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I'm 13. Can I buy supplies at a pet store without a parent/adult present? | I had a cat growing up--most of the time I was the one who got her supplies. It was never an issue. |
Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor? | If you're looking to learn more about investing for personal use (as opposed to academic interest), I'd recommend something like The Ages of the Investor instead. |
What is the US Fair Tax? | You asked about the challenges. The transition itself is the biggest one. For people to get used to the tax at the register vs at their paycheck. For a great number of people to find new work. I don't know the numbers, but anyone involved with personal income taxes would be out of work. Sales tax is already part of the process in most states, bumping it to a federal tax wont add too much in overhead. I make no moral judgment, but consider, most prostitutes and drug dealers are avoiding income tax, but they still are buying the same goods in stores you and I are. This proposed tax reduces the collection noncompliance, and brings more people into "the system". Another factor some may not like is the ability to affect behavior by picking and choosing what to promote, via deductions, such as home buying or charity. |
How are stock buybacks not considered insider trading? | In most countries there are specific guidelines on buy backs. It is never a case where by one fine morning company would buy its shares and sell it whenever it wants. In general company has to pass a board resolution, sometimes it also requires it to be approved by share holders. It has to notify the exchange weeks in advance. Quite a few countries require a price offer to all. I.E. it cannot execute a market order. All in all the company may have inside information, but it cannot time the market. |
When will Canada convert to the U.S. Dollar as an official currency? | I don't see countries switching to the USD, I see countries moving away from it. The US has the largest peace time debt ever, is not being even close to fiscally responsible (approving ~4 trillion budget!) and is faced with 100 trillion in future commitments (social security, medicare) with a workforce (tax base) that is decreasing as the baby boomers retire. When the US cannot meet those obligations (and most experts agree there is no hope of that anymore) they will have to print money and devalue the currency. |
Is there any instrument with real-estate-like returns? | nan |
Are personal finance / money management classes taught in high school, anywhere? | In Houston, Texas USA where I went to a private high school they had a half-semester class in personal finance, but it was optional and didn't give you any credits towards graduation. You are right though, it should be a standard class. After all, who doesn't need that information in their adult lives, and not everyone goes to college. |
What is the process of getting your first share? | nan |
Are marijuana based investments promising, or just another scam? | Any advertisement for a "business opportunity" is nearly always a scam of some kind. In such deals, the seller is the one making the money. They rely on the fantasy of the average person who imagines themself with a profitable business. Real businessmen do not get their businesses from flyers on the sides of telephone poles. Real businessmen already know every aspect and detail of their business already. They do not need to pay some clown $10,000 to "get them started". If you are reading such advertisements, it means you have money, but do not know what to do with it. Although I cannot tell you what to do with your money. I can tell you this: giving it to somebody who advertises a "great business opportunity" would be a mistake. |
Why government bonds fluctuate so much, even though interest rates don't change that often? | Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during. |
How can I improve my credit score if I am not paying bills or rent? | You can improve your credit score simply by being an authorized user on someone's credit card account. They don't even physically have to give you a card to use, they can just add you to the account as an authorized user and your credit score will be affected. Be forewarned though, it can be negatively impacted as well. Only participate in such a scheme if it's with someone trustworthy and reliable. |
Is there any special meaning when the market price for a stock exactly equals ask or bid? | When a stock is ask for 15.2 and bid for 14.5, and the last market price was 14.5, what does it mean? It means that the seller wants to sell for a higher price than the last sale while the buyer does not want to buy for more than the last sale price. Or what if the last price is 15.2? The seller is offering to sell for the last sale price, but the buyer wants to buy for less. |
Accepted indicators for stock market valuation | There are several camps for stock valuation, and much of it boils down to your investment style. A growth investor will not consider something with a 50x P/E ratio to be overvalued, but a value investor certainly would. I would recommend looking up the Fama-French n-factor model (it was 3-factor, I believe they have released newer papers which introduce other factors), and reading The Intelligent Investor by Benjamin Graham. Graham's methodology is practically canon for many investors, and the methodology focuses on value, while outlining quantitative factors for determining if a stock is under or over valued. |
How Do Scammers / Money Launderers Profit From Loans To Victims | If they have your account numbers (which are necessary for direct deposits) they could possibly initiate ACH withdrawals from your accounts too (requires some setup but they may have accomplices). Note that even if you didn't have money there, depending on the local bank rules you may be still on the hook for overdrafts they create, at least by default. You may be able to prove later that this was fraud but the burden of proof will be on you, and in the meantime they might be gone with the money. They could use your documents to either establish other accounts in your name (identity theft) or take over your accounts (e.g. by contacting customer service of the bank and claiming to be you, and presenting the documents you sent as a proof), request credits under your identity (possibly using the money on the account as a collateral since the bank may not know where the money is from), etc. This is even easier given you will give them all the documents and information needed for a loan, your signature, etc. And the fact that they ask you to send documents to a specific address doesn't mean they could be found at that address when the problems start - it may be rented short-term, belong to either knowing or unknowing accomplice, be a forwarding service, etc. Could be money laundering of course too. That's just what comes to mind after a short while thinking about it. |
What are some well known or well regarded arguments against investing? | Oh, geez, well-regarded arguments against investing, hmm? Well, I have a couple. They're not against investing per se. They're asking about your priorities and whether you might have something better to do than inevesting: And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully: and he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits? And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods. And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry. But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided? So is he that layeth up treasure for himself, and is not rich toward God. -- Luke 12:16-21 Christian or otherwise, there may be better things for you to do with your excess cash - indeed, with your life - than simply invest it to bring yourself more money. Many people find charitable contributions more important than spending a little more money on themselves (immediately or in the future). Of course, you will need to decide what these things are that matter to you. Perhaps you would like to contribute to traditional charities. Perhaps you would like to fund education, or a religious organization, or the Democratic Party, or the Republican Party, or the Libertarian Party, or the Green Party, or the Tea Party, or Occupy Wall Street. Perhaps you'd like to fund research into something. Perhaps you simply have friends and family that you want to make happy. Perhaps a small vacation to spend time with family is worth more to you now than the investment returns will be worth later. Moreover, note that economic decisions like this are made on the margin - it's not so much a question of whether you invest at all, but whether you should invest more or less, and spend/donate more or less. I made me great works; I builded me houses; I planted me vineyards: I made me gardens and orchards, and I planted trees in them of all kind of fruits: I made me pools of water, to water therewith the wood that bringeth forth trees: I got me servants and maidens, and had servants born in my house; also I had great possessions of great and small cattle above all that were in Jerusalem before me: I gathered me also silver and gold, and the peculiar treasure of kings and of the provinces: I got me men singers and women singers, and the delights of the sons of men, as musical instruments, and that of all sorts. So I was great, and increased more than all that were before me in Jerusalem: also my wisdom remained with me. And whatsoever mine eyes desired I kept not from them, I withheld not my heart from any joy; for my heart rejoiced in all my labor: and this was my portion of all my labor. Then I looked on all the works that my hands had wrought, and on the labor that I had labored to do: and, behold, all was vanity and vexation of spirit, and there was no profit under the sun. -- Ecclesiastes 2:4-11 Because in the long run, we're all dead. Anywho! It's all a matter of returns and risk analysis. Even spending on yourself and charitable giving can be thought in these terms (the returns are not 'more money', so they may be harder to analyze, but they're important too). |
New 1099 employee with Cobra insurance | While COBRA premiums are not eligible to be a "business" expense they can be a medical expense for personal deduction purposes. If you're itemizing your deductions you may be able to deduct that way. However, you will only be able to deduct the portion of the premium that exceeds 10% of your AGI. Are you a full time employee now or are you a 1099 contractor? Do you have access to your employers health plan? |
For very high-net worth individuals, does it make sense to not have insurance? | I think that insurance is one of the best things ever created for this reasons: |
401k vs. real estate for someone who is great at saving? | With an appropriate selection within a 401K and if operating expenses are low, you get tax deferred savings and possibly a lower tax bracket for now. The returns vary of course with market fluctuations but for almost 3 years it has been double digit growth on average. Some health care sector funds were up over 40% last year. YMMV. With stocks and mutual funds that hold them, you also are in a sense betting that people want their corporations to grow and succeed. Others do most of the work. Real estate should be part of your savings strategy but understand that they are not kidding when they talk about location. It can lose value. Tenants tend to have some problem part of the year such that some owners find it necessary to have a paid property manager to buffer from their complaints. Other owners get hauled into court and sued as slum lords for allegedly not doing basics. Tenants can ruin your property as well. There is maintenance, repair, replacement, insurance against injury not just property damage, and property taxes. While some of it might be deductible, not all is. You may want to consider that there are considerable ongoing costs and significant risks in time and money with real estate as an investment at a level that you do not incur with a 401K. If you buy mainly to flip, then be aware that if there are unforeseen issues with the house or the market sours as it can, you could be stuck with an immovable drain on your income. If you lose your job could you make payments? Many, many people sadly lost their homes or investment properties that way in 2008-2010. |
How can I determine if my rate of return is “good” for the market I am in? | Do you recall where you read that 25% is considered very good? I graduated college in 1984 so that's when my own 'investing life' really began. Of the 29 years, 9 of them showed 25% to be not quite so good. 2013 32.42, 2009 27.11, 2003 28.72, 1998 28.73, 1997 33.67, 1995 38.02, 1991 30.95, 1989 32.00, 1985 32.24. Of course this is only in hindsight, and the returns I list are for the S&P index. Even with these great 9 years, the CAGR (compound annual growth) of the S&P from 1985 till the end of 2013 was 11.32% Most managed funds (i.e. mutual funds) do not match the S&P over time. Much has been written on how an individual investor's best approach is to simply find the lowest cost index and use a mix with bonds (government) to match their risk tolerance. "my long term return is about S&P less .05%" sounds like I'm announcing that I'm doing worse than average. Yes, and proud of it. Most investors (85-95% depending on survey) lag by far more than this, many percent in fact) |
Non Qualifying Stock Option offered by employer | A little terminology: Grant: you get a "gift" with strings attached. "Grant" refers to the plan (legal contract) under which you get the stock options. Vesting: these are the strings attached to the grant. As long as you're employed by the company, your options will vest every quarter, proportionally. You'll become an owner of 4687 or 4688 options every quarter. Each such vest event means you'd be getting an opportunity to buy the corresponding amount of stocks at the strike price (and not the current market price which may be higher). Buying is called exercising. Exercising a nonqualified option is a taxable event, and you'll be taxed on the value of the "gift" you got. The value is determined by the difference between the strike price (the price at which you have the option to buy the stock) and the actual fair market value of the stock at the time of vest (based on valuations). Options that are vested are yours (depending on the grant contract, read it carefully, leaving the company may lead to forfeiture). Options that are not vested will disappear once you leave the company. Exercised options become stocks, and are yours. Qualified vs Nonqualifed - refers to the tax treatment. Nonqualified options don't have any special treatment, qualified do. 3.02M stocks issued refers to the value of the options. Consider the total valuation of the company being $302M. With $302M value and 3.02M stocks issued, each stock is worth ~$100. Now, in a year, a new investor comes in, and another 3.02M stocks are issued (if, for example, the new investor wants a 50% stake). In this case, there will be 6.04M stocks issued, for 302M value - each stock is worth $50 now. That is called dilution. Your grant is in nominal options, so in case of dilution, the value of your options will go down. Additional points: If the company is not yet public, selling the stocks may be difficult, and you may own pieces of paper that no-one else wants to buy. You will still pay taxes based on the valuations and you may end up paying for these pieces of paper out of your own pocket. In California, it is illegal to not pay salary to regular employees. Unless you're a senior executive of the company (which I doubt), you should be paid at least $9/hour per the CA minimum wages law. |
Are there brokers or companies who trade Forex and make money for us on our investment? And do you think fxtradeinvestment is legit? | So you think there is a business that can take $X and in two weeks turn it into $10X plus their profit. That means that in two weeks you can turn $1,000 into $10,000. So every two weeks you add a zero, in six weeks you add 3 zeros. In 12 weeks total your $1,000 is now $1,000,000,000; and in a few weeks after that you are richer than Bill Gates. All Guaranteed! Run away. |
How are shares used, and what are they, physically? | If you are particularly interested in the share certificate artifacts themselves, there is a collection hobby in paper share certificates and bonds, called scripophily. This can include both active share certificates (for instance, think about giving your kid or grandkid a frameable paper share of Hasbro, Disney or McDonalds?), inactive certificates from famous bankruptcies or famous companies of the past, or just the visual interest in scrollwork and engraved vignettes. |
How to systematically find sideways stocks? | You can likely use bollinger band values to programmatically recognize sideways trending stocks. Bollinger band averages expand during periods of volatility and then converge on the matched prices the longer there is little volatility in the asset prices. Also, look at the bollinger band formula to see if you can glean how that indicator does it, so that you can create something more custom fit to your idea. |
How to use proceeds of old house sale shortly after buying new house? | Really this is no different from any kind of large lump sum and having a mortgage. There are probably many questions and answers on this subject. It really doesn't matter that the proceeds were the result of a sale, an inheritance would not change the answer. I think it is important to note that the proceeds will not eliminate the house 2 mortgage. A high level choice of investment one makes is between equity (such as stock) and debt investments (such as bonds and mortgages). You are in a unique case of being able to invest in your own mortgage with no investment fee. This may tip the scales in favor of paying down the mortgage. It is difficult to answer in your specific case as we don't know the rest of your finances. Do you have a sizable 401K that is heavily invested in stocks? Do you have the need for a college fund? Do you have an emergency fund? Do you have a desire to own several homes generating income property? If it was me I'd do the following in order, skipping steps I may have already completed: I've heard that the bank may agree to a "one time adjustment" to lower the payments on Mortgage #2 because of paying a very large payment. Is this something that really happens? I really kind of hate this attitude. Your goal is to get rid of the mortgage in a timely manner. Doing such makes paying for kids college a snap, reduces the income one might need in retirement, basically eliminates the need for life insurance, and gives one a whole lot of money to have fun with. |
Shares in stock exchange and dividend payout relationship | It would be 0.22 * Rs 5 per share, i.e. Rs 1.1 per share. For 1000 share it would be Rs 1.1 * 1000, i.e. 1100 |
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. |
Where can I find announcements of official GDP figures for the US and other countries? | For immediate availability, by far the fastest (and cheapest) way to get macroeconomic figures as they are released, is by following (verified) Twitter accounts of the respective Central bank and institutions alike. Indeed, Twitter is the new trader tape. |
How does Robinhood stock broker make money? | Robinhood seems interesting. Some say it's a gimmicky site with a nice UI not an investing or trading platform. From investopedia: 1. For now, the app stays afloat for mainly two reasons. First, the business itself is extremely lean: no physical locations, a small staff, no massive public relations campaigns and only one operating system platform to maintain. Robinhood also generates interest off of unused cash deposits from user accounts according to the Federal Funds rate. 2. Second, venture capitalists such as Index Ventures, Ribbit Capital, Google Ventures, Andreessen Horowitz, Social Leverage,and “many others” have invested more than $16 million in the app. 3. According to Barron’s, Robinhood plans to implement margin trading in 2015, eventually charging 3.5% interest for the service. E*Trade charges 8.44% for accounts under $25,000. Phone assisted trading will also be available at $10 per trade in the future. 4. Originally, Robinhood planned to make money off of order flows – a common tactic used by discount brokerages in the 1990s to generate revenue. According to the company's FAQ, Robinhood backpedaled on the idea because it executes orders through a clearing partner and, as a result, receives little to no payment for order flow. The company is willing to return to its original plan in the future if it receives order flows directly or begins to generate a lot of revenue from them. |
Money market account for emergency savings | Most emergencies are less than 1,000 in nature. As such I would keep at least that amount in a checking/savings account at the bank from which you pay your bills or can get cash from. This amount may increase so you can avoid low balance fees, or because of the nature of your life style and income. Beyond that, you can search for yield. I personally like online savings accounts like Amex Personal Savings, Ally or others. Money market accounts will work equally well. There you can keep the bulk of your emergency savings and large purchase savings. Keep in mind you still won't earn much. A 40K emergency fund will only earn you $38/month at Ally. |
If a stock doesn't pay dividends, then why is the stock worth anything? | I haven't seen any of the other answers address this point – shares are (a form of) ownership of a company and thus they are an entitlement to the proceeds of the company, including proceeds from liquidation. Imagine an (extreme, contrived) example whereby you own shares in a company that is explicitly intended to only exist for a finite and definite period, say to serve as the producers of a one-time event. Consider a possible sequence of major events in this company's life: So why would the shares of this hypothetical company be worth anything? Because the company itself is worth something, or rather the stuff that the company owns is worth something, even (or in my example, especially) in the event of its dissolution or liquidation. Besides just the stuff that a company owns, why else would owning a portion of a company be a good idea, i.e. why would I pay for such a privilege? Buying shares of a company is a good idea if you believe (and are correct) that a company will make larger profits or capture more value (e.g. buy and control more valuable stuff) than other people believe. If your beliefs don't significantly differ from others then (ideally) the price of the companies stock should reflect all of the future value that everyone expects it to have, tho that value is discounted based on time preference, i.e. how much more valuable a given amount of money or a given thing of value is today versus some time in the future. Some notes on time preference: But apart from whether you should buy shares in a specific company, owning shares can still be valuable. Not only are shares a claim on a company's current assets (in the event of liquidation) but they are also claims on all future assets of the company. So if a company is growing then the value of shares now should reflect the (discounted) future value of the company, not just the value of its assets today. If shares in a company pays dividends then the company gives you money for owning shares. You already understand why that's worth something. It's basically equivalent to an annuity, tho dividends are much more likely to stop or change whereas the whole point of an annuity is that it's a (sometimes) fixed amount paid at fixed intervals, i.e. reliable and dependable. As CQM points out in their answer, part of the value of stock shares, to those that own them, and especially to those considering buying them, is the expectation or belief that they can sell those shares for a greater price than what they paid for them – irrespective of the 'true value' of the stock shares. But even in a world where everyone (magically) had the same knowledge always, a significant component of a stock's value is independent of its value as a source of trading profit. As Jesse Barnum points out in their answer, part of the value of stocks that don't pay dividends relative to stocks that do is due to the (potential) differences in tax liabilities incurred between dividends and long-term capital gains. This however, is not the primary source of value of a stock share. |
Which banks have cash-deposit machines in Germany? | This may not answer your question but it may be an alternative. My credit union credits my account for deposits immediately (ones I make in an envelope). They view it as a service to their members. They take the risk that the member could deposit an empty envelope, say they deposited $400, and then withdraw the money. There may be banks in your country that do business this way. |
How do third-party banks issue car loans? | I have had it two way now: I got pre-approval from my credit union which just so happened to be one of the bigger vehicle lenders in the metro area. What I found out was that the dealership (which was one of the bigger ones in the metro area) had a computer system that looked up my deal with the credit union. Basically, I signed some contracts and the CU and the dealership did whatever paperwork they needed to without me. I bought a used car and drove it off of the lot that night, and I didn't ever go back (for anything financial) Both my wife and her sister received blank checks that were valid up to a certain amount. In the case of my sister in law, she signed the check, the dealership called to confirm funds and she drove off. In the case of my wife, she ended up negotiating a better deal with dealer finance, but I was assured she only had to sign the check, get it verified and drive the car home. |
Is it true that the price of diamonds is based on a monopoly? | diamonds are intrinsically worthless this is simply wrong. (1) Diamonds that are sold for anything less than, oh, let's say $5000 at original retail - are indeed utterly, totally, completely worthless. It is simply "one of the great scams". Their real "price" is maybe "five bucks". End of story. There is no secondary market. Literally - "end of story". If you buy a "diamond" lol for "$2000" to impress your loved one, you can not then "sell it" for any amount of money. It is: worthless. Once again: simple, undeniable fact. the diamond you bought for 2 grand cannot be resold. Ir's worthless. (OK, maybe you can get 100 bucks for it, something like that. Or, you can scam someone clueless, and get 200 bucks.) (2) However actual "investment" stones do in fact have a value - if somewhat fragile. Example, a few years ago I sold a stone for 30 thousand. That was a "real" price and it was quite liquid - I was within days able to find a buyer. (A dealer - he would have then sold it on for 35 or whatever.) I have never dealt in stones over six figures, but I'm fairly certain those are "real" valuable objects: just like paintings by name artists. (However: yes, the line between "laughable diamonds" and actual investment stones, is indeed moving ever upwards.) (Note - the "elephant in the room" with diamonds is that GE's industrial process for simply making utterly flawless diamonds, starting with carbon, is getting better every decade.) (A second overwheleming point that nobody has mentioned: diamonds get beat-up. Regarding "engagement ring diamonds", a used one is exactly as useless as a used car. It's crap. Just as with $200,000 picassos, this concept does not apply to "actual investment stones".) Note that many of the comments/arguments on this page are very confused because: people are not distinguishing between the (ROFL) "engagement ring scam market" and the rarefied "investment gem market". The two things are utterly different. Yes, "engagement ring diamonds" are an utter scam, and are simply: "worthless". The fundamental, basic, overwhelming scam in today's business/social universe is: "engagement diamonds". Yes, the price is only due to marketing/monopolies etc. Elephant in the room A: GE's technology can - end of story - manufacture diamonds. (Starting with "pencil leads".) End of story. It's all over. Elephant in the room B: folks forget that diamonds get beat-up, they are just like used cars. Regarding "engagement-ring diamonds", nobody has ever, or will ever, bought a used one. Simple, utterly undeniable fact: regarding "engagement ring diamonds". they have: zero value. You cannot resell them. End of story. If you buy a house, you can resell it. If you buy a car, you can resell it (at a spectacular loss). If you buy a picasso, you can resell it (almost always making a huge profit). If you buy an "engagement ring diamond", it is worth: nothing. Zero. Nada. strictly regarding investment stones, which is a distinctly utterly different market. This market has no connection, in any way, at all, even vaguely, it is utterly unrelated, to "engagement ring diamonds". You can in fact buy and sell these items - very much like say "art" or "mid century antiques", and make money. This market just has utterly no connection to the whole "engagement ring diamonds" scam system. Say you buy wine at the supermarket, for 5 to 100 bucks a bottle. If you think that the "wine" thus bought, has a secondary market, or you can invest in it or something: you have lost your mind. In total contrast: Yes, although totally flakey, there is indeed an "investment wine market" which is real and reasonable. I for example have made some money in that. (I have a great anecdote even - I had one cellar of wine in burgundy, which could have been sold for, say, 30 grand - but we drank it :) ) Again, the (somewhat bizarre) actual market in investment wine, just has to "buying wine in the supermarket". To further the analogy: wine prices in the supermarket / your (ROFL) wine dealer, from 5 to 100 bucks, are just: utterly laughable. Utterly. Laughable. Much as folks sit around, and decide on "label designs", they sit around, and decide on "price points". There is, utterly, no difference between $5 and $100 grape juice rofl "wine". The price difference is simply a marketing decision: at best, you can think of it as a Velbin good. ... exactly the same applies to "engagement ring diamonds". |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | I'll take an alternate route: honesty + humor. Say something like this with a smile and a laugh, like you know they're crazy, but they maybe don't know it yet. "Are you crazy? Co-signing a loan can put us both in a lot of potential danger. First, you shouldn't get a loan that you can't afford/attain on your own, and second, I'd be crazy to agree to be liable for a loan that someone else can't get on their own. You want something bad enough, you get your credit rating in order, or you save up the money - that's how I bought (my car/house/trip to Geneva). I'd be happy to point you in the right direction if you want to put a plan together." You're offering help, but not the kind that puts you in danger. Declining to co-sign a loan can't damage your relationship with this person as much as failure to pay will. |
I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | You should never take advice from someone else in relation to a question like this. Who would you blame if things go wrong and you lose money or make less than your savings account. For this reason I will give you the same answer I gave to one of your previous similar questions: If you want higher returns you may have to take on more risk. From lowest returns (and usually lower risk) to higher returns (and usually higher risk), Bank savings accounts, term deposits, on-line savings accounts, offset accounts (if you have a mortgage), fixed interest eg. Bonds, property and stock markets. If you want potentially higher returns then you can go for derivatives like options or CFDs, FX or Futures. These usually have higher risks again but as with any investments some risks can be partly managed. What ever you decide to do, get yourself educated first. Don't put any money down unless you know what your potential risks are and have a risk management strategy in place, especially if it is from advice provided by someone else. The first rule before starting any new investment is to understand what your potential risks are and have a plane to manage and reduce those risks. |
How can people have such high credit card debts? | I had $70K in credit card at one point. Limited income, starting a business - it's the only credit available. (yes, all paid off now). |
Does the Black-Scholes Model apply to American Style options? | The difference between an American and European option is that the American option can be exercised at any time, whereas the European option can be liquidated only on the settlement date. The American option is "continuous time" instrument, while the European option is a "point in time" instrument. Black Scholes applies to the latter, European, option. Under "certain" (but by no means all) circumstances, the two are close enough to be regarded as substitutes. One of their disciples, Robert Merton, "tweaked" it to describe American options. There are debates about this, and other tweaks, years later. |
Did I get screwed in taxes on a mutual fund dividend payment? | No, not screwed. This is just an artifact of the tax code and year end dividends. You paid a tax, and in return, got a higher basis. When you sell, you will have less profit, therefore less tax to pay than the guy who bought right after the dividend. You can call the fund company if you want to buy later this year. Once you understand the process, it might not bother you at all. |
How do multi-currency bank accounts work? What is the advantage? | Today typically a Business needs to hold accounts in more than one currency. Banks in certain countries are offering what is called a dual currency account. It is essentially 2 accounts with same account number but different currency. So One can have an account number say 123456 and have it in say AUD and USD. So the balance will always show as X AUD and Y USD. If you deposit funds [electronic, check or cash] in USD; your USD balance goes up. Likewise at the time of withdrawal you have to specify what currency you are withdrawing. Interest rates are calculated at different percentage for different currencies. So in a nutshell it would like operating 2 accounts, with the advantage of remembering only one account number. Designate a particular currency as default currency. So if you don't quote a currency along with the account number, it would be treated as default currency. Otherwise you always quote the account number and currency. Of-course bundled with other services like free Fx Advice etc it makes the entire proposition very attractive. Edit: If you have AUD 100 and USD 100, if you try and withdraw USD 110, it will not be allowed; Unless you also sign up for a auto sweep conversion. If you deposit a GBP check into the account, by default it would get converted into AUD [assuming AUD is the default currency] |
Why can't I withdraw the $57 in my account? | Is there a debit card accessing this account? When you spend money on a debit card for certain item, including, but not limited to gas, restaurant, hotel, a bit extra is held in reserve. For example, a $100 restaurant charge might hold $125, to allow for a tip. (You're a generous tipper, right?) The actual sales slips my take days to reconcile. It's for this reason that I've remarked how credit cards have their place. Using debit cards requires that one have more in their account than they need to spend, especially when taking a trip including hotel costs. |
Why do stocks go up? Is it due to companies performing well, or what else? [duplicate] | The value of a stock ultimately is related to the valuation of a corporation. As part of the valuation, you can estimate the cash flows (discounted to present time) of the expected cash flows from owning a share. This stock value is the so-called "fundamental" value of a stock. What you are really asking is, how is the stock's market price and the fundamental value related? And by asking this, you have implicitly assumed they are not the same. The reason that the fundamental value and market price can diverge is that simply, most shareholders will not continue holding the stock for the lifespan of a company (indeed some companies have been around for centuries). This means that without dividends or buybacks or liquidations or mergers/acquisitions, a typical shareholder cannot reasonably expect to recoup their share of the company's equity. In this case, the chief price driver is the aggregate expectation of buyers and sellers in the marketplace, not fundamental evaluation of the company's balance sheet. Now obviously some expectations are based on fundamentals and expert opinions can differ, but even when all the experts agree roughly on the numbers, it may be that the market price is quite a ways away from their estimates. An interesting example is given in this survey of behavioral finance. It concerns Palm, a wholly-owned subsidiary of 3Com. When Palm went public, its shares went for such a high price, they were significantly higher than 3Com's shares. This mispricing persisted for several weeks. Note that this facet of pricing is often given short shrift in standard explanations of the stock market. It seems despite decades of academic research (and Nobel prizes being handed out to behavioral economists), the knowledge has been slow to trickle down to laymen, although any observant person will realize something is amiss with the standard explanations. For example, before 2012, the last time Apple paid out dividends was 1995. Are we really to believe that people were pumping up Apple's stock price from 1995 to 2012 because they were waiting for dividends, or hoping for a merger or liquidation? It doesn't seem plausible to me, especially since after Apple announced dividends that year, Apple stock ended up taking a deep dive, despite Wall Street analysts stating the company was doing better than ever. That the stock price reflects expectations of the future cash flows from the stock is a thinly-disguised form of the Efficient Market Hypothesis (EMH), and there's a lot of evidence contrary to the EMH (see references in the previously-linked survey). If you believe what happened in Apple's case was just a rational re-evaluation of Apple stock, then I think you must be a hard-core EMH advocate. Basically (and this is elaborated at length in the survey above), fundamentals and market pricing can become decoupled. This is because there are frictions in the marketplace making it difficult for people to take advantage of the mispricing. In some cases, this can go on for extended periods of time, possibly even years. Part of the friction is caused by strong beliefs by market participants which can often shift pressure to supply or demand. Two popular sayings on Wall Street are, "It doesn't matter if you're right. You have to be right at the right time." and "It doesn't matter if you're right, if the market disagrees with you." They suggest that you can make the right decision with where to put your money, but being "right" isn't what drives prices. The market does what it does, and it's subject to the whims of its participants. |
Is 6% too high to trade stocks on margin? | Okay so we are assuming that you can sustain 6% or more return on your investments. Personally I would compare that rate to what lines of credit are going for and do what ever is least expensive. Either way your risk is the same. Your net worth is the same. Your assets will be the same. Your liabilities will be the same. Its just a matter of who you owe it to and what the rate is. Don't be afraid of having a second mortgage. If the stocks go down either way you have to sell what's left and pay your debt. Or what I should maybe say is don't be more afraid of a line of credit more than margin in your investment account. |
Is a property that comes with tenants a risk? | The perceived risk depends on the entire situation, but often it is considered more risk, especially if you want to occupy yourself. Things you need to consider: It can be very difficult to show a property with tenants occupying it. There are many reasons for this and most homes show / sell better empty. I have found many tenants make it difficult on the seller. Leaving their areas a mess, being unaccommodating and especially in markets that are flooded with options, a lot of buyers just won't bother with the difficulty of scheduling a showing in occupied properties. I've tried to purchase many properties where the renter insists on being there during a showing, but won't open the door and there's no recourse for the landlord because his lease or laws in the area don't allow you to enter without permission. Also, it can be difficult to look past a lot of clutter and other people's decorating and aroma "preferences" to be kind. :) Is the property currently under lease and what is the period of that lease? It could be that the lease is month to month, or it could be years remaining on the lease period. It is likely a legal requirement in most areas that you honor the existing lease. I would never buy a property that has multiple years remaining. While some amateur landlords will allow 2 or even 5 year leases, this is a very bad idea for many reasons! What are laws like in your area for evicting tenants? You should know this regardless of whether or not you intend to occupy or keep it a rental. It can be a very difficult process evicting tenants and this process is vastly different from country to country and state to state here in the USA. Look into the security deposit - assuming there is one. How much is the deposit? Will it cover damage that may not exist yet? Don't think that just because you plan on evicting them soon, it isn't important. People can trash a place on the way out and an expensive lawsuit could be your only recourse. It is far easier to take a deposit than sue. I would absolutely demand that the deposit transfer to you upon sale. View the current renters with a fresh eye. Especially if you are considering leave it a rental, look into all of the typical requirements: Their monthly income, their credit history, their criminal record, their payment history, their references. Are they likely to be good or terrible renters? If you're interested in the property, consider an offer which requires the current landlord to evict within the time-frame of the buy/sell agreement. This isn't an uncommon requirement. I think the first thing to do is go look at the property and see if you can determine for yourself why it hasn't sold yet. Properties all have different reasons for not selling in a reasonable time to the local market. Having renters alone in most markets shouldn't be that big of a factor. I would suspect bad smells, nasty renters, or an unfavorable lease agreement exists. |
What is considered a business expense on a business trip? | The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate |
Economics: negative consumer sentiment following failure to upsell | There are several different participants in the transaction, and you may not be aware of all the issues: In some business (fast food) they are required to ask if you want to super size, they are expected to do this at every transaction, but aren't paid more if you buy more. The employee can also decide that too much pressure to up-sell may push you to purchase the item online. That will cost them a commission, the store location a sale, and maybe drive you to a different company. It is also possible they don't have the training to be able to explain the difference between the items. |
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... |
Possible to use balance transfers to avoid interest with major credit cards? | Sure of course you can do balance transfers like this but you are way late to the party and it has gotten to be pretty challenging finding new cards to transfer balances to. Before the current financial crisis in the US you could get enormous amounts of credit (2-5 times a person's annual income) and transfer balances to your bank account to collect interest . There were a bunch of ways to the transfer everything from direct deposit to your bank account to a balance transfer check payable to yourself to overpaying another credit card and requesting a refund. Over paying another account sets off a lot of red flags now days but other methods still work. The financial atmosphere has changed a lot and there are very few available cards with no balance transfer fees or capped fees and the interest rates are a lot lower now so it really isn't worth doing. |
Is there any “Personal” Finance app that allows 2 administrators? | We use mint for just that. We have a "shared" account. We each have the mobile app and share the same pin for the application (not our phones -- you can set a pin in the settings on the application). Thus we each share a login to the site, where we have setup all of our accounts. In the "Your Profile" link at the top of the page, you may select the Email & Alerts option. From here you may add a second e-mail account. This way if you go over a budget or have a bill upcoming each of you will get a notification. We have setup budgeting through the web site, and either of us can modify the budget via logging in. |
If I want a Credit Card offered through a different Credit Union should I slowly transition my banking to that CU? | No. There's no inherent reason to link the place that you bank with any other financial service. There may occasionally be benefits; for instance you can sometime get lower rates on mortgages or loans by having a a checking account with an institution. Or perhaps it'll be easier for you to make a same-day payment on a credit account. There could be some negatives as well. If you fall behind on a loan account, the bank may take money from your savings/checking account to satisfy your debt. Choose a bank or CU that's convenient to you. Choose a credit card from whatever bank or CU provides you with the best benefits. If that credit card is coming from a CU that requires a savings account for membership, open a minimum balance savings account and apply for the product you're interested in. If your credit is as good as you claim, they'll be happy to offer you the credit card regardless of whether you do your day-to-day banking with them. |
How can I find a list of all North American ETF's including symbols? | You can use www.etfdb.com and search on geography. |
How does a high share price benefit a company when it is raising funds? | Share price is based on demand. Assuming the same amount of shares are made available for trade then stocks with a higher demand will have a higher price. So say a company has 1000 shares in total and that company needs to raise $100. They decide to sell 100 shares for $1 to raise their $100. If there is demand for 100 shares for at least $1 then they achieve their goal. But if the market decides the shares in this company are only worth 50 cents then the company only raises $50. So where do they get the other $50 they needed? Well one option is to sell another 100 shares. The dilution comes about because in the first scenario the company retains ownership of 900 or 90% of the equity. In the second scenario it retains ownership of only 800 shares or 80% of the equity. The benefit to the company and shareholders of a higher price is basically just math. Any multiple of shares times a higher price means there is more value to owning those shares. Therefore they can sell fewer shares to raise the same amount. A lot of starts up offer employees shares as part of their remuneration package because cash flow is typically tight when starting a new business. So if you're trying to attract the best and brightest it's easier to offer them shares if they are worth more than those of company with a similar opportunity down the road. Share price can also act as something of a credit score. In that a higher share price "may" reflect a more credit worthy company and therefore "may" make it easier for that company to obtain credit. All else being equal, it also makes it more expensive for a competitor to take over a company the higher the share price. So it can offer some defensive and offensive advantages. All ceteris paribus of course. |
Explanations on credit cards in Canada | Is my understanding okay ? If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. Which is where the credit card company can add fees so you pay more and they make more money. Don't forget that in the credit case, you are borrowing money rather than using your own. Another thing that bothers me is that the credit card apparently has a rather low credit limit. If I wanted to buy something that costs $2500 but only have a credit limit of $1500, can I make a preemptive wire from my check account to the VISA account to avoid facing the limit ? If so, what is the point for the customer of having two accounts (and two cards for that matter...) ? If you were the credit card company, do you believe people should be given large limits first? There are prepaid credit cards where you could put a dollar amount on and it would reject if the balance gets low enough. Iridium Prepaid MasterCard would be an example here that I received one last year as I was involved in the floods in my area and needed access to government assistance which was given this way. Part of the point of building up a credit history is that this is part of how one can get the credit limits increased on cards so that one can have a higher limit after demonstrating that they will pay it back and otherwise the system could be abused. There may be a risk that if you prepay onto a credit card and then want to take back the money that there may be fees involved in the transaction. Generally, with credit cards the company makes money on the fees involved for transactions which may come from merchants or yourself as a cash advance on a credit card will be charged interest right away while if you buy merchandise in a store there may not be the interest charged right away. |
Why does the share price tend to fall if a company's profits decrease, yet remain positive? | Aside from the market implications Victor and JB King mention, another possible reason is the dividends they pay. Usually, the dividends a company pays are dependent on the profit the company made. if a company makes less profit, the dividends turn out smaller. This might incite unrest among the shareholders, because this means that they get paid less dividends, which makes that share more likely to be sold, and thus for the price to fall. |
Is there any reason not to put a 35% down payment on a car? | Do you guys think it's a good idea to put that much down on the car ? In my opinion, it depends on a lot of factors. If you have nothing to pay, and are not planning to invest in something that cost a lot soon (I.E an house, etc). Then I see no problem in put "that much down on the car". Remember that the more you pay at first, the less you will pay interest on. However, if you are planning on buying something big soon, then you might want to pay less and keep moneys for your future investment. I would honestly not finance a car with the garage as I find their interest rate to high. Possibilities depends a lot of your bank accounts, but what I would personally do is pay it cash using my credit margin with the bank which is only 2.8% interest rate. Garage where I live rarely finance under 7% interest rate. You may not have a credit margin, but maybe you could get a loan with the bank instead ? Many bank keep an history of your loan which will get you a better credit name when trying to buy an home later. On the other side, having a good credit name is not really useful in a garage. What interest rate is reasonable based on my credit score? I don't think it is possible to give a real answer to this as it change a lot around the world. However, I would recommend to simply compare with the interest rate asked when being loan by the bank. |
How is the Dow divisor calculated? | Have you actually read the Wikipedia article? To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; which made the DJIA at first, a simple arithmetic average. The present divisor, after many adjustments, is less than one (meaning the index is larger than the sum of the prices of the components). That is: DJIA = sum(p) / d where p are the prices of the component stocks and d is the Dow Divisor. Events such as stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow Divisor is updated so that the quotations right before and after the event coincide: DJIA = sum(p_old) / d_old = sum(p_new) / d_new The Dow Divisor was 0.14602128057775 on December 24, 2015.[40] Presently, every $1 change in price in a particular stock within the average, equates to a 6.848 (or 1 ÷ 0.14602128057775) point movement. Knowing the old prices, new prices (e.g. following a split), and old divisor, you can easily compute the new divisor... Edit: Also, the detailed methodology is published by SP Indices (PDF). Edit #2: For simplicity's sake, assume the DJIA is an index that contains 4 stocks, with a price of $100.00 each. One of the stocks splits 2:1, meaning the new price/share is $50.00. Plugging the numbers into the above equation, we can determine the new Dow Divisor: 400 / 4 = 350 / d => d = 3.5 |
What is a good size distribution for buying gold? | Look at a broader diversification. Something like: For physical gold, I'd look at a mix of gold coins and bullion. Study the pricing model for coins -- you'll probably find that the spreads on small coins make them too expensive. There are a few levels of risk with storing in a vault -- the practical risk is that your government will close banks in the event of a panic, and your money will be inaccessible. You need to balance that risk with the risk to your personal security that comes with having lots of gold or cash in your home. My recommendation is to avoid wasting time on the "Mad Max" scenarios. If the world economy collapses into utter ruin, we're all screwed. A few gold coins won't do much for you. |
Learning investment--books to read? Fundamental/Value/Motley Fool | You are smart to read books to better inform yourself of the investment process. I recommend reading some of the passive investment classics before focusing on active investment books: If you still feel like you can generate after-tax / after-expenses alpha (returns in excess of the market returns), take a shot at some active investing. If you actively invest, I recommend the Core & Satellite approach: invest most of your money in a well diversified basket of stocks via index funds and actively manage a small portion of your account. Carefully track the expenses and returns of the active portion of your account and see if you are one of the lucky few that can generate excess returns. To truly understand a text like The Intelligent Investor, you need to understand finance and accounting. For example, the price to earnings ratio is the equity value of an enterprise (total shares outstanding times price per share) divided by the earnings of the business. At a high level, earnings are just revenue, less COGS, less operating expenses, less taxes and interest. Earnings depend on a company's revenue recognition, inventory accounting methods (FIFO, LIFO), purchase price allocations from acquisitions, etc. If you don't have a business degree / business background, I don't think books are going to provide you with the requisite knowledge (unless you have the discipline to read textbooks). I learned these concepts by completing the Chartered Financial Analyst program. |
Why invest in becoming a landlord? | Let me add a few thoughts that have not been mentioned so far in the other answers. Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?). This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance. My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently. There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord. Assuming that you can read German, here's a relevant newspaper article and a related press release. |
What's the fuss about identity theft? | The problem is that the reason you find out may be that you are at the car dealer, picked out a car, and getting ready to sign the loan papers with your supposedly good credit, and you are denied for late payment on loans you didn't know you have. Or debt collectors start hounding you. Or you credit card interest rates go up. Or you are charged more for your insurance because you are seen as a bad credit risk. Or you can't rent an apartment. The list is almost endless. It can takes many months and hours spent on the phone to fix these things. |
Tax Write-offs and knowing how much I need to spend before the end of the year | (I'm assuming USA tax code as this is untagged) As the comments above suggest there is no "right" answer or easy formula. The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes. Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad. I highly recommend that you take some time closely analyze your business and personal taxes for the previous year. Once you understand the problem better, you can optimize around it. If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions. |
Pros & cons of investing in gold vs. platinum? | Platinum use is pretty heavily overweight in industrial areas; according to the linked Wikipedia article, 239 tonnes of platinum was sold in 2006, of which 130 tonnes went to vehicles emissions control devices and another 13.3 tonnes to electronics. Gold sees substantial use as an investment as well as to hedge against economical decline and inflation, with comparatively little industrial ("real world", as some put it) use. That is their principal difference from an investment point of view. According to Wikipedia's article on platinum, ... during periods of economic uncertainty, the price of platinum tends to decrease due to reduced industrial demand, falling below the price of gold. Gold prices are more stable in slow economic times, as gold is considered a safe haven and gold demand is not driven by industrial uses. If your investment scenario is a tanking world economy, for reason of its large industrial usage, I for one would not count on platinum to not fall in price. Of course gold may fall in price as well, but since it is not primarily an industrial use commodity, I would personally expect gold to do better in such a scenario. |
Advantage of Financial Times vs. free news sources for improving own knowledge of finance? | I recommend using Morning Brew. They email you a free daily newsletter with the top financial news stories and earnings events. I have subscribed to the Wall Street Journal and Financial Times before. Morning Brew basically covers all of the headlines you would see on those sites. |
Why does the biotechnology industry have such a high PE ratio? | Most biotech companies do not have a product they are selling. They have a set of possible drugs that they are developing. If any of these drugs get proven to be better than the current drugs they can be sold at a great profit. Therefore as soon as a biotech company proves a drug candidate is likely to pass large scale trials the company is often taken over by a large pharmaceutical company and is therefore no longer listed on the stock market. So mostly profit comes after the company stops being listed, therefore the profit will be negative for most biotech companies that are publicly traded. |
Portfolio Diversity : invest $4000 into one account or $1000 into 4 accounts? | You spread money/investment across different accounts for different reasons: All this is in addition to diversification reasons. Investing all your money into one stock, bond, Mutual fund, ETF is risky if that one segment of the economy/market suffers. There is a drawback to diversification of accounts. Some have minimum amounts and fee structures. In the original question you asked about 1,000 per account. That may mean that some accounts may be closed to you. In other cases they will charge a higher percentage for fees for small accounts. Those issues would disappear long before you hit the 1,000,000 per account you mentioned in your comment. One problem can occur with having too much diversification. Having dozens of funds could mean that the overlap between the funds might result in over investing in a segment because you didn't realize that one stock segment appeared in 1/3 of the funds. |
Including the region where you live in your investment portfolio? | The problem is aggregating information from so many sources, countries, and economies. You are probably more aware of local laws, local tax changes, local economic performance, etc, so it makes sense that you'd be more in tune with your own country. If your intent is to be fully diversified, then buy a total world fund. A lot of hedge funds do what you are suggesting, but I think it requires either some serious math or some serious research. Note: I'm invested in emerging markets (EEM) for exactly the reason you suggest... diversification. |
What could be the cause of a extreme high/low price in after hours market? | Often these types of trades fall into two different categories. An error by broker or exchange. Exchange clearing out part of their books incorrectly is an example. Most exchanges make firms reopen their positions for after market hours. There may have been an issue doing so or exchange could incorrectly cancel positions. I was in the direct feed industry for years and this was a big issue. At the same time the broker can issue a no limit buy on accident (or has software that is prospecting and said software has a bug or written poorly). unscrupulous parties looking to feign an upswing or downswing in market. Let's say you hold 500k shares in a stock that sells for $11. You could possibly buy 100 shares for $13. Trust me you will find a seller. Then you are hoping that people see that trade as a "norm" and trade from there, allowing you to rake in $1M for spending an extra $200 - NOTE this is not normal and an extreme example. This was so common in the early days of NASDAQ after hours that they discontinued using the after hours trades as part of historical information that they keep like daily/yearly high or closing price. The liquidity allows for manipulation. It isn't seen as much now since this has been done a million times but it does still happen. |
Can a non dividend-paying product (say ETF) suddenly start paying dividends? | Yes, absolutely. Consider Microsoft, Updated Jan. 17, 2003 11:59 p.m. ET Software giant Microsoft Corp., finally bowing to mounting pressure to return some of its huge cash hoard to investors, said it will begin paying a regular annual dividend to shareholders. From Wall Street Journal. Thus, for the years prior to 2003, the company didn't pay dividends but changed that. There can also be some special one-time dividends as Microsoft did the following year according to the Wall Street Journal: The $32 billion one-time dividend payment, which comes to $3 for each share of Microsoft stock, could be a measurable stimulus to the U.S. economy -- and is expected to arrive just in time for holiday shopping. Course companies can also reduce to stop dividends as well. |
Using property to achieve financial independence | Will buying a flat which generates $250 rent per month be a good decision? Whether investing in real estate is a good decision or not depends on many things, including the current and future supply/demand for rental units in your particular area. There are many questions on this site about this topic, and another answer to this question which already addresses many risks associated with owning property (though there are also benefits to consider). I just want to focus on this point you raised: I personally think yes, because rent adjusts with inflation and the rise in the price of the property is another benefit. Could this help me become financially independent in the long run since inflation is getting adjusted in it? In my opinion, the fact that rental income general adjusts with 'inflation' is a hedge against some types of economic risk, not an absolute increase in value. First, consider buying a house to live in, instead of to rent: If you pay off your mortgage before your retire, then you have reduced your cost of accommodations to only utilities, property taxes, and repairs. This gives you a (relatively) known, fixed requirement of cash outflows. If the value of property goes up by the time you retire - it doesn't cost you anything extra, because you already own your house. If the value of property goes down by the time you retire, then you don't save anything, because you already own your house. If you instead rent your whole life, and save money each month (instead of paying off a mortgage), then when you retire, you will have a larger amount of savings which you can use to pay your monthly rental costs each month. By the time you retire, your cost of accommodations will be the market price for rent at that time. If the value of property goes up by the time you retire - you will have to pay more on rent. If the value of property goes down by the time you retire, you will save money on rent. You will have larger savings, but your cash outflow will be a little bit less certain, because you don't know what the market price for rent will be. You can see that, because you need to put a roof over your own head, just by existing you bear risk of the cost of property rising. So, buying your own home can be a hedge against that risk. This is called a 'natural hedge', where two competing risks can mitigate each-other just by existing. This doesn't mean buying a house is always the right thing to do, it is just one piece of the puzzle to comparing the two alternatives [see many other threads on buying vs renting on this site, or on google]. Now, consider buying a house to rent out to other people: In the extreme scenario, assume that you do everything you can to buy as much property as possible. Maybe by the time you retire, you own a small apartment building with 11 units, where you live in one of them (as an example), and you have no other savings. Before, owning your own home was, among other pros and cons, a natural hedge against the risk of your own personal cost of accommodations going up. But now, the risk of your many rental units is far greater than the risk of your own personal accommodations. That is, if rent goes up by $100 after you retire, your rental income goes up by $1,000, and your personal cost of accommodations only goes up by $100. If rent goes down by $50 after you retire, your rental income goes down by $500, and your personal cost of accommodations only goes down by $50. You can see that only investing in rental properties puts you at great risk of fluctuations in the rental market. This risk is larger than if you simply bought your own home, because at least in that case, you are guaranteeing your cost of accommodations, which you know you will need to pay one way or another. This is why most investment advice suggests that you diversify your investment portfolio. That means buying some stocks, some bonds, etc.. If you invest to heavily in a single thing, then you bear huge risks for that particular market. In the case of property, each investment is so large that you are often 'undiversified' if you invest heavily in it (you can't just buy a house $100 at a time, like you could a stock or bond). Of course, my above examples are very simplified. I am only trying to suggest the underlying principle, not the full complexities of the real estate market. Note also that there are many types of investments which typically adjust with inflation / cost of living; real estate is only one of them. |
New company doesn't allow 401k deposits for 6 months, what to do with money I used to deposit? | $9000 over 6 months is great, I'd use it for long term savings regardless of the 401(k) situation. There's nothing wrong with a mix of pre and post tax money for retirement. In fact, it's a great way to avoid paying too much tax should your 401(k) withdrawals in retirement push you into a higher bracket. Just invest this as you would your other long term money. |
Explanation on Warren Buffett's famous quote | In the short term the market is a popularity contest In the short run which in value investing time can extend even to many years, an equity is subject to the vicissitudes of the whims by every scale of panic and elation. This can be seen by examining the daily chart of any large cap equity in the US. Even such large holdings can be affected by any set of fear and greed in the market and in the subset of traders trading the equity. Quantitatively, this statement means that equities experience high variance in the short rurn. in the long term [the stock market] is a weighing machine In the long run which in value investing time can extend to even multiple decades, an equity is more or less subject only to the variance of the underlying value. This can be seen by examining the annual chart of even the smallest cap equities over decades. An equity over such time periods is almost exclusively affected by its changes in value. Quantitatively, this statement means that equities experience low variance in the long run. |
How much of each stock do index funds hold? | An index fund is just copying the definition of an index. The group that defines the index determines how to weight the different parts of the index. The index fund just makes sure they invest the same way the index creator wants. Think of a non-investment scenario. A teacher can grade tests, quizzes, homework, in-class assignments, research papers. They decide how much weight to give each category and how much weight to give each part of each category. when a student wants to see how they are doing they take the information in the syllabus, and generate a few formulas in a spreadsheet to calculate their current grade. They can also calculate what they need to get on the final exam to get the grade they want. |
How do you quantify investment risk? | I use two measures to define investment risk: What's the longest period of time over which this investment has had negative returns? What's the worst-case fall in the value of this investment (peak to trough)? I find that the former works best for long-term investments, like retirement. As a concrete example, I have most of my retirement money in equity, since the Sensex has had zero returns over as long as a decade. Since my investment time-frame is longer, equity is risk-free, by this measure. For short-term investments, like money put aside to buy a car next year, the second measure works better. For this purpose, I might choose a debt fund that isn't the safest, and has had a worst-case 8% loss over the past decade. I can afford that loss, putting in more money from my pocket to buy the car, if needed. So, I might choose this fund for this purpose, taking a slight risk to earn higher return. In any case, how much money I need for a car can only be a rough guess, so having 8% less than originally planned may turn out to be enough. Or it may turn out that the entire amount originally planned for is insufficient, in which case a further 8% shortfall may not be a big deal. These two measures I've defined are simple to explain and understand, unlike academic stuff like beta, standard deviation, information ratio or other mumbo-jumbo. And they are simple to apply to a practical problem, as I've illustrated with the two examples above. On the other hand, if someone tells me that the standard deviation of a mutual fund is 15%, I'll have no idea what that means, or how to apply that to my financial situation. All this suffers from the problem of being limited to historical data, and the future may not be like the past. But that affects any risk statistic, and you can't do better unless you have a time machine. |
Ballpark salary equivalent today of “healthcare benefits” in the US? | While the other answers try to quantify the value of health care the question you ask is about employee vs contractor. The delta between those regarding benefits goes way beyond health care. In fact because almost every full time employee must have health care offered by their employer the option of "you can have X with healthcare, or Y with no healthcare" is no longer an option. I have seen situations in the last few years where employees who had no need for healthcare coverage (retired military) were offered additional vacation days to compensate for their lower cost to the employer. For employee vs contractor what is different isn't just healthcare. It also includes holidays, vacation days, sick days, employer portion of social security, education benefits, and 401k. Insurance benefits include not just healthcare but also dental, vision, short term and long term disability, and life insurance. The rule of thumb to cover all these benefits that are lost when you are a contractor is an amount equal to your income. Of course some of these benefits depend on single vs married and kids or not. But unless the rate they are paying the contractors is approaching twice the rate they are paying employees the contractor will be hard pressed to cover the missing benefits. |
What exactly changes following a stock split? Why doesn't “Shares” (on the following SEC balance sheet) change? | In theory*, if a company has 1m shares at $10 and does a 10 for 1 split, then the day after it has 10m shares at $1 (assuming no market move). So both the price and the number of share change, keeping the total value of the company unchanged. Regarding your BIS, I suspect that the new number of shares has not been reported yet because it's an ETF (the number of shares in issue changes everyday due to in/out flows). Your TWX example is not ideal either because there was a spin off on the same day as the stock split so you need to separate the two effects. * Some studies have documented a positive stock split effect - one of the suggested reasons is that the stock becomes more liquid after the split. But other studies have rejected that conclusion, so you can probably safely consider that on average it will not have a material effect. |
What is the best credit card for someone with no credit history | If you've never had a credit card before a likely reason can be due to lack of credit history. You can apply for a department store card. Nordstroms, Macy's, Target will often grant a small line of credit even with no history. Target would be my first attempt as they have a wide selection of every day items, improving your usage on the card. If you've been denied due to too many applications, then you need to wait 18-24 months for the hard pulls to drop off your credit report before you apply again. |
What is a good asset allocation for a 25 year old? | The standard advice is that stocks are all over the place, and bonds are stable. Not necessarily true. Magazines have to write for the lowest common denominator reader, so sometimes the advice given is fortune-cookie like. And like mbhunter pointed out, the advertisers influence the advice. When you read about the wonders of Index funds, and see a full page ad for Vanguard or the Nasdaq SPDR fund, you need to consider the motivation behind the advice. If I were you, I would take advantage of current market conditions and take some profits. Put as much as 20% in cash. If you're going to buy bonds, look for US Government or Municipal security bond funds for about 10% of your portfolio. You're not at an age where investment income matters, you're just looking for some safety, so look for bond funds or ETFs with low durations. Low duration protects your principal value against rate swings. The Vanguard GNMA fund is a good example. $100k is a great pot of money for building wealth, but it's a job that requires you to be active, informed and engaged. Plan on spending 4-8 hours a week researching your investments and looking for new opportunities. If you can't spend that time, think about getting a professional, fee-based advisor. Always keep cash so that you can take advantage of opportunities without creating a taxable event or make a rash decision to sell something because you're excited about a new opportunity. |
Can I resubmit W8-BEN with W9 form? | Since you're a US citizen, submitting W8-BEN was wrong. If you read the form carefully, when you signed it you certified that you are not a US citizen, which is a lie and you knew it. W9 and W8 are mutually exclusive. You're either a US person for tax purposes or you're not, you cannot be both. As a US citizen - you are a US person for tax purposes, whether you have any other citizenship or not, and whether you live in (or have ever been to) the US or not. You do need to file tax returns just like any other US citizen. If you have an aggregate of $10K or more on your bank accounts outside of the US at any given day - you need to file FBAR. FATCA forms may also be applicable, depending on your balances. From foreign banks' perspective you're a US person, with regard to their FATCA obligations. Whether or not you'll be punished is hard to tell. Whether or not you could be punished is easy to tell: you could. You knowingly broke the law by certifying that you're not a US citizen when you were. That is in addition to un-filed tax returns, FBAR, etc etc. The fact that you were born outside of the US and have never lived there is technically irrelevant. Not knowing the law is not a reasonable cause for breaking it. Get a US-licensed tax adviser (EA/CPA licensed in the US) to help you sort it out. |
Business Investment Loss from prior year | You need to give specific dates! In the United States, you have three years to file an amended tax return. https://www.irs.gov/uac/Newsroom/Ten-Facts-about-Amended-Tax-Returns Did the restaurant fail in 2012? If so, that's probably the year to take the loss. If you need to amend your 2012 return, which you filed in 2013, you should have until 2016 to file this. The exact date may be based on when you filed 2012 taxes! |
ETF vs Mutual Fund: How to decide which to use for investing in a popular index? | If you just want to track an index, then ETFs are, generally speaking, the better way. |
Why are bank transactions not instant? | It is a rather complex system, but here is a rough summary. Interbank tranfers ultimately require a transfer of reserves at the central bank. As a concrete example, the bank of england system is the rtgs. Only the clearing banks and similar (e.g. bacs) have access to rtgs. You can send a chaps payment fairly quickly, but that costs. Chaps immediately triggers an rtgs transfer once the sending bank agrees and so you can be certain that the money is being paid. Hence its use for large amounts. Bacs also sits on the rtgs but to keep costs down it batches tranfers up. Because we are talking about bank reserve movements, checks have to be in place and that can take time. Furthermore the potential for fraud is higher than chaps since these are aggregrated transactions a layer removed, so a delay reduces the chance of payment failing after apparently being sent. Faster payments is a new product by bacs that speeds up the bacs process by doing a number of transfers per day. Hence the two hour clearing. For safety it can only be used for up to 10k. Second tier banks will hold accounts with clearing banks so they are another step down. Foreign currency transfers require the foreign Central Bank reserve somewhere, and so must be mediated by at least one clearing bank in that country. Different countries are at different stages in their technology. Uk clearing is 2h standard now but US is a little behind I believe. Much of Europe is speeding up. Rather like bitcoin clearing, you have a choice between speed and safety. If you wait you are more certain the transaction is sound and have more time to bust the transfer. |
What is your effective tax rate if you work from home in Montreal for a company in Toronto? | Assuming that you don't own the business, it would seem to apply. The CRA says: If you were a resident of Quebec on December 31, 2016, and you did not have a business with a permanent establishment outside Quebec, your refundable Quebec abatement is 16.5% of the basic federal tax on line 55 of Schedule 1. If you had income from a business (including income you received as a limited or non-active partner) and the business has a permanent establishment outside Quebec, or you were not a resident of Quebec on December 31, 2016, and the business has a permanent establishment in Quebec, use Form T2203, Provincial and Territorial Taxes for 2016 - Multiple Jurisdictions, to calculate your abatement. For people whose income isn't coming from businesses they own, this seems quite clear. |
3-year horizon before trading up to next home: put windfall in savings, or pay off mortgage? | First, I would want cash around the time I made the move. I would like enough for a 20% down payment, moving expenses, and enough for 6 months of mortgage payments on the existing house. This way if the house does not sell quickly, you are safe. As you approach the time it comes to move, you can work backwards on how much time you would need to accumulate that kind of money. Second, this does not have to be an all or nothing kind of thing. Perhaps you use some of the proceeds to beef up your retirement, some to pay down the mortgage, and some for savings. You could be very wrong about the market, even so it is a wonderful opportunity to add to your nest egg at such a young age. My own self prefers to do things in ratios. In your case I might do 10% of the proceeds in for retirement, 10% for savings, and 80% for mortgage reduction. (You may want to also add some charitable giving.) I really like paying down the mortgage. Not only is it a risk less investment, it reduces your personal risk. |
Pay off car loan entirely or leave $1 until the end of the loan period? | Nobody outside of the credit scoring agencies know exactly what goes into the scoring formula. That said, I don't think there is any evidence that keeping a fixed loan (car or mortgage) open is necessary to keep its effect on your score. It doesn't improve your utilization ratio like an open revolving credit line would. And depending on the exact details of how your specific lender reports the loan, it might appear detrimental to your debt-to-income ratio. I would simply pay it off. |
What are the financial advantages of living in Switzerland? | The cost of living is quite high in New York City. It has the highest CPI (Consumer Price Index) of any city in the U.S. Salaries also tend to be highest in NYC. Just about any bicycle lock sold in the U.S. has an exception in its warranty for NYC. It is the most populous American city. So, why do people deal with all the hassles of living here? Because, it is a hotbed of activity. I venture that the advantages are basically the same in Zurich: |
I have savings and excess income. Is it time for me to find a financial advisor? | Others have mentioned the term fiduciary but haven't really gone in to what that is. Despite the name "financial advisor" there is no legal (In the US) mandate as to what that means. Often times a financial advisor is little more than a sales rep whose job it is to sell particular financial instruments. These people will give you good generic advice such as "make sure you have a nest egg" and "don't spend more than you make". However when the rubber hits the road in terms of how to save they will often recommend/insist/pressure a particular asset/security which doesn't necessarily meet your risk/reward preference/tolerance. Often times the assets they pitch have high fees. These people won't charge you for their time because their time is a loss leader for the commissions they make on selling their products. In contrast a fiduciary's job responsibility is to look out for your interests. They shouldn't receive any kind of payment based on what assets you buy. This means that you have to pay them for their time. The NAPFA website seems to have good ideas on choosing an advisor. http://www.napfa.org/HowtoFindAnAdvisor.asp |
For what dates are the NYSE and U.S. stock exchanges typically closed? | The NYSE publishes a list of holidays at its website. New link: https://www.nyse.com/markets/hours-calendars Old link in the original answer that doesn't work now: http://www.nyse.com/about/newsevents/1176373643795.html Hope that helps! |
Is there any instance where less leverage will get you a better return on a rental property? | I would say that you should keep in mind one simple idea. Leverage was the principal reason for the 2008 financial meltdown. For a great explanation on this, I would HIGHLY recommend Michael Lewis' book, "The Big Short," which does an excellent job in spelling out the case against being highly leveraged. As Dale M. pointed out, losses are greatly magnified by your degree of leverage. That being said, there's nothing wrong with being highly leveraged as a short-term strategy, and I want to emphasize the "short-term" part. If, for instance, an opportunity arises where you aren't presently liquid enough to cover then you could use leverage to at least stay in the game until your cash situation improves enough to de-leverage the investment. This can be a common strategy in equities, where you simply substitute the term "leverage" for the term "margin". Margin positions can be scary, because a rapid downturn in the market can cause margin calls that you're unable to cover, and that's disastrous. Interestingly, it was the 2008 financial crisis which lead to the undoing of Bernie Madoff. Many of his clients were highly leveraged in the markets, and when everything began to unravel, they turned to him to cash out what they thought they had with him to cover their margin calls, only to then discover there was no money. Not being able to meet the redemptions of his clients forced Madoff to come clean about his scheme, and the rest is history. The banks themselves were over-leveraged, sometimes at a rate of 50-1, and any little hiccup in the payment stream from borrowers caused massive losses in the portfolios which were magnified by this leveraging. This is why you should view leverage with great caution. It is very, very tempting, but also fraught with extreme peril if you don't know what you're getting into or don't have the wherewithal to manage it if anything should go wrong. In real estate, I could use the leverage of my present cash reserves to buy a bigger property with the intent of de-leveraging once something else I have on the market sells. But that's only a wise play if I am certain I can unwind the leveraged position reasonably soon. Seriously, know what you're doing before you try anything like this! Too many people have been shipwrecked by not understanding the pitfalls of leverage, simply because they're too enamored by the profits they think they can make. Be careful, my friend. |
I was given a 1099-misc instead of a w-2 what are my next steps? | I agree that you should have received both a 1099 and a W2 from your employer. They may be reluctant to do that because some people believe that could trigger an IRS audit. The reason is that independent contractor vs employee is supposed to be defined by your job function, not by your choice. If you were a contractor and then switched to be an employee without changing your job description, then the IRS could claim that you should have always been an employee the entire time, and so should every one of the other contractors that work for that company with a similar job function. It's a hornet's nest that the employer may not want to poke. But that's not your problem; what should you do about it? When you say "he added my Federal and FICA W/H together", do you mean that total appears in box 4 of your 1099? If so, it sounds like the employer is expecting you to re-pay the employer portion of FICA. Can you ask them if they actually paid it? If they did, then I don't see them having a choice but to issue a W2, since the IRS would be expecting one. If they didn't pay your FICA, then the amount this will cost you is 7.65% of what would have been your W2 wages. IMHO it would be reasonable for you to request that they send you a check for that extra amount. Note: even though that amount will be less than $600 and you won't receive a 1099 in 2017 for it, legally you'll still have to pay tax on that amount so I think a good estimate would be to call it 10% instead. Depending on your personality and your relationship with the employer, if they choose not to "make you whole", you could threaten to fill out form SS-8. Additional Info: (Thank you Bobson for bringing this up.) The situation you find yourself in is similar to the concept of "Contract-to-Hire". You start off as a contractor, and later convert to an employee. In order to avoid issuing a 1099 and W2 to the same person in a single tax year, companies typically utilize one of the following strategies: Your particular situation is closest to situation 2, but the reverse. Instead of retroactively calling you a W2 employee the entire time, your employer is cheating and attempting to classify you as a 1099 contractor the entire time. This is frowned upon by the IRS, as well as the employee since as you discovered it costs you more money in the form of employer FICA. From your description it sounds like your employer was trying to do you a favor and didn't quite follow through with it. What they should have done was never switch you to W2 in the first place (if you really should have been a contractor), or they should have done the conversion properly without stringing you along. |
How to get rid of someone else's debt collector? | I have been in a similar position for quite a while now and the only thing that seems to help is screening phone calls. I have a long list of collector numbers set to not ring on my phone. They can still leave a voice mail but they never do. As far as I know there aren't any laws that protect you from nuisance phone calls. FDCPA letters only apply to the debtor and the collector it is sent to it doesn't protect an unrelated third party from getting annoying phone calls. I have a feeling that sending FDCPA letters is just confirming that you probably are the debtor and prolong the collection calls. |
ISA - intra year profits and switching process | You're overthinking it. The ISA limit applies to the amount you invest into the ISA. In your example, £10,000. Whether that then fluctuates with performance is irrelevant. Even if you realise aprofit or a loss, nobody is watching it. You merely count the amount you originally contributed into the ISA wrapper. When they add up to £15,000; that's the limit reached. (And by the way, remember that only money going into the ISA is counted. It doesn't matter if you -let's say - put £15k in, then remove 10k. You've reached the limit. You don't again have the chance to put £10k 'back in'. |
Ongoing things to do and read to improve knowledge of finance? | Before you can truly learn, you must unlearn first. I recommend the book "Fooled by Randomness" by Nassim Taleb. |
Issuing bonds at discount - computing effective interest rate | In this case the market interest rate is the discount rate that sets equal the market price (current value) of the bond to its present value. To find the market interest rate which is also referred to as promised yield YTM you would have solve for the interest rate in the bond price formula A market price of bond is the sum of discounted coupons and the terminal value of the bond. Most spreadsheet programs and calculators have a RATE function that makes possible finding this market interest rate. First see this for finding a coupon paying bond price The coupon payments are discounted so is the par value of the bond and sum of such discounts is the market price of the bond. The TVM functions in Excel and calculators make this possible using the following equation Let us take your data, 9% $100,000 coupon with 5 years remaining to maturity with market interest rate of 10%. Bonds issued in the US mostly pay two coupons per year. Thus we are finding the present value of 10 coupons each worth $4500 and par value of $100,000. The semi-annual market interest rate is 10%/2 or 5% The negative sign indicate money going out of hand Now solving for RATE is only possible using numerical methods and the RATE function is programmed using Newton-Raphson method to find one of the roots of the bond price equation. This rate will be the periodic rate in this case semi-annual rate which you have to multiply by 2 to get the annual rate. Do remember there is a difference between annual nominal rate and an annualized effective rate. To find the market interest rate If you don't have Excel or a financial calculator then you may opt to use my version of these financial functions in this JavaScript library tadJS |
How do I determine how much rent I could charge for a property or location? | This may not be entirely scientific, but as a landlord my usual approach is just to do a search for rental properties on Craigslist for comparable homes in the neighborhood. There are all kinds of formulas professional property managers use, but in the end these listings are the ones you are going to be competing with for tenants. Also, it isn't super accurate, but online services like Zillow.com can give you some numbers for rental houses that include those that aren't currently advertising. |
Does an employee have the right to pay the federal and state taxes themselves instead of having employer doing it? | No. An employer is legally obliged to deduct taxes from your pay cheque and send them to the IRS. The only way round that is to either provide evidence of deductions that would reduce your tax bill to nothing, or to become self-employed. |
Is a car loan bad debt? | What's missing in your question, so Kate couldn't address, is the rest of your financial picture. If you have a fully funded emergency account, are saving for retirement, and have saved up the $15K for the car, buy in cash. If you tell me that if the day after you buy the car in cash, your furnace/AC system dies, that you'd need to pay for it with an $8K charge to a credit card, that's another story. You see, there's more than one rate at play. You get close to zero on you savings today. You have a 1.5% loan rate available. But what is your marginal cost of borrowing? The next $10K, $20K? If it's 18% on a credit card, I personally would find value in borrowing at sub-2.5% and not depleting my savings. On the other side, the saving side, does your company offer a 401(k) with company match? I find too many people obsessing over their 6% debt, while ignoring a 100% match of 4-6% of their gross income. For what it's worth, trying to place labels on debt is a bit pointless. Any use of debt should be discussed 100% based on the finances of the borrower. |
Home Valuation in a Dodgy neighborhood | I wouldn't personally spend any money on an appraisal. Spend some time yourself looking at Zillow.com and maybe Realtor.com and other sites to review recent sales in your specific area. Not the houses a mile away. Try to find comparables to yours. The key factor is dollars per square foot. See if the trend over the last couple of years is upwards or downwards in dollars per square foot of living area. If it's downwards, I wouldn't invest for sure. |
Is 6% too high to trade stocks on margin? | Yes, 6% is a waste of money, because some other brokers such as IB offer margin rates below 2%. Also, to borrow money for even less than any broker's margin interest rate, one can do an EFP transaction. This involves simultaneously shorting a stock and buying the SSF for the same stock. When the futures contract expires, you take delivery of the underlying stock to automatically close out your short position. Until then, you've effectively borrowed cash for the cost of borrowing the stock, which is typically less than 0.5% interest for widely traded ones. You also pay for the slight difference in price between the stock and the future, which is typically equivalent to another 0.5% interest or less. The total often comes to less than 1% interest. The only risk with this transaction is that the stock could become hard to borrow at some point, so then you would have to pay higher interest on it temporarily or maybe even have to close out your short early. But it is extremely rare for large, high-volume stocks to become hard-to-borrow. The borrowing cost of SPY has spiked above 5% on only a handful of days in the last decade. |
Intentions of Deductible Amount for Small Business | If your sole proprietorship losses exceed all other sources of taxable income, then you have what's called a Net Operating Loss (NOL). You will have the option to "carry back" and amend a return you filed in the last 2 years where you owed tax, or you can "carry forward" the losses and decrease your taxes in a future year, up to 20 years in the future. For more information see the IRS links for NOL. Note: it's important to make sure you file the NOL correctly so I'd advise speaking with an accountant. (Especially if the loss is greater than the cost of the accountant...) |
Is a “total stock market” index fund diverse enough alone? | You're missing the concept of systemic risk, which is the risk of the entire market or an entire asset class. Diversification is about achieving a balance between risk and return that's appropriate for you. Your investment in Vanguard's fund, although diversified between many public companies, is still restricted to one asset class in one country. Yes, you lower your risk by investing in all of these companies, but you don't erase it entirely. Clearly, there is still risk, despite your diversification. You may decide that you want other investments or a different asset allocation that reduce the overall risk of your portfolio. Over the long run, you may earn a high level of return, but never forget that there is still risk involved. bonds seem pretty worthless, at least until I retire According to your profile, you're about my age. Our cohort will probably begin retiring sometime around 2050 or later, and no one knows what the bond market will look like over the next 40 years. We may have forecasts for the next few years, but not for almost four decades. Writing off an entire asset class for almost four decades doesn't seem like a good idea. Also, bonds are like equity, and all other asset classes, in that there are different levels of risk within the asset class too. When calculating the overall risk/return profile of my portfolio, I certainly don't consider Treasuries as the same risk level as corporate bonds or high-yield (or junk) bonds from abroad. Depending on your risk preferences, you may find that an asset allocation that includes US and/or international bonds/fixed-income, international equities, real-estate, and cash (to make rebalancing your asset allocation easier) reduces your risk to levels you're willing to tolerate, while still allowing you to achieve returns during periods where one asset class, e.g. equities, is losing value or performing below your expectations. |
When writing a covered call, what's the difference between a “net debit” and a “net credit”? | When you enter into a multi-legged trade where one is a buy and one is a sell, the limit is expressed as either: The gist is that you don't care what each individual piece costs; you only care what the cost of the bundle is. When you put on a buy-write, you are buying stock and selling a (covered) call against that stock. That trade will always cost money. Putting on a buy-write will always be done at a net debit. This is because is is normally impossible for a call to be worth more than its underlying stock price. There are a few possible reasons there would be a"net credit" option for what's described as a "buy-write": |
Subsets and Splits