funds be Used for Infrequent, but Likely, Expenses? | I would suggest that you use Emergency Funds for things that have a Low likelihood of happening but if they do happen can be devastating. I used to work as a financial advisor and the sugfestion we gave people is to have about 3 months worth of expenses in cash. This was primarily to cover things luke loss of work or some unforseen even that would prevent you from missing work for an extended period of time. Once you have your emergency fund saved do not touch it! Leave it where it is. Then tou can start working on a savings account for those items that are more likely to happen but dont have as much of a negative impact. |
Do market shares exhaust? | Let's clarify some things. Companies allow for the public to purchase their shares through Initial Public Offering (IPO) (first-time) and Seasoned Public Offering (SPO) (all other times). They choose however many shares they want to issue depending on the amount of capital they want to raise. What this means is that the current owners give up some ownership % in exchange for cash (usually). In the course of IPOs and SPOs, it can happen that the public will not buy all shares if there is very little interest, but I would assume that the more probable scenario if very little interest is present is that the shares' value would take a big drop on their issuance date from the proposed IPO/SPO price. After those shares are bought by the public, they are traded on Exchanges which are a secondary and (mostly) do not affect the underlying company. The shares are exchanged from John Doe to Jane Doe as John Doe believes the market value for those shares will take a direction that Jane Doe believes in the opposite. Generally speaking, markets will find an equilibrium price where you can reasonably easily buy-sell securities as the price is not too far from what most participants in the market believe it should be. In cases where all participants agree on the direction (most often in case of a crash) it can be hard to find a party to make a trade with. Say a company just announced negative news with long-lasting effects on the business there will be a surge in sell orders with very few buyers. If you are willing to buy, you will likely very easily find a trading partner but if you are trying to sell instead then you will have to compete for the lowest price against all other sellers. All that to say that in such cases, while shares are technically sellable / purchasable, the end result can be that no shares are purchasable. |
What should I do with $4,000 cash and High Interest Debt? | Patti - I realize, of course, that you pose an either/or question. It seems the question closes the door on other potential solutions. |
what is the meaning of allowing FDI in Insurance and pension funds | Insurance in India is offered by Private companies as well [ICICI, Maxbupa, SBI, Max and tons of other companies]. These are priavte companies, as Insurance sectors one has to look for long term stability, not everyone can just open an Insurance company, there are certain capital requirements. Initially the shareholding pattern was that Indian company should have a majority shareholding, any foreign company can have only 26% share's. This limit has now been extended to 49%, so while the control of the private insurance company will still be with Indian's the foreign companies can invest upto 49%. It's a economic policy decission and the outcome whether positive or negative will be known after 10 years of implemenation :) Pro's: - Brings more funds into the Insurance segment, there by bringing strength to the company - Better global practise on risk & data modelling may reduce premium for most - Innovation in product offering - More Foreign Exchange for country that is badly needed. Con's: - The Global companies may hike premium to make more profits. - They may come up with complex products that common man will not understand and will lead to loss - They may take back money anytime as they are here for profit and not for cause. Pension today is offered only by Government Companies. There is a move to allow private companies to offer pension. Today life insurance companies can launch Pension schemes, however on maturity the annuity amount needs to be invested into LIC to get an annuity [monthly pension]. |
If a stock is selling for less than book value, is the company headed for bankruptcy? | No, but it is certainly a possibility. the efficient market hypothesis would say that this means that the market perceives the present value of all future earning as negative. These earnings might take the form of a writedown of assets at some point. (Companies carry a goodwill asset that is generally imaginary. They book that asset when they buy companies for more than they are worth.) It would be as if PRUN was a stock tracking my life. If I bought my house in 2006 for $1 million cash. I might have a book value of $1 million. However, PRUN might trade at $500k because the market knows that my asset isn't really worth $1 million and at some point my earnings will take a hit to reflect that. It might also mean that future "real" earnings "ie actual profit and loss on sales" are going to be negative. This would mean bankruptcy is more likely. |
Ethics and investment | There are a number of mutual funds which claim to be 'ethical'. Note that your definition of 'ethical' may not match theirs. This should be made clear in the prospectus of whichever mutual fund you are looking at. You will likely pay for the privilege of investing this way, in higher expenses on the mutual fund. If I may suggest another option, you may want to consider investing in low-fee mutual funds or ETFs and donating some of the profit to offset the moral issues you see. |
How to report a personal expense for an LLC partnership paid in one year and reimbursed in another? | You report it when the expense was incurred/accrued. Which is, in your case, 2014. There's no such thing as "accounts payable" on tax forms, it is an account on balance sheet, but most likely it is irrelevant for you since your LLC is probably cash-based. The reimbursement is a red-herring, what matters is when you paid the money. |
Why does it seem unnecessary to fully save for irregular periodic expenses? | It totally depends on when your expenses hit and whether you might have a larger stock than necessary. If you run your projections against the monthly save and the intervals of when you'll need the money, you might be able to extract some stock from the account. I recommend making this a bit simpler. I operate this with an "annuals" account which is a complete aggregate of expenses that I know I have several times per year (or once every two years), but are not monthly or part of a weekly non-fixed expense budget cap. Instead of tracking each expense individually and saving for it, create a spreadsheet that lists out all of these expenses, sum them, and then divide by 12. When I first opened this account, I added a one-time deposit to "catchup" to make sure I would never need to pull money from another source for these expenses. As new expenses come into existence that I should plan for annually, I simply add them to this list and adjust the monthly auto-deposit to the account. This also adjusts my single number weekly budget. To make it easy, whenever I see an expense on my annuals list on my amex or debit, I simply initiate a withdrawal from the annuals savings and it will balance out my weekly or monthly budget expenses. The goal of my annuals account is to simply avoid anti-windfalls that are known quantities (insurance, annual eye exam, sprinkler flush, amazon prime, etc) that would throw a wrench in weekly/monthly budget and expense planning. The more variables you can remove from your weekly/monthly, the more regular it becomes and the more likely you will be able to stick to a budget. |
How to interpret a 1,372.55% dividend payout ratio (GSK)? | I don't think it makes sense to allow accounting numbers that you are not sure how to interpret as being a sell sign. If you know why the numbers are weird and you feel that the reason for it bodes ill about the future, and if you think there's a reason this has not been accounted for by the market, then you might think about selling. The stock's performance will depend on what happens in the future. Financials just document the past, and are subject to all kinds of lumpiness, seasonality, and manipulation. You might benefit from posting a link to where you got your financials. Whenever one computes something like a dividend payout ratio, one must select a time period over which to measure. If the company had a rough quarter in terms of earnings but chose not to reduce dividends because they don't expect the future to be rough, that would explain a crazy high dividend ratio. Or if they were changing their capital structure. Or one of many other potentially benign things. Accounting numbers summarize a ton of complex workings of the company and many ratios we look at could be defined in several different ways. I'm afraid that the answer to your question about how to interpret things is in the details, and we are not looking at the same details you are. |
Is it smarter to buy a small amount of an ETF every 2 or 3 months, instead of monthly? | Note, the main trade off here is the costs of holding cash rather than being invested for a few months vs trading costs from trading every month. Let's start by understanding investing every month vs every three months. First compare holding cash for two months (at ~0% for most Canadians right now) and then investing on the third month vs being invested in a single stock etf (~5% annually?). At those rates she is forgoing equity returns of around These costs and the $10 for one big trade give total costs of $16+$8+$10=$34 dollars. If you were to trade every month instead there would be no cost for not being invested and the trading costs over three months would just be 3*$10=$30. So in this case it would be better to trade monthly instead of every three months. However, I'm guessing you don't trade all $2000 into a single etf. The more etfs you trade the more trading more infrequently would be an advantage. You can redo the above calculations spliting the amount across more etfs and including the added trading costs to get a feel for what is best. You can also rotate as @Jason suggests but that can leave you unbalanced temporarily if not done carefully. A second option would be to find a discount broker that allows you to trade the etfs you are interested in for free. This is not always possible but often will be for those investing in index funds. For instance I trade every month and have no brokerage costs. Dollar cost averaging and value averaging are for people investing a single large amount instead of regular monthly amounts. Unless the initial amount is much much larger than the monthly amounts this is probably not worth considering. Edit: Hopefully the above edits will clarify that I was comparing the costs (including the forgone returns) of trading every 3 months vs trading every month. |
E*Trade commission | The commission is per trade, there is likely a different commission based on the type of security you're trading, stock, options, bonds, over the internet, on the phone, etc. It's not likely that they charge an account maintenance fee, but without knowing what kind of account you have it's hard to say. What you may be referring to is a fund expense ratio. Most (all...) mutual funds and exchange traded funds will charge some sort of expense costs to you, this is usually expressed as a percent of your holdings. An index fund like Vanguard's S&P 500 index, ticker VOO, has a small 0.05% expense ratio. Most brokers will have a set of funds that you can trade with no commission, though there will still be an expense fee charged by the fund. Read over the E*Trade fee schedule carefully. |
Buying my first car out of college | Think about it. IF you save $15K by buying a Honda or a Mazda, you can invest those money at modest 5% average, you'll have over 60K before you retire, which allows you to retire at least a year earlier.... So it is worth working an extra year in your life to have a fancier car? And that's a conservative investment. |
What is “beta” for an investment or a portfolio, and how do I use it? | In addition to individual stocks, your entire portfolio will also have a beta. It would be equal to the weighted sum of the individual asset betas So a beta portfolio of 1 would have approximate risk equal to a market index. You would use this to construct a risk level that you were comfortable with, given the expected return of the individual assets. You are also interested in obtaining a high level of "alpha" which means that your portfolio is earning more than what would be expected, given it's level of risk. |
Does financing a portfolio on margin affect the variance of a portfolio? | Yes, more leverage increases the variance of your individual portfolio (variance of your personal net worth). The simple way to think about it is that if you only own only 50% of your risky assets, then you can own twice as many risky assets. That means they will move around twice as much (in absolute terms). Expected returns and risk (if risk is variance) both go up. If you lend rather than borrow, then you might have only half your net worth in risky assets, and then your expected returns and variation in returns will go down. Note, the practice of using leverage differs from portfolio theory in a couple important ways. |
Why would this FHA refinance cause my mortgage insurance payment to increase so much? | If you're refinancing a conforming (Fannie Mae or Freddie Mac) mortgage, don't go with an FHA. Try a HARP refinance, which won't increase your mortgage insurance even if your home has lost value. HARP also limits the risk-based pricing adjustments that can be charged, so your rate should be very competitive. With an FHA mortgage, even once you get the loan-to-value ratio down to 80 percent, you still have mortgage insurance for several years, plus the upfront costs. In your case, I think it's a bad deal. |
End-of-season car sales? | Manufacturers sometimes give incentives to car dealers to ensure that the prior year models are sold out before the year is up. However, dealers are usually pretty smart on only ordering the cars they know they can sell before this happens. Also, manufacturers are usually pretty good about only producing enough vehicles to cover demand. Honestly, you aren't likely to see these incentives materialize unless the manufacturer really screwed up. If that happens then three things occur. First is that manufacturers give a hidden incentive to the dealers. Dealers won't publicize this, even internally. If the cars are still not moving after a month, then the dealers will tell the salespeople that those cars have a specific "bonus" on them. If those cars still don't sell, then the bonus inflates quite a bit and dealers begin advertising that car at a deep discount on the radio. It's pretty much guaranteed to sell at that point. Barring those circumstances, the deal you get on a brand new car, late in the model year, is likely to be the same you could have gotten early in the model year. Honestly, if you want the best deal possible, look at the date of the inspection sticker on the car. If it is close to the 3 month mark then the dealer will bend over backwards to sell the car as the finance costs are racking up on it. They'll often sell that one at heavy discounts. |
Is a fixed-price natural gas or electricity contract likely to save money? | The answer to this question will vary considerably by state and how utilities are regulated in your area. In New York, ESCOs (Energy Supply Companies) are almost always a ripoff for consumers versus the old-style regulated utility (in NY the utility supply markups are tightly regulated, but ESCOs are less regulated). You also need to really understand the marketplace rules for "locking in" a price. If you can lock in the July price for natural gas for a year, that rocks. There are other factors as well. But even then its a real bet, since weather and supply factors can have a dramatic effect on gas prices in the winter. IMO, the best bet is to run with the market rates and bank the efficiency improvements that you build into your home over time. Some utilities offer "budget plans" that smooth out your payments without interest -- I'd recommend that route if predictable bills are your goal. |
Pay off car or use money for down payment | Absolutely do not pay off the car if you aren't planning to keep it. The amount of equity that you have from a trade in vehicle will always be a variable when negotiating a new car purchase. By applying cash (a hard asset) to increase your equity, you are trading a fixed amount for an unknown, variable amount. You are also moving from a position of more certainty for a position of less certainty. You gain nothing by paying off the car, whereas the dealer can negotiate away a larger piece of the equity in the vehicle. |
What tax law loophole is Buffet referring to? | A Section 1256 contract is any: Non-equity options include debt options, commodity futures options, currency options, and broad-based stock index options. A broad-based stock index is based upon the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). 60% of the capital gain or loss from Section 1256 Contracts is deemed to be long-term capital gain or loss and 40% is deemed to be short-term capital gain or loss. What this means is a more favorable tax treatment of 60% of your gains. http://www.tradelogsoftware.com/tax-topics/futures/ It's a really wierd rule (arbitraty 60% designation, so broad, etc), but section 1256 contracts get preferential tax treatment and that's what Buffett's talking about. |
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. |
Money-market or cash-type ETFs for foreigners with U.S brokerage account | Securities and ETFs are also subjected to Estate Tax. Some ways: Draft a "Transfer on Death" instruction to the broker, that triggers a transfer to an account in the beneficiary's name, in most cases avoiding probate. If the broker does not support it, find another broker. Give your brokerage and bank password/token to your beneficiary. Have him transfer out holdings within hours of death. Create a Trust, that survives even after death of an individual. P.S. ETF is treated as Stock (a company that owns other companies), regardless of the nature of the holdings. P.S.2 Above suggestions are only applicable to nonresident alien of the US. |
I spend too much money. How can I get on the path to a frugal lifestyle? | Since you ask.... How do I do it? My frugality doesn't come from budgeting or even half so much from keeping money away from myself (though mostly-one-way retirement accounts help). It's a matter of world-view. Spending and shopping for things you don't need is a vice. Limit your indulgence in it. I've also made wasteful purchases in my life. When I find myself considering buying something that I don't really need, I ask myself whether it will end up like... like the stupid eyeglass cleaner gadget from the Sharper Image that I used twice. Or the Bluetooth earpiece that spent 98% of its time lost and .02% of its time in my ear. Or the little Sony VAIO laptop which was great on the train, but probably cost 8 times as much as an EeePC and didn't do way too much more. (In my defense on that one, it was just before netbooks were really taking off... but I still felt bad about it the next year). I've also got two savings goals. The first is responsible and very big (financial stability: a year's expenses plus money for a down payment on a house. a California house. in a good neighborhood.) The second is personal and just medium-big (a large musical instrument). I've decided not to spend money on the second until I'm financially stable and I have enough money to take care of the first... so that makes me more willing to scrimp and save to pursue the first than I would be otherwise. Advice for others? Ask yourself: Why are you buying that thing? You can survive without it, can't you? You didn't need it a week ago, did you? Does the old one have holes in it or something? Or will you at least use it regularly, for years? Why aren't you buying the cheaper kind? Or buying it used? |
How much is university projected to cost in Canada in 18 years? | For a Canadian university education, an October 2009 article at Canada.com says: [...] The study estimates the total price tag of an undergraduate degree at a whopping $137,013 for students living away from home and $101,426 for those staying at home. [...] |
Why does an option lose time value faster as it approaches expiry | Not cumulative volatility. It's cumulative probability density. Time value isn't linear because PDFs (probability distribution function) aren't linear. It's a type of distribution e.g. "bell-curves") These distributions are based on empirical data i.e. what we observe. BSM i.e. Black-Scholes-Merton includes the factors that influence an option price and include a PDF to represent the uncertainty/probability. Time value is based on historical volatility in the underlying asset price, in this case equity(stock). At the beginning, time value is high since there's time until expiration and the stock is expected to move within a certain range based on historical performance. As it nears expiration, uncertainty over the final value diminishes. This causes probability for a certain price range to become more likely. We can relate that to how people think, which affects the variation in the stock market price. Most people who are hoping for a value increase are optimistic about their chances of winning and will hold out towards the end. They see in the past d days, the stock has moved [-2%,+5%] so as a call buyer, they're looking for that upside. With little time remaining though, their hopes quickly drop to 0 for any significant changes beyond the market price. (Likewise, people keep playing the lottery up until a certain age when they're older and suddenly determine they're never going to win.) We see that reflected in the PDF used to represent options price movements. Thus your time value which is a function of probability decreases in a non-linear fashion. Option price = intrinsic value + time value At expiration, your option price = intrinsic value = stock price - strike price, St >= K, and 0 for St < K. |
My tenant wants to pay rent through their company: Should this raise a red flag? | I disagree with the other respondents. If your tenant is an individual, renting in their individual capacity, there is no reason they need your SSN. They will not be sending a 1099 to you. If your tenant is a business, then your property is not a residential property. It is at least a "corporate housing", and you would have noticed that the contract was signed by a company representative in the capacity of being a company representative, not an individual person. In that case, that representative would also ask you to fill a form W9, on which your tax ID should be reported. I would suggest let the tenant figure out their tax avoidance issues without you being involved. |
What's the point of Ford loosening financing requirements? | Why then did Ford (and the auto industry in general) suddenly decide to court such buyers? Clearly when they felt they had a viable solution to the financing and could open up the market of buyers they were previously ignoring. If more sales are desired, surely the same can be accomplished with simply lowering prices? Millions of people have bad credit. Apparently Ford thinks adding millions of people to the pool of potential buyers is more effective to boosting sales than discounting product for the pool of existing potential buyers. |
How should I record invoices in foreign currency in GNUCash? | The solution I've come up with is to keep income in CAD, and Accounts Receivable in USD. Every time I post an invoice it prompts for the exchange rate. I don't know if this is "correct" but it seems to be preserving all of the information about the transactions and it makes sense to me. I'm a programmer, not an accountant though so I'd still appreciate an answer from someone more familiar with this topic. |
Getting (historical) Standard & Poor Stock Guides | I haven't seen one of these in quite some time. Back in the 1970s, maybe the 1980s, stock brokers would occasionally send their retail clients a complimentary copy once in a while. Also, I remember the local newspaper would offer a year-end edition for a few dollars (maybe $3) and that edition would include the newspaper company's name on the cover. They were very handy little guides measuring 5 1/2 x 8 (horizontal) with one line devoted to each company. They listed hundreds of publicly traded companies and had basic info on each company. As you stated, for further info you needed to go to the library and follow-up with the big S&P and/or Moody's manuals. That was long before the internet made such info available at the click of a button on a home computer! |
Can ETF's change the weighting of the assets they track | Can they change the weights? Yes. Will they? It depends. are ETF's fixed from their inception to their de-listing? It's actually not possible for weights to be fixed, since different assets have different returns. So the weights are constantly changing as long as the market is moving. Usually after a certain period or a substantial market move, fund managers would rebalance and bring the weights back to a certain target. The target weights - what your question is really about - aren't necessarily the same as the initial weights, but often times they are. It depends on the objective of the ETF (which is stated in prospectus). In your example, if the manager drops the weight of the most volatile one, the returns of the ETF and the 5 stocks could be substantially different in the next period. This is not desirable when the ETFs objective is to track performance of those 5 stocks. Most if not all ETFs are passively-managed. The managers don't get paid for active management. So they don't have incentive to adjust the weights if their funds are tracking the benchmarks just fine. |
Are there cons to paying monthly bills with a rewards card and then paying it off monthly? | Pitfalls of paying plastic That being said, you can also find cards that have better than the 1% it looks like you are getting. I have a card that gives 2% cash back on Gas Stations, Utilities (including stuff like AT&T) and Food Stores (Walmart included). There are also limited time deals from cards - my fiance's discover has 5% cash back Oct/Nov/Dec on Online purchases. Make sure to remain diligent, keep your balances low and don't get hit with interest rates or fees (I had HORRIBLE credit and I refused to get a card with an annual fee). Why pay full price with cash, when you can get 2-5% cash back? |
How to calculate the standard deviation of stock returns? | For implied volatility it is okey to use Black and scholes but what to do with the historical volatility which carry the effect of past prices as a predictor of future prices.And then precisely the conditional historical volatility.i suggest that you must go with the process like, for stock returns 1) first download stock prices into excel sheet 2) take the natural log of (P1/po) 3) calculate average of the sample 4) calculate square of (X-Xbar) 5) take square root of this and you will get the standard deviation of your required data. |
Do I need a business credit card? | I finally got one to separate my business and personal expenses. It will make accounting at the end of the year a lot easier. |
Starting a new job. Help me with retirement/debt planning please! | I would go with your alternative idea: get rid of the debt as fast as possible. You have $32k of debt. It's a lot, but with your new $90k salary, do you think you could get rid of it all in 12 months? See if you can make that happen. Once the debt is gone, you'll be in a position to invest as much as you want and keep all your gains. You are worried about sacrificing future money in your investments, but if you eliminate the debt over the next year, this will be minimized. Just lose the debt. |
Is person-person lending/borrowing protected by law? | For person A to be protected (meaning able to recover some or all of the money should the other party try to welsh on the deal), the two of them must have entered into a valid, binding contract where both parties acknowledge and agree to the debt and the terms. Such a contract is subject to the Statute of Frauds, a collection of laws governing contracts which is mostly borrowed from English common law. The basics are that in all cases, a "contract" is only formed when both parties agree, technically when one party accepts an offer made by the other party. Both the offer and acceptance must be made sincerely. For a contract, once entered, to be enforceable, proof of the contract's existence and terms must itself exist. Certain types of transactions (real estate, large amounts of money) require contracts to be in written form, and witnessed by a trusted third party (in most cases this party is required to be a notary public). And contracts must have a certain amount of quid-pro-quo; contracts that provide a unilateral benefit can be thrown out on a case-by-case basis. A contract that simply states that Person B owes Person A money, without stating what benefit Person A had provided Person B in return for the money (in this case A gives B the money to begin with), is unenforceable. The benefits must of course be legal on both sides; a contract to deliver 5 tons of cocaine will not be upheld by any court in any free country, and neither will any contract attempting to enforce hush money, kickbacks, bribery etc (though some toe the line; one could argue that a signing bonus is tantamount to bribery). In some cases even seemingly benign clauses, like "escape clauses" allowing one party a "free out", can make the contract unenforceable as they could be abused to the severe detriment of one party. There are also jurisdiction-specific rules, such as limits on "finance charges" for debts not owed to a "bank" (a bar, for instance, cannot charge 10% on an outstanding tab in the United States). This is HUGE for your example, because if Person A had specified an interest rate in excess of the allowed rate for non-bank lenders, not only will the contract get thrown out even though Person B agreed to the terms, but Person A could find themselves on the hook for punitive damages payable to Person B, FAR in excess of the contracted amount. Given that the agreement meets all tests of validity for a contract, if either party fails to perform in accordance with the contract, causing a loss or "tort" for the other party, the injured party can sue. Generally the two options are "strict performance" (the injuring party is ordered by the court to comply exactly with the terms of the contract), or payment of net actual damages and dissolution of the contract. In your example, if Person A had lent Person B money, strict performance would mean payment of the debt in the installments agreed, at the rate agreed; actual damages would be payment of the outstanding balance plus current interest charges (without any further penalty). Notice that it's "net" damages; if Person A was to issue the loan in installments, and missed one, causing Person B to suffer damages from the loss of expected cash flow directly resulting in their failure to pay according to the terms, then Person B's proven damages are subtracted from A's; very often, the plaintiff in a suit to recover money can end up owing the defendant for a prior failure to perform. There are further laws governing bankruptcy; basically, if the other person cannot satisfy the contract and cannot pay damages, they will pay what they can, and the contract is terminated with prejudice ("no blood from a turnip"). |
Creating a Limited company while still fully employed | I was just thinking ahead, can I apply for Limited company now, while fully time employed, and not take any business until I get a contract. Yes. You can open as many companies you want(assuming you are sane). There is no legal provisions regarding who can open a company. What happens if I create a company and it has no turnover at all? Does this complicate things later? After you open a company, you have to submit your yearly statements to Companies House, whether you have a billion pounds turnover or 0. If you claim VAT that has also to be paid after you register for VAT. VAT registration is another registration different from opening a limited company. Is it the same if I decided to take a 1,2 or x month holiday and the company again will not incur any turnover? Turnover is year end, so at the year end you have to submit your yearly results, whether you took a 12 month holiday or a week's holiday. Is it a OK to do this in foresight or should I wait weeks before actually deciding to search for contracts. No need to open a limited company now, if you are so paranoid. Opening a company in UK takes 5 minutes. So you can open a company after landing a contract. |
Name first on car loan can you also be the cosigner | I want to first state that I'm not an attorney and this is not a response that would be considered legal advice. I'm going to assume this was a loan was made in the USA. The OP didnt specify. A typical auto loan has a borrower and a co-borrower or "cosigner". The first signer on the contract is considered the "primary". As to your question about a primary being a co-borrower my answer would be no. Primary simply means first signer and you can't be a first signer and a co-borrower. Both borrower and co-borrower, unless the contract specifies different, are equally responsible for the auto loan regardless if you're a borrower or a co-borrower (primary or not primary). I'm not sure if there was a situation not specified that prompted the question. Just remember that when you add a co-borrower their positive and negative financials are handled equally as the borrower. So in some cases a co-borrower can make the loan not qualify. (I worked for an auto finance company for 16 years) |
How to evaluate an annuity | Annuities are usually not good deals. Commissions to the salesman can be as high as 9% of the initial premium. They're not scams, just not the best deals for most circumstances. Basically, these things are a combination of an investment vehicle and multiple insurance policies, including permanent insurance. The 8.2% "return" is the total cash value of the account, which your heirs get if you die. |
Is it legal to not get a 1099-b until March 15? | If one looks at the "Guide to Information Returns" in the Form 1099 General Instructions (the instructions that the IRS provides to companies on how to fill out 1099 and other forms), it says that the 1099-B is due to recipient by February 15, with a footnote that says "The due date is March 15 for reporting by trustees and middlemen of WHFITs." I doubt that exception applies, though it may. There's also a section in the instructions on "Extension of time to furnish statements to recipients" which says that a company can apply to the IRS to get an extension to this deadline if needed. I'm guessing that if you were told that there were "complications" that they may have applied for and been given this extension, though that's just a guess. While you could try calling the IRS if you want (and in fact, their web site does suggest calling them if you don't receive a W-2 or 1099-R by the end of February), my honest opinion is that they won't do much until mid-March anyway. Unfortunately, you're probably out of luck being able to file as early as you want to. |
Why are there so many stock exchanges in the world? | Why are there so many stock exchanges in the world? The simple answer is that there is a lot of money to be made by charging fees to facilitate the trading of securities, but there are other factors at play here relating to new technologies. Trading volumes have increased rapidly in recent years. According to this ITG data, in 1997, 6.5 billion shares were traded on US exchanges. By 2015 this number had increased to 40.8 billion shares. There are a number of reasons for this rapid increase in volumes. Most significant would be the introduction of new technologies that allow for high volume, high frequency trading. This increase in activity has be accompanied by an increase in the number of stock exchanges. As CQM points out in his answer, there has been considerable consolidation in the ownership of "legacy" exchanges. For example, the NYSE merged with EuroNext in 2007, and the combined group is now owned by the Intercontinental Exchange, which also owns numerous smaller stock exchanges as well as a number of derivative/commodities exchanges. However, this consolidation in ownership has been more than matched by the creation of many "virtual" exchanges. In North America these virtual exchanges are called "Alternative Trading Systems". In Europe, they are called "Multilateral Trading Facilities". These new virtual exchanges, sometimes referred to as "dark pools", have begun to significantly eat away at the volumes of the legacy exchanges. If you look at the ITG data (linked above), you will see that the total volume of shares traded on legacy exchanges actually peaked in 2008, and has since then has decreased. This coincides roughly with the appearance of the virtual exchanges and the new high frequency trading methods. According to this paper from the SEC site, dated 2013, Alternative Trading Systems accounted for 11.3% of total volumes in 2012. This will have increased rapidly in the years since 2012. It is this loss of business that has prompted the consolidation in the ownership of the legacy exchanges. These new exchange are "conceptually the same" as the legacy exchanges and must play by the same regulatory rules. |
Is selling only shares you bought with margin on a margin/unsettled cash purchase free ride? | I'm not 100% sure, but I don't think it would be considered a free ride. The idea of a free ride is that you are engaging in a transaction when you do not actually have the money available to cover it, since the broker is technically giving you a 3 day loan whenever you purchase your stock (3 day rule to settle.) However, if you are using a margin account, and you have enough credit available, then you are not actually using unsettled assets, but rather an additional line of credit which was granted to you. You would just need to make sure that your total transactions are less than your purchasing power. That's my take on it anyway. I hope that helps, and hopefully someone can confirm or reject what I have said. |
How to choose a company for an IRA? | I assume that with both companies you can buy stock mutual funds, bonds mutual funds, ETFs and money market accounts. They should both offer all of these as IRAs, Roth IRAs, and non-retirement accounts. You need to make sure they offer the types of investments you want. Most 401K or 403b plans only offer a handful of options, but for non-company sponsored plans you want to have many more choices. To look at the costs see how much they charge you when you buy or sell shares. Also look at the annual expenses for those funds. Each company website should show you all the fees for each fund. Take a few funds that you are likely to invest in, and have a match in the other fund family, and compare. The benefit of the retirement accounts is that if you make a less than perfect choice now, it is easy to move the money within the family of funds or even to another family of funds later. The roll over or transfer doesn't involve taxes. |
MasterCard won't disclose who leaked my credit card details | File a John Doe lawsuit, "plaintiff to be determined", and then subpoena the relevant information from Mastercard. John Doe doesn't countersue, so you're pretty safe doing this. But it probably won't work. Mastercard would quash your subpoena. They will claim that you lack standing to sue anyone because you did not take a loss (which is a fair point). They are after the people doing the hacking, and the security gaps which make the hacking possible. And how those gaps arise among businesses just trying to do their best. It's a hard problem. And I've done the abuse wars professionally. OpSec is a big deal. You simply cannot reveal your methods or even much of your findings, because that will expose too much of your detection method. The ugly fact is, the bad guys are not that far from winning, and catching them depends on them unwisely using the same known techniques over and over. When you get a truly novel technique, it costs a fortune in engineering time to unravel what they did and build defenses against it. If maybe 1% of attacks are this, it is manageable, but if it were 10%, you simply cannot staff an enforcement arm big enough - the trained staff don't exist to hire (unless you steal them from Visa, Amex, etc.) So as much as you'd like to tell the public, believe me, I'd like to get some credit for what I've done -- they just can't say much or they educate the bad guys, and then have a much tougher problem later. Sorry! I know how frustrating it is! The credit card companies hammered out PCI-DSS (Payment Card Industry Data Security Standards). This is a basic set of security rules and practices which should make hacking unlikely. Compliance is achievable (not easy), and if you do it, you're off the hook. That is one way Amy can be entirely not at fault. Example deleted for length, but as a small business, you just can't be a PCI security expert. You rely on the commitments of others to do a good job, like your bank and merchant account salesman. There are so many ways this can go wrong that just aren't your fault. As to the notion of saying "it affected Amy's customers but it was Doofus the contractor's fault", that doesn't work, the Internet lynch mob won't hear the details and will kill Amy's business. Then she's suing Mastercard for false light, a type of defamtion there the facts are true but are framed falsely. And defamation has much more serious consequences in Europe. Anyway, even a business not at fault has to pay for a PCI-DSS audit. A business at fault has lots more problems, at the very least paying $50-90 per customer to replace their cards. The simple fact is 80% of businesses in this situation go bankrupt at this point. Usually fraudsters make automated attacks using scripts they got from others. Only a few dozen attacks (on sites) succeed, and then they use other scripts to intercept payment data, which is all they want. They are cookie cutter scripts, and aren't customized for each site, and can't go after whatever personal data is particular to that site. So in most cases all they get is payment data. It's also likely that primary data, like a cloud drive, photo collection or medical records, are kept in completely separate systems with separate security, unlikely to hack both at once even if the hacker is willing to put lots and lots of engineering effort into it. Most hackers are script kiddies, able to run scripts others provided but unable to hack on their own. So it's likely that "none was leaked" is the reason they didn't give notification of private information leakage. Lastly, they can't get what you didn't upload. Site hacking is a well known phenomenon. A person who is concerned with privacy is cautious to not put things online that are too risky. It's also possible that this is blind guesswork on the part of Visa/MC, and they haven't positively identified any particular merchant, but are replacing your cards out of an abundance of caution. |
How to withdraw money from currency account without having to lose so much to currency conversion? | In your position I would use one of the existing Polish currency exchange platforms (you can find a list here: http://jakikantor.pl). A few of them have bank accounts in Britain so the exchange rate will be close to market price. |
What does an x% inflation rate actually mean? | Individual product prices do not necessarily rise at inflation rates. What inflation means is that the purchasing power of one unit of currency decreases by x% in a year, which is typically measured by looking at a broad spectrum of products in an economy and extrapolating to "all products". So for all products across an economy, the aggregate price of all goods will, on average, be X% higher that they were this time last year. Some products will be cheaper, some will be more expensive, but on average their prices will rise with inflation rates. For the other part of your question, inflation is an annualized percentage, so an inflation rate of 12% means prices are 12% higher than they were a year ago, so if you extrapolate that linear trend, prices will rise (again, on average) 1% in a month. |
How can contractors recoup taxation-related expenses? | They are already indirectly paying these expenses. They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse. The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income. |
Are Index Funds really as good as “experts” claim? | Here is my simplified take: In any given market portfolio the market index will return the average return on investment for the given market. An actively managed product may outperform the market (great!), achieve average market performance (ok - but then it is more expensive than the index product) or be worse than the market (bad). Now if we divide all market returns into two buckets: returns from active investment and returns from passive investments then these two buckets must be the same as index return are by definition the average returns. Which means that all active investments must return the average market return. This means for individual active investments there are worse than market returns and better then market returns - depending on your product. And since we can't anticipate the future and nobody would willingly take the "worse than market" investment product, the index fund comes always up on top - IF - you would like to avoid the "gamble" of underperforming the market. With all these basics out of the way: if you can replicate the index by simply buying your own stocks at low/no costs I don't see any reason for going with the index product beyond the convenience. |
I just made $50K from selling my house. How should I invest the proceeds? | First pay off all existing debt. Then set up at least 6 month emergency fund. Freelancing exposes you to way more risks than employment. Then buy GIC's to cover and match the maturity of your expected education fees. Only 'play' with what is left. Don't over think it. Buy a low-cost (less than 0.5%) passive large-index mutual fund covering either the S&P or TSX. |
Is there a standard check format in the USA? | Many years ago, I worked on software that had to print the date, payee, and amounts on pre-printed checks. Other than the MICR line (which had a particular placement with respect to the bottom edge and required a particular font in a particular point size), most aspects of the check layout and format were up to the particular check provider. Then there was a desire to start using optical character recognition to further automate check handling. A standard came out, that most checks I see now seem to follow. The standard dictated the exact dollar sign glyph to be printed to the left of the amount box. This glyph was used by the OCR to locate the amount. There were specific tolerances for where you could print/write the amount relative to that dollar sign. There were also some requirements for the box containing the amount to have some clearance from the noisy backgrounds pre-printed on many checks. But what font you used inside the amount box was, as far as I could tell, unspecified. After all, customers could always hand-write the amount. Interestingly, the part of the check where you spell out the amount is known as the "legal amount." If the amount in numerals and the amount in words don't match, the spelled version takes precedence, legally. (The theory being that it's easier to doctor the numerals to change the apparent value of the check than it is to change the words.) I always found it ironic that the layout standard to enable OCR standard was focused on reading the numerals rather than the legal amount. OCR has come a long way since then, so I wouldn't be surprised if, nowadays, both amounts are read, even on hand-written checks. A little search shows that current (voluntary) standards are put out by the ANSI X9 group. |
Do stocks give you more control over your finances than mutual funds? | Exchange-traded funds are bought and sold like stocks so you'd be able to place stop orders on them just like you could for individual stocks. For example, SPY would be the ticker for an S & P 500 ETF known as a SPDR. Open-end mutual funds don't have stop orders because of how the buying and selling is done which is on unknown prices and often in fractional shares. For example, the Vanguard 500 Index Investor shares(VFINX) would be an example of an S & P 500 tracker here. |
What do these options trading terms mean? | With stocks, you can buy or sell. If you sell first, that's called 'shorting.' As in "I think linkedin is too high, I'm going to short it." With options, the terminology is different, the normal process is to buy to open/sell to close, but if you were shorting the option itself, you would first sell to open, i.e you are selling a position to start it, effectively selling it short. Eventually, you may close it out, by buying to close. Options trading is not for the amateur. If you plan to trade, study first and be very cautious. |
Frustrated Landlord | If you're sinking 1k/year into it, and the value is rising by $100k in 15 years, or $6k/year, you have a fine investment. Ignore the wife, she just wants something even better. |
Keeping our current home (second property) as a rental. Will it interfere with purchasing a third home? | Even after the real estate crash, there are banks that lend money outside of the rules I'll share. A fully qualified mortgage is typically run at debt to income ratios of 28/36, where 28% of your gross monthly income can apply to the mortgage, property tax, and insurance, and the 36% is the total monthly debt (including the mortgage, etc) plus car loan student loan, etc. It's less about the total loan on the potential than about these ratios. The bank may allow for 75% of monthly rent so until rentals are running at a profit, they may seem a loss, even while just breaking even. This is just an overview, each bank may vary a bit. |
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc | Wow, very amused by some of the answers. I will comment on those later. To directly answer your question, here is a link to a brochure that explains the three basic typs and is written in straightforward language. link text That is step one. Step 2 is a question, cheapest when, initially or for long term? Without a doubt term initially is the cheapest. However every 10 years or 20 years it increases in price. As the name term implies it is temporary. Coverage will end at some point, 75, or 80 depending upon plan design chosen. It is possible that if you choose Term you can outlive your coverage and all you have are a bunch of cancelled cheques. Young people with a mortgage, children and other debts should buy a lot of term as the mortgage will be paid off, the kids will no longer be dependent. These needs are temporary. However some needs are permanent. What about leaving a Legacy at Death to a Charity? Insurance is a good solution and can provide a tax deduction too. Term isn't a good fit. Or a business owner wishing to transfer his/her business at death to their children. Taxes will be due and permanent insurance such as Whole Life and Universal Life can be arranged to provide cash to pay tax whenever this happens. Let me ask you who received 10% in the last ten years on their equity portfolio. Almost zero people did. However a Whole Plan would have generated a guaranteed return of 3.0% plus a non-guaranteed return via dividends that the combined internal rate of return on a combined basis would be about 5.6% AFTER TAXES. Life a bond portfolio yield. (Internal rate of return is dependent on age at buying, years of investing. All insurance comany software can show you the internal rate of return.) IRR is essesntially: what is the return after tax that you must get to equal the equity or death benefit from a permanent insurance plan. Someone mentioned by Term and Invest the difference. That is what universal life is, Term and Invest the difference except the difference is growing tax sheltered.Outside investments with comparable risk are taxable! There is no easy answer for what type is right, often a combination is. The key question you should ask is How Much Is Enough? Then consider types based upon your needs and budget. Here is a link where you can calculate how much you need. I hope this helps a bit. |
Can dividends be exploited? | The moment the dividend is announced, especially from a company that doesn't normally pay dividends, the dividend is factored into everybody's analysis. In the absence of any other news the price of apple would be expected to drop once the dividend in locked in. Why would I buy shares from you at full price one day after the dividend is paid, if I will have to wait for the next dividend? Also keep in mind the dividend was announced on July 24th, and is given to shareholders of record on August 13th. You are way behind the curve. |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | This sound like a very bad idea. If you invest exclusively in silver, your investment is not diversified in any way. This is what I would call risky. Have a look at index funds and ETFs and build a diversified portfolio. It does not take much time, and you don't need to let it do by someone else. They are risky too, but I see "silver only" as much riskier. You reduce the risk by holding on to the funds for a long time. |
Is it better to buy this used car from Craigslist or from a dealership? | You seem to be on the right track. I feel, though, that it's worth addressing your maintenance budget. Even if both cars described in your question are from the same model year, one has been in service 2x more; one car has been on the road, in weather, twice as much as the other. I'm not sure what's being represented in the $6k of maintenance, but a whole host of systems can require maintenance or replacement at 200k+ miles. A/C compressor, all sorts of rubber parts (seals, hoses, belts, bushings), computer systems, stereo, window regulators, the list goes on. I don't know at what point the battery on a hybrid needs to be replaced, or what that replacement entails, but likely the battery or the hybrid recharge system will require something after 200k miles of service. I would learn more about what actual maintenance a high mileage prius can experience. To answer your question though, at this level of "used" I don't think the dealership adds anything to the equation. When you're buying certified pre-owned, the dealership/manufacturer relationship and warranty can be meaningful. When you're buying a 100k+ miles car from a random small used car lot it might as well be a stranger on craigslist... |
Optimal way to use a credit card to build better credit? | I answered a similar question, How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score?, in which I show a graph of how utilization impacts your score. In another answer to Should I keep a credit card open to maintain my credit score?, I discuss the makeup of your score. From your own view at Credit Karma, you can see that age of accounts will help your score, so now is the time to get the right cards and stay with them. My background is technology (electrical engineer) and MBA with a concentration in finance. I'm not a Psychology major. If one is undisciplined, credit can destroy them. If one is disciplined, and pays in full each month, credit is a tool. The quoting of billionaires is a bit disingenuous. I've seen people get turned away at hotels for lack of a credit card. $1000 in cash would not get them into a $200/night room. Yes, a debit card can be used, but the rental car and hotel "reserve" a large amount on the card, so if you don't have a high balance, you may be out of town and out of luck. I'll quote another oft-quoted guru: "no one gets rich on credit card rewards." No, but I'm on track to pay for my 13 year old's last semester in college with the rewards from a card that goes right into her account. It will be great to make that withdrawal and not need to take the funds from anywhere else. The card has no fee, and I've not paid them a dime in interest. By the way, with 1-20% utilization ideal, you want your total available credit to be 5X the highest monthly balance you'd every hit. Last - when you have a choice between 2% cash reward, and the cash discount Kevin manages, take the discount, obviously. |
Where can I buy stocks if I only want to invest a little bit at a time, and not really be involved in trading? | There's a few options you may want to look into. First, I'm writing from an US point of view, I do not know if these are available in Russia. First look into DRIPS (Dividend Reinvestment Plans). These seem tailor made for your request. They are plans set up by companies that pay dividends. If you own at least one share (costing no more than say $100 often less), then these companies will take the dividends paid on these shares and automatically buy more shares as the income from the dividends pile up. This is a low cost of entry way of getting in on many high quality stocks. Stalwart stocks such as GE and many utility and real estate stocks (REITs) offer this. Check out these links: Secondly you can look at brokerages that specialize in buying smaller amount of stocks on a regular basis to simulate a DRIP, ShareBuilder will allow you to invest say $50 or $100 a month into one or more stocks. However, at smaller amounts, their commission fees can eat in to your returns. Folio investing does the same thing as Sharebuilder. It's worth looking at them both and comparing their commissions and other features |
What could cause a stock to trade below book value? | A company's stock value is indicative of the market's collective belief of the future of the company. The relationship of between price and book value will vary according to the quality of the company, the category of stock, etc. In extreme cases, say Bank of America, the stock trades at a fraction of book, because BOA's books are a fantasy by most people's reckoning. |
What is a normal amount of money to spend per week on food/entertainment/clothing? | Zero? Ten grand? Somewhere in the middle? It depends. Your stated salary, in U.S. dollars, would be high five-figures (~$88k). You certainly should not be starving, but with decent contributions toward savings and retirement, money can indeed be tight month-to-month at that salary level, especially since even in Cardiff you're probably paying more per square foot for your home than in most U.S. markets (EDIT: actually, 3-bedroom apartments in Cardiff, according to Numbeo, range from £750-850, which is US$1200-$1300, and for that many bedrooms you'd be hard-pressed to find that kind of deal in a good infield neighborhood of the DFW Metro, and good luck getting anywhere close to downtown New York, LA, Miami, Chicago etc for that price. What job do you do, and how are you expected to dress for it? Depending on where you shop and what you buy, a quality dress shirt and dress slacks will cost between US$50-$75 each (assuming real costs are similar for the same brands between US and UK, that's £30-£50 per shirt and pair of pants for quality brands). I maintain about a weeks' wardrobe at this level of dress (my job allows me to wear much cheaper polos and khakis most days and I have about 2 weeks' wardrobe of those) and I typically have to replace due to wear or staining, on average, 2 of these outfits a year (I'm hard on clothes and my waistline is expanding). Adding in 3 "business casual" outfits each year, plus casual outfits, shoes, socks, unmentionables and miscellany, call it maybe $600(£400)/year in wardrobe. That doesn't generally get metered out as a monthly allowance (the monthly amount would barely buy a single dress shirt or pair of slacks), but if you're socking away a savings account and buying new clothes to replace old as you can afford them it's a good average. I generally splurge in months when the utilities companies give me a break and when I get "extra" paychecks (26/year means two months have 3 checks, effectively giving me a "free" check that neither pays the mortgage nor the other major bills). Now, that's just to maintain my own wardrobe at a level of dress that won't get me fired. My wife currently stays home, but when she worked she outspent me, and her work clothes were basic black. To outright replace all the clothes I wear regularly with brand-new stuff off the rack would easily cost a grand, and that's for the average U.S. software dev who doesn't go out and meet other business types on a daily basis. If I needed to show up for work in a suit and tie daily, I'd need a two-week rotation of them, plus dress shirts, and even at the low end of about $350 (£225) per suit, $400 (£275) with dress shirt and tie, for something you won't be embarrassed to wear, we're talking $4000 (£2600) to replace and $800 (£520) per year to update 2 a year, not counting what I wear underneath or on the weekends. And if I wore suits I'd probably have to update the styles more often than that, so just go ahead and double it and I turn over my wardrobe once every 5 years. None of this includes laundering costs, which increase sharply when you're taking suits to the cleaners weekly versus just throwing a bunch of cotton-poly in the washing machine. What hobbies or other entertainment interests do you and your wife have? A movie ticket in the U.S. varies between $7-$15 depending on the size of the screen and 2D vs 3D screenings. My wife and I currently average less than one theater visit a month, but if you took in a flick each weekend with your wife, with a decent $50 dinner out, that's between $260-$420 (£165-270) monthly in entertainment expenses. Not counting babysitting for the little one (the going rate in the US is between $10 and $20 an hour for at-home child-sitting depending on who you hire and for how long, how often). Worst-case, without babysitting that's less than 5% of your gross income, but possibly more than 10% of your take-home depending on UK effective income tax rates (your marginal rate is 40% according to the HMRC, unless you find a way to deduct about £30k of your income). That's just the traditional American date night, which is just one possible interest. Playing organized sports is more or less expensive depending on the sport. Soccer (sorry, football) just needs a well-kept field, two goals and and a ball. Golf, while not really needing much more when you say it that way, can cost thousands of dollars or pounds a month to play with the best equipment at the best courses. Hockey requires head-to-toe padding/armor, skates, sticks, and ice time. American football typically isn't an amateur sport for adults and has virtually no audience in Europe, but in the right places in the U.S., beginning in just a couple years you'd be kitting your son out head-to-toe not dissimilar to hockey (minus sticks) and at a similar cost, and would keep that up at least halfway through high school. I've played them all at varying amateur levels, and with the possible exception of soccer they all get expensive when you really get interested in them. How much do you eat, and of what?. My family of three's monthly grocery budget is about $300-$400 (£190-£260) depending on what we buy and how we buy it. Americans have big refrigerators (often more than one; there's three in my house of varying sizes), we buy in bulk as needed every week to two weeks, we refrigerate or freeze a lot of what we buy, and we eat and drink a lot of high-fructose corn-syrup-based crap that's excise-taxed into non-existence in most other countries. I don't have real-world experience living and grocery-shopping in Europe, but I do know that most shopping is done more often, in smaller quantities, and for more real food. You might expect to spend £325 ($500) or more monthly, in fits and starts every few days, but as I said you'd probably know better than me what you're buying and what it's costing. To educate myself, I went to mysupermarket.co.uk, which has what I assume are typical UK food prices (mostly from Tesco), and it's a real eye-opener. In the U.S., alcohol is much more expensive for equal volume than almost any other drink except designer coffee and energy drinks, and we refrigerate the heck out of everything anyway, so a low-budget food approach in the U.S. generally means nixing beer and wine in favor of milk, fruit juices, sodas and Kool-Aid (or just plain ol' tap water). A quick search on MySupermarkets shows that wine prices average a little cheaper, accounting for the exchange rate, as in the States (that varies widely even in the U.S., as local and state taxes for beer, wine and spirits all differ). Beer is similarly slightly cheaper across the board, especially for brands local to the British Isles (and even the Coors Lite crap we're apparently shipping over to you is more expensive here than there), but in contrast, milk by the gallon (4L) seems to be virtually unheard of in the UK, and your half-gallon/2-liter jugs are just a few pence cheaper than our going rate for a gallon (unless you buy "organic" in the US, which carries about a 100% markup). Juices are also about double the price depending on what you're buying (a quart of "Innocent" OJ, roughly equivalent in presentation to the U.S. brand "Simply Orange", is £3 while Simply Orange is about the same price in USD for 2 quarts), and U.S.-brand "fizzy drinks" are similarly at a premium (£1.98 - over $3 - for a 2-liter bottle of Coca-Cola). With the general preference for room-temperature alcohol in Europe giving a big advantage to the longer unrefrigerated shelf lives of beer and wine, I'm going to guess you guys drink more alcohol and water with dinner than Americans. Beef is cheaper in the U.S., depending on where you are and what you're buying; prices for store-brand ground beef (you guys call it "minced") of the grade we'd use for hamburgers and sauces is about £6 per kilo in the UK, which works out to about $4.20/lb, when we're paying closer to $3/lb in most cities. I actually can't remember the last time I bought fresh chicken on the bone, but the average price I'm seeing in the UK is £10/kg ($7/lb) which sounds pretty steep. Anyway, it sounds like shopping for American tastes in the UK would cost, on average, between 25-30% more than here in the US, so applying that to my own family's food budget, you could easily justify spending £335 a month on food. |
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