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Lump sum annuity distribution — do I owe estate tax? | null | There can be Federal estate tax as well as State estate tax due on an estate, but it is not of direct concern to you. Estate taxes are paid by the estate of the decedent, not by the beneficiaries, and so you do not owe any estate tax. As a matter of fact, most estates in the US do not pay Federal estate tax at all because only the amount that exceeds the Federal exemption ($5.5M) is taxable, and most estates are smaller. State estate taxes might be a different matter because while many states exempt exactly what the Federal Government does, others exempt different (usually smaller) amounts. But in any case, estate taxes are not of concern to you except insofar as what you inherit is reduced because the estate had to pay estate tax before distributing the inheritances. As JoeTaxpayer's answer says more succinctly, what you inherit is net of estate tax, if any. What you receive as an inheritance is not taxable income to you either. If you receive stock shares or other property, your basis is the value of the property when you inherit it. Thus, if you sell at a later time, you will have to pay taxes only on the increase in the value of the property from the time you inherit it. The increase in value from the time the decedent acquired the property till the date of death is not taxable income to you. Exceptions to all these favorable rules to you is the treatment of Traditional IRAs, 401ks, pension plans etc that you inherit that contain money on which the decedent never paid income tax. Distributions from such inherited accounts are (mostly) taxable income to you; any part of post-tax money such as nondeductible contributions to Traditional IRAs that is included in the distribution is tax-free. Annuities present another source of complications. For annuities within IRAs, even the IRS throws up its hands at explaining things to mere mortals who are foolhardy enough to delve into Pub 950, saying in effect, talk to your tax advisor. For other annuities, questions arise such as is this a tax-deferred annuity and whether it was purchased with pre-tax money or with post-tax money, etc. One thing that you should check out is whether it is beneficial to take a lump sum distribution or just collect the money as it is distributed in monthly, quarterly, semi-annual, or annual payments. Annuities in particular have heavy surrender charges if they are terminated early and the money taken as a lump sum instead of over time as the insurance company issuing the annuity had planned on happening. So, taking a lump sum would mean more income tax immediately due not just on the lump sum but because the increase in AGI might reduce deductions for medical expenses as well as reduce the overall amount of itemized deductions that can be claimed, increase taxability of social security benefits, etc. You say that you have these angles sussed out, and so I will merely re-iterate Beware the surrender charges. |
What evidence exists for claiming that you cannot beat the market? | null | common sentiment that no investor can consistently beat the market on returns. I guess its more like very few investor can beat the market, a vast Majority cannot / do not. What evidence exists for or against this? Obviously we can have a comparison of all investors. If we start taking a look at some of the Actively Managed Funds. Given that Fund Managers are experts compared to common individual investors, if we compare this, we can potentially extend it more generically to others. Most funds beat the markets for few years, as you keep increasing the timeline, i.e. try seeing 10 year 15 year 20 year return; this is easy the data is available, you would realize that no fund consistently beat the index. Few years quite good, few years quite bad. On Average most funds were below market returns especially if one compares on longer terms or 10 - 20 years. Hence the perception Of course we all know Warren Buffet has beat the market by leaps and bounds. After the initial success, people like Warren Buffet develop the power of "Self Fulfilling Prophecy". There would be many other individuals. |
Taxes, Puts and the Wash Rule | null | There are different schools of thought. You can ask the IRS - and it would not surprise me if you got different answers on different phone calls. One interpretation is that a put is not "substantially identical" to the disposed stock, therefore no wash is triggered by that sale. However if that put is exercised, then you automatically purchase the security, and that is identical. As to whether the IRS (or your brokerage firm) recognizes the identical security when it falls out of an option, I can't say; but technically they could enforce it because the rule is based on 30 days and a "substantially identical" stock or security. In this interpretation (your investor) would probably at least want to stay out of the money in choosing a strike price, to avoid exercise; however, options are normally either held or sold, rather than be exercised, until at or very close to the expiration date (because time value is left on the table otherwise). So the key driver in this interpretation would be expiration date, which should be at least 31 days out from the stock sale; and it would be prudent to sell an out of the money put as well, in order to avoid the wash sale trigger. However there is also a more unfavorable opinion - see fairmark.com/capgain/wash/wsoption.htm where they hold that a "deep in the money" option is an immediate trigger (regardless of exercise). This article is sage, in that they say that the Treasury (IRS) may interpret an option transaction as a wash if it's ballpark to being exercisable. And, if the IRS throws paper, it always beats each of paper, rock and scissors :( A Schwab article ("A Primer on Wash Sales") says, if the CUSIPs match, bang, wash. This is the one that they may interpret unfavorably on in any case, supporting Schwab's "play it safe" position: "3. Acquire a contract or option to buy substantially identical stock or securities..." . This certainly nails buying a call. As to selling a put, well, it is at least conceivable that an IRS official would call that a contract to buy! SO it's simply not a slam dunk; there are varying opinions that you might describe as ranging from "hell no" to "only if blatant." If you can get an "official" predetermination, or you like to go aggressive in your tax strategy, there's that; they may act adversely, so Caveat Taxfiler! |
Can I negotiate a credit card settlement by stopping payments? | null | This would be on your credit for ~8 years. If it goes according to your plan, it will take 6 months to a year to do the settlement by getting behind enough to let it go to collections and then settling. The write-off will then be on your credit record for 7 years before it "falls off". Your cash out refinance would have to cover you for at least the next 8 years to be valuable. And you have a lot of assumptions to get there: In short, there's one way (or only a few ways) this works out well in your favor. There are many ways that this has the chance to hurt you. I don't like "investments" with those kind of odds. |
How much house can I afford, waiting around 3 years or so | null | On $4K/mo gross about $1000/mo can go to the mortgage, and at today's rates, that's about $200K of mortgage the bank might lend you. Income is qualified based on gross, not net, so if $48,000/yr is wrong, please scale my guesstimate down a bit. In the end, today's rates allow a mortgage of nearly 4X one's gross income. This is too high, in my opinion. I'm answering what the bank would approve you at, not what I think is wise. Wise, in my opinion is 2.5-3X one's income, tops. |
Paying taxes on dividends even though your capital gains were $0? | null | You are incorrect in saying that you have a capital gains of $0. You either have no capital gains activity, because you haven't realized it or you have an unrealized capital gains of -$10k. If you were to sell immediately after receiving the dividend you would end up as a wash investment wise - the 10k of dividend offsetting the 10k capital wash. Though due to different tax treatments of money you may be slightly negative with respect to taxes. You are taxed when you receive the money. And you realized that 10k in dividends - even if you didn't want too. In the future if this bothers you. You need to pay attention to the dividend pay out dates for funds. But then just after they payout a dividend and have drain their cash account. The issue is that you unknowingly bought 90k of stock and 10k of cash. This information is laid out in the fund documentation, which you should be reviewing before investing in any new fund. |
using credit card and paying back quickly | null | I can't speak for every credit card, but I know two of mine don't have overage fees. The transaction either goes through, or gets denied. Check your card agreement and look for the fee section. One other thing to consider, sometimes when you make an online payment to a credit card, you will notice that the "Available Balance" number on the account will increase right away even if the payment is not reflected on your "Current Balance". If this is the case, and you are positive that your payment will be successfully posted to the account, I say go for it. |
Is buying a home a good idea? | null | Once you paid it off, you don't pay rent anymore. That is the major advantage. Also, you can do any change you want to it. Many people consider it an investment - if you ever sell it, it could be worth more than what you paid (although this is not for sure) |
In a buy order with a trigger, will I pay the current ask or the buy price in the order? | null | If you want to buy once the price goes up to $101 or above you can place a conditional order to be triggered at $101 or above and for a limit order to entered to buy at $102. This will mean that as soon as the price reaches $101 or above, your limit order will enter the market and you will buy at any price from $102 or below. So if the price just trickles over $101 you will end up buying at around $101 or just over $101. However, if the price gaps above $101, say it gaps up to $101.50, then you will end up buying at around $101.50. If the price gaps up above $102, say $102.50, then your limit order at $102 will hit the market but it will not trade until the price drops back to $102 or below. |
What is a reasonable salary for the owner and sole member of a small S-Corp? | null | Generally if you're a sole S-Corp employee - it is hard to explain how the S-Corp earned more money than your work is worth. So it is reasonable that all the S-Corp profits would be pouring into your salary. Especially when the amounts are below the FICA SS limits when separating salary and distributions are a clear sign of FICA tax evasion. So while it is hard to say if you're going to be subject to audit, my bet is that if you are - the IRS will claim that you underpaid yourself. One of the more recent cases dealing with this issue is Watson v Commissioner. In this case, Watson (through his S-Corp which he solely owned) received distributions from a company in the amounts of ~400K. He drew 24K as salary, and the rest as distributions. The IRS forced re-characterizing distributions into salary up to 93K (the then-SS portion of the FICA limit), and the courts affirmed. Worth noting, that Watson didn't do all the work himself, and that was the reason that some of the income was allowed to be considered distribution. That wouldn't hold in a case where the sole shareholder was the only revenue producer, and that is exactly my point. I feel that it is important to add another paragraph about Nolo, newspaper articles, and charlatans on the Internet. YOU CANNOT RELY ON THEM. You cannot defend your position against IRS by saying "But the article on Nolo said I can not pay SE taxes on my earnings!", you cannot say "Some guy called littleadv lost an argument with some other guy called Ben Miller because Ben Miller was saying what everyone wants to hear", and you can definitely not say "But I don't want to pay taxes!". There's law, there are legal precedents. When some guy on the Internet tells you exactly what you want to hear - beware. Many times when it is too good to be true - it is in fact not true. Many these articles are written by people who are interested in clients/business. By the time you get to them - you're already in deep trouble and will pay them to fix it. They don't care that their own "advice" got you into that trouble, because it is always written in generic enough terms that they can say "Oh, but it doesn't apply to your specific situation". That's the main problem with these free advice - they are worth exactly what you paid for them. When you actually pay your CPA/Attorney - they'll have to take responsibility over their advice. Then suddenly they become cautious. Suddenly they start mentioning precedents and rulings telling you to not do things. Or not, and try and play the audit roulette, but these types are long gone when you get caught. |
What are some of the key identifiers/characters of an undervalued stock? | null | P/E = price per earnings. low P/E (P/E < 4) means stock is undervalued. |
Capital Gains Tax - Does this apply only to the actual “gains” or to the entire amount of my sale? | null | You normally only pay taxes on the difference between the sale price and the cost basis of the asset. In your example, you would probably pay taxes on the $10 difference, not the full sale price of $110. If you paid a commission, however, you would be taxed on your gain minus the commission you paid. Since you held the asset for less than a year, you wouldn't pay the long-term capital gains rate of 20%; you'd be taxed on the capital gain as if it were ordinary income, which depends on your federal income tax bracket. Also, littleadv makes a good point about the implications of buying the asset with after-tax funds too, so that's another part of the equation to consider as well. |
How can I investigate historical effect of Rebalancing on Return and Standard Deviation? | null | To answer your question directly.. you can investigate by using google or other means to look up research done in this area. There's been a bunch of it Here's an example of search terms that returns a wealth of information. effect+of+periodic+rebalancing+on+portfolio+return I'd especially look for stuff that appears to be academic papers etc, and then raid the 'references' section of those. Look for stuff published in industry journals such as "Journal of Portfolio Management" as an example. If you want to try out different models yourself and see what works and what doesn't, this Monte Carlo Simulator might be something you would find useful The basic theory for those that don't know is that various parts of a larger market do not usually move in perfect lockstep, but go through cycles.. one year tech might be hot, the next year it's healthcare. Or for an international portfolio, one year korea might be doing fantastic only to slow down and have another country perform better the next year. So the idea of re-balancing is that since these things tend to be cyclic, you can get a higher return if you sell part of a slice that is doing well (e.g. sell at the high) and invest it in one that is not (buy at the low) Because you do this based on some criteria, it helps circumvent the human tendency to 'hold on to a winner too long' (how many times have you heard someone say 'but it's doing so well, why do I want to sell now"? presuming trends will continue and they will 'lose out' on future gains, only to miss the peak and ride the thing down back into mediocrity.) Depending on the volatility of the specific market, and the various slices, using re balancing can get you a pretty reasonable 'lift' above the market average, for relatively low risk. generally the more volatile the market, (such as say an emerging markets portfolio) the more opportunity for lift. I looked into this myself a number of years back, the concensus I came was that the most effective method was to rebalance based on 'need' rather than time. Need is defined as one or more of the 'slices' in your portfolio being more than 8% above or below the average. So you use that as the trigger. How you rebalance depends to some degree on if the portfolio is taxable or not. If in a tax deferred account, you can simply sell off whatever is above baseline and use it to buy up the stuff that is below. If you are subject to taxes and don't want to trigger any short term gains, then you may have to be more careful in terms of what you sell. Alternatively if you are adding funds to the portfolio, you can alter how your distribute the new money coming into the portfolio in order to bring up whatever is below the baseline (which takes a bit more time, but incurs no tax hit) The other question is how will you slice a given market? by company size? by 'sectors' such as tech/finance/industrial/healthcare, by geographic regions? |
How do the wealthy pay for things? | null | This is second hand information as I am not a millionaire, but I work with such people everyday and have an understanding of how they handle cash: The wealthy people don't. Simple. Definitely not if they don't have to. Cash is a tool to them that they use only if they get benefit of it being a cash transaction (one of my friends is a re-seller and he gets a 10% discount from suppliers for settling lines using cash). Everything else they place on a line of credit. For people who "dislike" credit cards and pay using ATM or debit cards might actually have a very poor understanding of leverage. I assure you, the wealthy people have a very good understanding of it! Frankly, wealthy people pay less for everything, but they deserve it because of the extreme amount of leverage they have built for themselves. Their APRs are low, their credit limits are insanely high, they have longer billing periods and they get spoiled by credit card vendors all the time. For example, when you buy your groceries at Walmart, you pay at least a 4% markup because that's the standardized cost of processing credit cards. Even if you paid in cash! A wealthy person uses his credit card to pay for the same but earns the same percentage amount in cash back, points and what not. I am sure littleadv placed the car purchase on his credit card for similar reasons! The even more wealthy have their groceries shipped to their houses and if they pay cash I won't be surprised if they actually end up paying much less for fresh (organic) vegetables than what equivalent produce at Walmart would get them! I apologize for not being able to provide citations for these points I make as they are personal observations. |
still have mortgage on old house to be torn down- want to build new house | null | You're effectively looking for a mortgage for a new self-build house. At the beginning, you should be able to get a mortgage based on the value of the land only. They may be willing to lend more as the build progresses. Try to find a company that specializes in this sort of mortgage. |
What are the advantages/disadvantages of a self-directed IRA? | null | This type of account will sell you just enough rope to hang yourself. Gold is at $1400 or so. Were you around when it first hit $800 in '79/'80? I was. No one was saying "sell" only forecasts of $2000. If you bought and held, you've still not broken even to inflation let alone simple market returns. |
What assets would be valuable in a post-apocalyptic scenario? | null | A book on the power of persuasion. The people will need you to lead them to the glory land like the Deacon* from Waterworld *Dennis Hopper. Study up. |
question about early exercise of a NQSO | null | Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). No. That's exactly what the SO is NQ for. Read more on the differences between ISO and NQSO here. Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). At this point you no longer have NQSO, you have RSU. If you filed 83(b) when you exercised, then you pay capital gains tax when they vest. If you didn't - its ordinary income to you. NQSO is a red herring here since once exercised they no longer exist. If you didn't file 83(b), then when the stock vests the difference between the FMV at vest and the money you spent on it when exercising (if any) is considered wages and taxed as ordinary income (+FICA etc). From that point the RSU becomes a regular stock investment and the capital gains clock starts ticking. |
New car price was negotiated as a “cash deal”. Will the price change if I finance instead? | null | There is no rule that says the dealer has to honor that deal, nor is there any that says he/she won't. However, if you are thinking of financing through though the dealership they are likely to honor the deal. They PREFER you finance it. If you finance it through the dealer the salesman just got TWO sales (a car and a loan) and probably gets a commission on both. If you finance it through a third party it makes no difference to the dealer, it is still a cash deal to them because even though you pay off the car loan over years, the bank pays them immediately in full. |
Leasing a car I intend to buy | null | I have a colleague who always leases cars first. He's very well off, has piles of money in savings, owns a home, and the cherry on top, he could just write a check for the car.... He sees the lease as an insurance policy on the first couple of years of the car's life. If it gets in an accident or he finds something about it he doesn't like, he can give it back to the dealer at the end of the term with no hassle and move on to the next car. Some people value the fact that a lease is a rental. If you're leasing a luxury car or something you couldn't otherwise afford, no amount of mental gymnastics will turn this in to a good idea. Separately, you should never make a down payment on a lease. If the car is totaled early on, you will not recoupe the money you put down. The issue here is that while the numbers all work out the same between a lease and a purchase your situation is different. If the leased car is totaled, the bank gets its money back from an insurer. If that payment doesn't cover the value of the car, the GAP insurance will cover it. In either situation, if there's an excess remaining it will be returned to you. The issue is the excess may not fully replace your down payment. If you then went to lease another car you would need to come up with that down payment again because you couldn't just simply choose to lease a used car; like you could in the case of a purchase. Additionally, GAP is generally included in a lease whether you want it or not. As far as I'm concerned it doesn't make financial sense to mitigate the value of the GAP coverage once you've decided to live in a lease situation. |
What strategies can I use to reduce my capital gains taxes? | null | There are a number of ways to minimize or even avoid capital gains taxes. Here's a look at five of the more common strategies:Invest for the long term. Take advantage of tax-deferred retirement plans. Use capital losses to offset gains. Watch your holding periods. Pick your cost basis. |
why do I need an emergency fund if I already have investments? | null | My take on this is that this reduces your liquidity risk. Stocks, bonds and many other investment vehicles on secondary markets you may think of are highly liquid but they still require that markets are open and then an additional 3-5 business days to settle the transaction and for funds to make their way to your bank account. If you require funds immediately because of an emergency, this 3-5 business days (which gets longer as week-ends and holidays are in the way) can cause a lot of discomfort which may be worth a small loss in potential ROI. Think of your car breaking down or a water pipe exploding in your home and having to wait for the stock sale to process before you can make the payment. Admittedly, you have other options such as margin loans and credit cards that can help absorb the shock in such cases but they may not be sufficient or cause you to pay interest or fees if left unpaid. |
Is this formula accurate for weighing the difference between an S-Corp and LLC? | null | It might be best to step back and look at the core information first. You're evaluating an LLC vs a Corporation (both corporate entities). Both have one or more members, and both are seen similarly (emphasis on SIMILAR here, they're not all the same) to the IRS. Specifically, LLC's can opt for a pass-through tax system, basically seen by the IRS the same way an S-Corp is. Put another way, you can be taxed as a corporate entity, or it's P/L statements can "flow through" to your personal taxes. When you opt for a flow-through, the business files and you get a separate schedule to tie into your taxes. You should also look at filing a business expense schedule (Schedule C) on your taxes to claim legitimate business expenses (good reference point here). While there are several differences (see this, and this, and this) between these entities, the best determination on which structure is best for you is usually if you have full time employ while you're running the business. S corps limit shares, shareholders and some deductions, but taxes are only paid by the shareholders. C corps have employees, no restrictions on types or number of stock, and no restrictions on the number of shareholders. However, this means you would become an employee of your business (you have to draw monies from somewhere) and would be subject to paying taxes on your income, both as an individual, and as a business (employment taxes such as Social Security, Medicare, etc). From the broad view of the IRS, in most cases an LLC and a Corp are the same type of entity (tax wise). In fact, most of the differences between LLCs and Corps occur in how Profits/losses are distributed between members (LLCs are arbitrary to a point, and Corps base this on shares). Back to your question IMHO, you should opt for an LLC. This allows you to work out a partnership with your co-worker, and allows you to disburse funds in a more flexible manner. From Wikipedia : A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704-1 are met. S corporations may not specially allocate profits, losses and other tax items under US tax law. Hope this helps, please do let me know if you have further questions. As always, this is not legal or tax advice, just what I've learned in setting several LLCs and Corporate structures up over the years. EDIT: As far as your formulas go, the tax rate will be based upon your personal income, for any pass through entity. This means that the same monies earned from and LLC or an S-corp, with the same expenses and the same pass-through options will be taxed the same. More reading: LLC and the law (Google Group) |
When does a low PE ratio not indicate a good stock? | null | PE can be misleading when theres a good risk the company simply goes out of business in a few years. For this reason some people use PEG, which incorporates growth into the equation. |
Why can't you just have someone invest for you and split the profits (and losses) with him? | null | Why is nobody providing a service that is basically: Give me your money. I will invest it as I see fit. A year later I will return the capital to you, plus half of any profits or losses. This means that if your capital under my management ends up turning a profit, I will keep half of those profits, but if I lose you money, I will cover half those losses. Because they can already make lots of money by just charging people an unconditional fee and not having to cover their losses. Why take on the risk of having to cover your losses when they can just take a percentage of your assets and stick you with any losses? In addition, as Charles E. Grant mentioned in a comment on another answer, if a person has both sufficient capital to cover your losses and sufficient confidence in their investing acumen that they don't think they will have to do so, they have little need for your money. Rather than take half the gains on your money, they will invest their own money (they must have some, or else they can't guarantee your losses) and take all the gains. Your scheme would only be plausible as a partnership between a person with investing skills but little capital, and another person with ample capital and less skill. In that case, the investment whiz could genuinely benefit from access to the bankroller's capital. As quid noted in chat, this does exist in the form of ad-hoc private equity arrangements between individuals. However, such a setup is unlikely to exist as an "off-the-shelf product" marketed at retail investors, because financial institutions have more capital than any individual retail investor -- and, more generally, anyone with sufficient skill to pull this off will (at least in theory) quickly accumulate enough capital that they can negotiate a less risky payment plan. |
How many days does Bank of America need to clear a bill pay check | null | I just had this happen to me with Chase and speaking with my executive support contact, they will not return the funds unless you request them back. Which I find appalling and just one more reason that I don't like working with Chase! |
Would you withdraw your money from your bank if you thought it was going under? | null | There's obviously a lot of discussion surrounding your question, but if I thought a bank was going under, then yes, absolutely I would withdraw my money. Now, we can debate whether me thinking the bank was going under was foolish or not, but if I truly believed it, I can't see why I would sit around and do nothing. |
Tenant wants to pay rent with EFT | null | I'd consider this offer. Keep in mind, any time you write a check, there's the information he's asking for. If it makes you feel comfortable, use the small balance account, or set up a 4th one you'll use for these incoming deposits only. |
Why is the stock market price for a share always higher than the earnings per share? | null | Stock prices are set by supply and demand. If a particular stock has a high EPS, say, $100, then people will bid more for that stock, driving up its price over one with a $10 EPS. Your job as an investor is to find stocks with low share prices, but which will give you high earnings (either in dividends, our future share price). This means finding stocks which you believe the market has priced incorrectly, for whatever reason (as an example, many bank stocks are being punished right now, even if the underlying banks are in good shape financially). If you want to beat the market indices, be prepared to do a lot of research, because you're trying to outsmart the market as a whole. |
What does net selling or buying of a stock mean? | null | What does it mean when some one says that today there was a lot of net selling or buying in a stock. What does it mean because for every selling there is also a buying going on then how can you determine a selling or buying ? Generally if the price of stock has gone down compared to previous day, the trend is of selling. As the price can be volatile, there maybe few trades that are above close price of previous day, or below close price of previous day. How can you calculate average trade price for a stock It is simple {sum of all [price*quantity]}/quantity. Related question Equity market inflow meaning |
Pay off mortgage or invest in high value saving account | null | Basically, the easiest way to do this is to chart out the "what-ifs". Applying the amortization formula (see here) using the numbers you supplied and a little guesswork, I calculated an interest rate of 3.75% (which is good) and that you've already made 17 semi-monthly payments (8 and a half months' worth) of $680.04, out of a 30-year, 720-payment loan term. These are the numbers I will use. Let's now suppose that tomorrow, you found $100 extra every two weeks in your budget, and decided to put it toward your mortgage starting with the next payment. That makes the semi-monthly payments $780 each. You would pay off the mortgage in 23 years (making 557 more payments instead of 703 more). Your total payments will be $434,460, down from $478.040, so your interest costs on the loan were reduced by $43,580 (but, my mistake, we can't count this amount as money in the bank; it's included in the next amount of money to come in). Now, after the mortgage is paid off, you have $780 semi-monthly for the remaining 73 months of your original 30-year loan (a total of $113,880) which you can now do something else with. If you stuffed it in your mattress, you'd earn 0% and so that's the worst-case scenario. For anything else to be worth it, you must be getting a rate of return such that $100 payments, 24 times a year for a total of 703 payments must equal $113,880. We use the future value annuity formula (here): v = p*((i+1)n-1)/i, plugging in v ($113880, our FV goal), $100 for P (the monthly payment) and 703 for n (total number of payments. We're looking for i, the interest rate. We're making 24 payments per year, so the value of i we find will be 1/24 of the stated annual interest rate of any account you put it into. We find that in order to make the same amount of money on an annuity that you save by paying off the loan, the interest rate on the account must average 3.07%. However, you're probably not going to stuff the savings from the mortgage in your mattress and sleep on it for 6 years. What if you invest it, in the same security you're considering now? That would be 146 payments of $780 into an interest-bearing account, plus the interest savings. Now, the interest rate on the security must be greater, because you're not only saving money on the mortgage, you're making money on the savings. Assuming the annuity APR stays the same now vs later, we find that the APR on the annuity must equal, surprise, 3.75% in order to end up with the same amount of money. Why is that? Well, the interest growing on your $100 semi-monthly exactly offsets the interest you would save on the mortgage by reducing the principal by $100. Both the loan balance you would remove and the annuity balance you increase would accrue the same interest over the same time if they had the same rate. The main difference, to you, is that by paying into the annuity now, you have cash now; by paying into the mortgage now, you don't have money now, but you have WAY more money later. The actual real time-values of the money, however, are the same; the future value of $200/mo for 30 years is equal to $0/mo for 24 years and then $1560/mo for 6 years, but the real money paid in over 30 years is $72,000 vs $112,320. That kind of math is why analysts encourage people to start retirement saving early. One more thing. If you live in the United States, the interest charges on your mortgage are tax-deductible. So, that $43,580 you saved by paying down the mortgage? Take 25% of it and throw it away as taxes (assuming you're in the most common wage-earner tax bracket). That's $10895 in potential tax savings that you don't get over the life of the loan. If you penalize the "pay-off-early" track by subtracting those extra taxes, you find that the break-even APR on the annuity account is about 3.095%. |
collateralized mortgage obligations | null | I think the definition of overcollateralization on investopedia will answer this question for you. Namely this part: For example, in the case of a mortgage backed security, the principal amount of an issue may be $100 million while the principal value of the mortgages underlying the issue may be equal to $120 million. The bond is packed with more mortgages than the face value indicates. It's effectively sold at a discount to underlying value. |
Brief concept about price movement of a particular stock [duplicate] | null | There isn't a formula like that, there is only the greed of other market participants, and you can try to predict how greedy those participants will be. If someone decided to place a sell order of 100,000 shares at $5, then you can buy an additional 100,000 shares at $5. In reality, people can infer that they might be the only ones trying to sell 100,000 shares right then, and raise the price so that they make more money. They will raise their sell order to $5.01, $5.02 or as high as they want, until people stop trying to buy their shares. It is just a non-stop auction, just like on ebay. |
How to get rid of someone else's debt collector? | null | Sue the debt collectors in small claims court. There are several example stories around the internet, but this is a well written one from the consumerist. If your phone is a cell phone: "it is against the law for a company to leave a pre-recorded message on your cell phone." In fact, the call frequency increased once they realized they had reached a live person. I called each of these companies multiple times, and though I was given assurances each time that my number would be taken off of their lists, the calls continued, morning, noon and night. At my wits end, I decided the only way to have the harassing calls stop was to file suits against the collection companies. It's very important to understand that it is against the law for a company to leave a pre-recorded message on your cell phone. Armed with this knowledge, I filed suit against several of the collection companies. I filed in small claims court so I did not need to hire an attorney, and the process was as simple as completing a paragraph on a complaint form. For evidence, I had over a hundred Google Voicemail transcripts showing the times the companies called and the text of the pre-recorded messages. Mysteriously, the calls all stopped immediately on the same date the collection companies received the certified letters stating they were being sued. Then a new flurry of calls began pouring in. This time it was their attorneys. The attorneys representing these out of state collection companies were all desperate to settle out of court. hey did not want to incur the expense of traveling for court or hiring a local law firm who wasn't on retainer. They also understood they had no justifiable defense for the calls. To make a long story short, so far I have successfully sued 3 of these collection companies and settled for more than $5,000 out of court. All it cost me was $35 and 20 minutes per suit. Making these companies pay is the only incentive for them to stop their illegal and harassing practices. If more consumers knew their rights and actually took a few minutes to stand up for them, it would become less profitable for these companies to conduct business the way they do now. -Source And whether you have a cell phone or land line, It is illegal for the debt collectors to tell you they are calling to collect a debt for someone else under the Fair Debt Collection Practices Act (wikipedia, ftc docs). What Remedies Are Available If The Debt Collector Violates The Law Under the Fair Debt Collection Practices Act, you have the right to sue a debt collector in state or federal court within one year from the date of the violation. If you win, you may recover damages in the amount of any losses you suffered as a result of the violation, plus an additional amount of up to $1,000.00. You may also be able to recover court costs and attorney fees. If the same debt collector has engaged in unlawful conduct with a number of consumers, it may be possible to find a lawyer who will file a class action lawsuit. -Source With regard to whether you can sue under FDCPA if you are not the debtor, one FDCPA lawyer (take with grain of salt) says yes: Did you know that it doesn't matter if you owe the account the debt collector is calling you about or not? If a debt collector violates the FDCPA (the federal Fair Debt Collection Practices Act, 15 USC 1692 et. seq.) that debt collector could be liable to pay you statutory damages, actual damages, attorney's fees, and court costs. -Source |
Is there a mathematical formula to determine a stock's price at a given time? | null | Try to find the P/E ratio of the Company and then Multiply it with last E.P.S, this calculation gives the Fundamental Value of the share, anything higher than this Value is not acceptable and Vice versa. |
Why do stock prices of retailers not surge during the holidays? | null | That's a pretty good question for a six-year-old! In addition to the good answers which point out that expectations are priced in, let's deny the premises of the question: Sales do not increase the value of a company; a company could be, for example, losing money on every sale. Share prices are (at least in theory) correlated with profits. So let's suppose that company X is unprofitable 320 days a year and is relying upon sales in late November and December to be in the black for the year. (Hence "black Friday".) Carefully examine the supposition of this scenario: we have a company that is so unprofitable that it must gamble everything on successfully convincing bargain hunting consumers in a weak economy to buy stuff they don't actually need from them and not a competitor. Why would this inspire investor confidence? There are plenty of companies that fail to meet their sales targets at Christmas, for plenty of reasons. |
What are the alternatives to compound interest for a Muslim? | null | Invest in growth stocks which do not pay any dividends (Note that some part of the dividends issued by a corporation might be from interest received by the company and passed on to you as a dividend); Buy a house from a bank that practices Islamic Banking. See this question which you yourself answered a few weeks ago to understand how this works. |
Should I pay off my credit card online immediately or wait for the bill? | null | Theoretically there is always a time value of money. You'll need to keep your cash in a Money Market Fund to realize its potential (I'm not saying MMFs are the best investment strategy, they are the best kind of account for liquid cash). Choose an accounts that's flexible with regard to its minimum required so you can always keep this extra money in it and remove it when you need to make a payment. |
What happens to people without any retirement savings? | null | According to both Huffington Post and Investopedia: Trying to retire without any savings in the bank can be difficult, and that difficulty is compounded by other factors senior citizens need to keep in mind as they age, like health issues and mobility. If saving money is not possible for you, retirement doesn’t have to pass you by. There are plenty of government-assisted and nonprofit programs that can help you, such as the Commodity Supplemental Food Program, Medicare, senior housing help from Housing and Urban Development and other resources. Therefore, to answer your questions: Is this pretty much the destiny of everyone who cannot save for retirement? Yes, if you do not have help from family (or friends) then you have a chance of ending up homeless and/or on government assistance. Do most people really never retire? There are people who really will never retire. There are stories in the news about Walmart greeters or McDonald's cashiers who are in their 80s and 90s working because they need to support themselves. However, that's not the case for everyone. There's a greeter at my local Costco who is in her 80s and she works because she loves it (her career was in consulting and she doesn't have a lack of retirement money. She just really likes talking to people.). What really happens? I can't answer what really happens because I have never experienced it and don't know people that do. Therefore I have to go off of what the two articles have said. |
When will Canada convert to the U.S. Dollar as an official currency? | null | The conspiracy buffs think this is already in the works. If you are interested, Google this fictional currency called the "Amero." Or you could just look up the snopes article on Amero. |
How much more than my mortgage should I charge for rent? | null | As others have pointed out, you can't just pick a favorable number and rent for that amount. If you want to rent out your house, you must rent it for a value that a renter would agree to. For example there is a house on my street that has been looking for renters for 3 years. They want $2,500 a month. This covers their mortgage, and a little bit more for taxes and repairs. It has never been rented once. Other homes in my neighborhood rent for around $1,000 a month. There is no value to a renter in renting a house that is $1,500 more then a similar house 2 doors down. Now what you can look at is cost mitigation. So I am using data from my area. Houses in my part of Florida must have A/C running in the wet months to keep the moisture from ruining the house. This can easily be $100 a month (usually more). The city requires you to have water service, even when not occupied, though the cost is very small. Same with waste, which is a flat fee: $20 a month. Yard watering is a must during the dry months (if you want to keep grass). Let's say that comes out to $50 a month, year round. Pest control is a must, especially if your house has wooden parts (like floors or a roof). Even modest pest control is $25 a month. Property taxes around $240 a month. Let's say your mortgage is around $1,000 a month. That means to sit empty your house would cost $1,435. Now if you were to rent the house, a lot of those costs could "go away" by becoming the tenants' responsibility. Your cost of the house sitting full would be $1,240. Let's pad that with 10% for repairs and go with $1,364. Now let's assume you can rent for $1,000 a month. Keep in mind all these rates are about right for my area but will change based on size and amenities. Your choices are let the house sit empty for $1,435 a month or fill it and only "lose" $240 a month. Keep in mind that in both cases you will be gaining equity. So what a lot of people do around here is rent out their houses and pay the $240 as an investment. For every $240 they pay, they get $1,000 in equity (well, interest and fees aside, but you get the point). It's not a money maker for them right now, but as they get older two things happen. That $240 a month "payment" pays off their mortgage, so they end up owning the house outright. Then that $240 a month payment turns to extra income. And at some point, their rental can be sold for (let's guess) $400,000. SO they paid $86,400 and got back $400,000. All the while they are building equity in their rental and in the home they are living in. The important take away from this, is that it's not a source of income for the landlord as much as it is an investment. You will likely not be able to rent a house for more then a mortgage + costs + taxes, but it does make a good investment vehicle. |
Are there any statistics that support the need for Title Insurance? | null | There seems to be no such information available. What is available is that number of claims are high and the Title Insurance companies have gone bankrupt as per the wikipedia article In 2003, according to ALTA, the industry paid out about $662 million in claims, about 4.3% percent of the $15.7 billion taken in as premiums. By comparison, the boiler insurance industry, which like title insurance requires an emphasis on inspections and risk analysis, pays 25% of its premiums in claims. However, no reference to the relationship between when claims are made and when policies are issued is found. As of 2008, the top three remaining title insurers all lost money, while LandAmerica went bankrupt and sold its title business to Fidelity http://en.wikipedia.org/wiki/Title_insurance#Industry_profitability The amount of premium received and claim made can be got from some of the companies balance sheet. For Fidelity its at http://www.investor.fnf.com/releasedetail.cfm?CompID=FNT&ReleaseID=363350 The article in here mentions the claims ratio as 5%. Refer http://www.federaltitle.com/blog/title-insuance-qaa |
Should I avoid credit card use to improve our debt-to-income ratio? | null | The answer depends on how much you spend every month. The DTI is calculated using the minimum payment on the balance owed on your card. Credit card minimum payments are ridiculous, often being only $50 for balances of a couple thousand dollars. In any case, when you get preapproved, the lender will tell you (based on your DTI) the maximum amount they will approve you for. If your minimum payment is $50, that's another $50 that could go towards your mortgage, which could mean an additional $10,000 financed. It's up to you to decide if $10,000 will make enough of a difference in the houses you look at. |
Can I evaluate the performance of a company using just OHLC data? | null | No. The information you are describing is technical data about a stock's market price and trading volume, only. There is nothing implied in that data about a company's financial fundamentals (earnings/profitability, outstanding shares, market capitalization, dividends, balance sheet assets and liabilities, etc.) All you can infer is positive or negative momentum in the trading of the stock. If you want to understand if a company is performing well, then you need fundamental data about the company such as you would get from a company's annual and quarterly reports. |
Should I re-allocate my portfolio now or let it balance out over time? | null | I would not sell unless the stock is starting to fall in price. If you are a long term investor you can review the weekly chart on a weekly basis to determine if the stock is still up-trending. Regarding HD below is a weekly chart for the last 4 years: Basically if the price is making Higher Highs (HH) and Higher Lows (HL) it is up-trending. If it starts to make Lower Lows (LL) followed by Lower Highs (LH) then the uptrend is over and the stock could be entering a downtrend. With HD, the price has been up-trending but seems to now be hitting some headwinds. It has been making some HHs followed by some HLs throughout the last 2 years. It did make a LL in late August 2015 but then recovered nicely to make a new HH, so the uptrend was not broken. In early November 2016 it made another LL but this time it seems to be followed by a LH in mid-December 2016. This could be clear evidence that the uptrend may be ending. The final confirmation would be if the price drops below the early November low of $119.20 (the orange line). If price drops below this price it would be confirmation that the uptrend is over and this should be the point at which you should sell your HD shares. You could place an automatic stop loss order just below $119.20 so that you don't even need to monitor the stock frequently. Another indication that the uptrend may be in trouble is the divergence between the HHs of the price and the peaks of a momentum indicator (in this case the MACD). The two sloping red lines show that the price made HHs in April and August 2016 whilst the momentum indicator made LHs at these peaks in the price. As the lines are sloping in different directions it is demonstrating negative divergence, which means that the momentum of the uptrend is slowing down and can act as an early warning system to be more cautious in the near future. So the question you could be asking is when is a good time to sell out of HD (or at least some of your HD to rebalance)? Why sell something that is still increasing in price? Only sell if you can determine that the price will not be increasing anymore in the near to medium term. |
What would I miss out on by self insuring my car? | null | If you can afford to replace your car, it is more cost effective, on average and over time, not to carry comprehensive and collision insurance. The insurance companies do make a profit, after all. However, you may be able to worry less ("What if someone steals my car if I park here?") with the insurance, and you have the knowledge the you won't have to spend your own money on a new car if something happens to this one, which may help with financial planning. |
NYSE vs. Nasdaq - can I tell what exchange a ticker traded on, based solely on the ticker? | null | You cannot determine this solely by the ticker length. However, there are some conventions that may help steer you there. Nasdaq has 2-4 base letters BATS has 4 base letters NYSE equity securities have 1-4 base letters. NYSE Mkt (formerly Amex) have 1-4 base letters. NYSE Arca has 4 base letters OTC has 4 base letters. Security types other than equities may have additional letters added, and each exchange (and data vendors) have different conventions for how this is handled. So if you see "T" for a US-listed security it would be only be either NASDAQ, NYSE or NYSE Mkt. If you see "ANET" then you cannot tell which exchange it is listed on. (In this case, ANET Arista Networks is actually a NYSE stock). For some non-equity security types, such as hybrids, and debt instruments, some exchanges add "P" to the end for "preferreds" (Nasdaq and OTC) and NYSE/NYSE Mkt have a variety of methods (including not adding anything) to the ticker. Examples include NYSE:TFG, NYSEMkt:IPB, Nasdaaq: AGNCP, Nasdaq:OXLCN. It all becomes rather confusing given the changes in conventions over the years. Essentially, you require data that provides you with ticker, listing location and security type. The exchanges allocate security tickers in conjunction with the SEC so there are no overlaps. eg. The same ticker cannot represent two different securities. However, tickers can be re-used. For example, the ticker AB has been used by the following companies: |
How to deposit a cheque issued to an associate in my business into my business account? | null | Have the check reissued to the proper payee. |
US: Basics of taxation of stocks | null | E.g. I buy 1 stock unit for $100.00 and sell it later for $150.00 => income taxes arise. Correct. You pay tax on your gains, i.e.: the different between net proceeds and gross costs (proceeds sans fees, acquisition costs including fees). I buy 1 stock unit for $150.00 and sell it later for $100.00 => no income taxes here. Not correct. The loss is deductible from other capital gains, and if no other capital gains - from your income (up to $3000 a year, until exhausted). Also, there are two different tax rate sets for capital gains: short term (holding up to 1 year) and long term (more than that). Short term capital gains tax matches ordinary income brackets, whereas long term capital gains tax brackets are much lower. |
How does delta of an option change with time if underlying price is constant? | null | As the option approaches expiry, the delta will approach zero or one, depending on whether you're in or out of the money. This might be easiest to conceptualise if you look at the option value as a function of the stock price, and then realise that the delta is the slope of that curve. Now, as we get closer to expiry, time value fades away, and we get closer and closer to the intrinsic value, which looks like this hockey stick: __/ As you see, close to expiry, if you're out of the money, you have nothing (with delta zero), while if you're in the money, you have a forward (with delta one). |
Why is the number of issued shares less than the number of outstanding shares | null | The formulae #issued shares = #outstanding shares + #treasury shares looks right. However it looks like the Treasury Shares are treated as -ve in accounting books and thus the outstanding shares are more than issued shares to the extent of Treasury shares. Further info at "Accounting for treasury stock" on wiki |
What is the difference between a stop order and a stop limit order? | null | Stop order is shorter term for stop-loss order. The point being that is intended as a protective measure. A buy stop order would be used to limit losses when an investor has sold a stock short. (Meaning that they have borrowed stock and sold it, in hopes that they can take advantage of a decline in the stock's price by replacing the borrowed stock later at a cheaper price. The idea is to limit losses due to a rising stock price.) Meanwhile, a sell stop order would be used to limit losses on a stock that an investor actually owns, by selling it before the price declines further. The important thing to keep in mind about stop orders is that they turn into market orders when the stop price is reached. This means that they will be filled at the best available price when the order is actually executed. In fast moving markets, this can be a price that is quite different from the stop price. A limit order allows an investor to ensure that they do not buy/sell a stock at more/less than the specified amount. The thing to keep in mind is that a limit order is not guaranteed to execute. A stop-limit order is a combination of a stop-loss order and limit order, in that it becomes a limit order (instead of a market order) when the stop price is reached. Links to definitions: Stop order Stop-limit order Limit order Market order |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | null | One of the reasons, apart from historical, is that different people have different tax liabilities which the employer may not be aware of. For example, in the US we don't pay taxes in source on investment income, and there are many credits and deductions that we can't take. So if I have a child and some interest income from my savings account - employer's withholding will not match my actual tax liability. There are credits for children, additional taxes for the interest, and the actual tax brackets vary based on my marital status and filing options I chose. So even the same family of two people married will pay different amounts in taxes if they chose to file separate tax returns for each, than if they chose to file jointly on one tax return. For anyone who've lived anywhere else, like you and me, this system is ridiculously complex and inefficient, but for Americans - that works. Mainly for the reason of not knowing anything better, and more importantly - not wanting to know. |
Should I buy a house with a friend? | null | There are lots of good reasons not to do this. HOWEVER if you do decide to, there are four things you need to consider: |
Will getting a second credit card help my credit rating? | null | No. Getting more credit lowers your credit utilization ratio (if you don't use it), which raises your credit rating, this can also be done by asking for a higher limit on your existing credit card. Also, there is a chance that the company you got your first card from won't pull your credit a second time when they go to the underwriter. As any extensions of credit lower your credit score, although the credit utilization ratio is weighted more heavily. |
Do dividend quotes for U.S. stocks include witheld taxes? | null | No. As a rule, the dividends you see in the distribution table are what you'll receive before paying any taxes. Tax rates differ between qualified and unqualified/ordinary dividends, so the distribution can't include taxes because tax rates may differ between investors. In my case I hold it in an Israeli account but the tax treaty between our countries still specifies 25% withheld tax This is another example of why tax rates differ between investors. If I hold SPY too, my tax rate will be very different because I don't hold it in an account like yours, so the listed dividend couldn't include taxes. |
Can I buy and sell a house quickly to access the money in a LISA? | null | Your first home can be up to £450,000 today. But that figure is unlikely to stay the same over 40 years. The government would need to raise it in line with inflation otherwise in 40 years you won't be able to buy quite so much with it. If inflation averages 2% over your 40 year investment period say, £450,000 would buy you roughly what £200,000 would today. Higher rates of inflation will reduce your purchasing power even faster. You pay stamp duty on a house. For a house worth £450,000 that would be around £12,500. There are also estate agent's fees (typically 1-2% of the purchase price, although you might be able to do better) and legal fees. If you sell quickly you'd only be able to access the balance of the money less all those taxes and fees. That's quite a bit of your bonus lost so why did you tie your money up in a LISA for all those years instead of investing in the stock market directly? One other thing to note is that you buy a LISA from your post tax income. You pay into a pension using your pre-tax income so if you're investing for your retirement then a pension will start with a 20% bonus if you're a lower rate taxpayer and a whopping 40% bonus if you're a higher rate taxpayer. If you're a higher rate taxpayer a pension is much better value. |
Is Amazon's offer of a $50 gift card a scam? | null | it's not a scam. it's not even too good to be true. frankly it's the lowest sign up bonus i've ever seen for a credit card. you would be better off signing up for a flagship card from one of the major banks (e.g. chase sapphire, citi double cash, discover it, amex blue). those cards regularly offer sign up bonuses worth between 400$ and 1000$. however, you can't get all the cards at once. noteably chase has a fairly firm limit of 5 new cards per 24 month. the other banks have similar, less publicized limits on who they will approve for a new card. so, by applying for this amazon card you are hurting your chances of getting far more lucrative sign up bonuses. it is however worth noting that those larger bonuses usually come with a minimum spending requirement (e.g. spend 1k$-3k$ in the first 3 months) |
How can rebuilding a city/large area be considered an economic boost? | null | Wikipedia's article on the Parable of the broken window mentions that Keynesians would argue that broken windows can be useful in depressed economies. I think Japan's economy was somewhat depressed, so if it applies anywhere, it'd apply in this scenario. |
What should I do with $4,000 cash and High Interest Debt? | null | This is the kind of scenario addressed by Reddit's /r/personalfinance Prime Directive, or "I have $X, what should I do with it?" It follows a fairly linear flowchart for personal spending beginning with a budget and essential costs. The gist of the flowchart is to cover your most immediate costs and risks first, while also maximizing your benefits. It sounds like you would fall somewhere around steps 1 and 3. (Step 2 won't apply since this is not pretax income.) If you don't already have at least $1000 reserved in an emergency fund, that's a great place to start. After that, you'll want to use the rest to pay down your debt. Your credit card debt is very high interest and should be treated as a financial emergency. Besides the balance of your gift, you may want to throw whatever other funds you have saved beyond one month's expenses at this problem. As far as which card, since you have multiple debts you're faced with the classic choice of which payoff method to use: snowball (lowest balance first) or avalanche (highest interest rate first). Avalanche is more financially optimal but less immediately gratifying. Personally, since your 26% APR debt is so large and so high interest, I would recommend focusing every available penny on that card until it is paid off, and then never use it again. Again, per the flowchart, that means using everything left over after steps 0-2 are fulfilled. |
What effect would a company delisting from the LSE to move to china have on shareholders? | null | Source Rule 41 of the AIM Rules sets out the procedure for delisting. In summary, a company that wishes to cancel the right of any of its trading securities must: The notification to the Exchange should be made by the company’s nominated adviser and should be given at least 20 business days prior to the intended cancellation date (the 20 business days’ notice requirement is a minimum). Any cancellation of a company’s securities on AIM will be conditional upon seeking shareholder approval in general meeting of not less than 75% of votes cast by its shareholders present and voting (in person or by proxy) at the meeting. The notification to shareholders should set out the preferred date of cancellation, the reasons for seeking the cancellation (for example annual fees to the Exchange, the cost of maintaining a nominated adviser and broker, professional costs, corporate governance compliance, inability to access funds on the market), a description of how shareholders will be able to effect transactions in the AIM securities once they have been cancelled and any other matters relevant to shareholders reaching an informed decision upon the issue of the cancellation. Cancellation will not take effect until at least 5 business days after the shareholder approval is obtained and a dealing notice has been issued by the Exchange. It should be noted that there are circumstances where the Exchange may agree that shareholder consent is not required for the cancellation of admission of a company’s shares, for example (i) where comparable dealing facilities on an EU regulated market or AIM designated market are put in place to enable shareholders to trade their AIM securities in the future or (ii) where, pursuant to a takeover which has become wholly unconditional, an offeror has received valid acceptances in excess of 75% of each class of AIM securities. The company’s Nominated Adviser will liaise with the Exchange to secure a dispensation if relevant. So you should receive information from the company regarding the due process informing you about your options. |
Stocks in India, what is the best way to get money to US | null | Convert the money into United States Dollars, put it in an NRE account in India and get 5% per annum for the USD. |
Is interest on a personal loan tax deductible? | null | Assuming USA: It is possible to make the interest deductible if you go to the trouble of structuring, and filing, the loan as an actual mortgage on a primary residence. Websearching "intra-family loan" will find several firms which specialize in this. It costs about $700 for all the paperwork and filing fees as of last time I checked, so unless you're going to pay at least three times that in interest over the life of the loan it probably isn't worth considering. (For an additional fee they'll take care of the payment processing, if you'd really rather be hands-off about it.) I have no idea whether the paperwork fees and processing fees can be deducted from the interest as a cost of producing that income. In theory that ought to be true, but I Am Not A Lawyer. Or accountant. Note: one of the interesting factors here is that the IRS sets a minimum interest rate on intra-family loans. It's pretty low (around 0.3%), so in most cases you can say you gifted the difference if you'd prefer to charge less... but that does set a floor on what the IRS will expect the lender to declare, and pay taxes on. There's a lot more that can be said about this, but since I am NOT an expert I'll refer you to those who are. I have no affiliation with any of this except as a customer, once; it seemed pretty painless but I can't claim to know whether they were really handling everything exactly correctly. The website seemed to do a pretty good job of explaining what choices had to be made and their effects, as well as discussing how these can be used to avoid excess gift taxes by spreading the gift over a number of years. |
Transfering money from NRE to saving account is taxable or not | null | Meagrely transferring money within your own accounts doesn't result in any tax, however legally once you are an NRI you cannot operate a savings account at all as per Reserve Bank Guidelines found here One option is for you to transfer to a joint account held by a close relative of yours with you and this would be tax free in India. |
How smart is it to really be 100% debt free? | null | The day I paid my last student loan payment and my last car payment was (January 4, 2000) a very happy day for me, being then 100% debt free. It is a very good feeling, especially since I was saving cash as well. It's a great thing to know that no-one "owns" you. Many others here have provided useful information about debt, and I know that paying off your existing loans will improve your credit rating, in case you want to go back into debt (which I did later in 2000, by buying a house). For most people, borrowing money to invest it is complicated (make sure you're not paying more on your borrowed $ than you make on your investment) due to the fact that most investments have risk involved. I would say that being debt-free is a very good goal, and there's a level of freedom it gives you. Just make sure you have your "rainy day" fund building while you're on your way to getting there. |
Mortgage loan implications when tearing down existing house and building new one? | null | You would probably be best off checking through your loan documents to see if anything is listed in it in regards to tearing down the existing house. Likely it is not allowed. Thinking about it logically, the house is collateral for the mortgage, and you are wanting to destroy the collateral. I would expect the bank would not be pleased. Semi related question (answers have some good info) - Construction loan for new house replacing existing mortgaged house? |
Why does my car loan interest go up despite making payments on-time? | null | Interest is calculated daily. Doing the math: Between 6-17 and 7-25 are 38 days, 200.29 / 38 = 5.27 interest per day. Between 7-25 and 8-17 are 23 days. 120.02 / 23 = 5.22 interest per day. The minimal difference is because the principal has already gone down a little bit. So you should expect ~5.20 x number of days for the next interest number coming up; slowly decreasing as the remaining principal debt decreases. Note that this is equivalent of an annual interest rate of over 20 %, which is beyond acceptable. In the current economy, this is ridiculously high. I recommend trying to get a refinancing with another provider; you should be able to get it for a third of that. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | null | If I understand you situation correctly, then the accepted answer is extremely misleading and incorrect. Your arrangement with your parents is definitely unreasonable. It is definitely not "similar to an interest-only loan". In an interest-only loan, like you can get from a bank, you will loan a sum of money, which you are expected to pay back at a certain time in the future, or when you sell the condo. But you pay back the original sum, not the value of property at selling time. For the access to the money you pay an interest to the bank. The bank gets their profits from the interest. The property only serves as collateral in case you are not able to make your interest payments. Another way to view it, is that your parent bought (a share of) your condo for investment reasons. In that case, they would expect to get their profits from the increase of the value of the property over time. That looks most like your situation. Granted, that is more risky for them, but that is what they choose to sign up for. But in that case it is not reasonable to charge your for interest as well, because that would mean they would get double profits. So how does the $500 monthly payment fit in? If it is interest, then it would work out to a yearly interest of about 5.2%. Where I live, that would nowadays be extremely high even for an interest-only mortgage from a bank. But I don't live in the USA, so don't know whether that is true there. I think in your situation, the $500 can only be seen as rent. Whether that is reasonable for your situation I cannot judge from here. It should be 75% of a reasonable rent for a condo like that. But in that case, your parents should also stand for 75% of the maintenance costs of the property, which you don't mention, and most of the property taxes and insurance fees. In short, no it is not a reasonable arrangement. You would be better of trying to get a morgage from the bank, and buy out your parents with it. |
Is there an online cost-basis calculator that automatically accounts for dividend re-investments and splits? | null | Google Finance portfolios take into account splits and cash deposits/withdrawals. |
Can SEP (Self employed person) borrow from me personally if it cannot buy with cash? | null | In most cases, it is not advisable for a self-employed individual to borrow from their personal savings to fund their pension. This is because it can jeopardize their personal financial security, as well as limit their ability to grow their pension over time.\n\nThere may be situations where a self-employed individual needs to fund their pension with non-cash assets, such as property or investments. In these cases, it may be possible to transfer ownership of these assets to the pension fund in exchange for shares or other assets. However, this process can be complex, and it is essential to seek professional financial advice before making any such transfers.\n\nIn summary, borrowing from personal savings to fund a self-employed pension is generally not advisable, and it is important to explore alternative funding options and seek professional financial advice before making any major financial decisions. |
What are “preferred” stocks? How are they different from normal (common) stocks? | null | I know this has already been answered and I know its frowned upon to dump a link, however, when it comes to investments it's best to get data from an 'official' source to avoid misinterpretations and personal opinions. The attached pdf is from the S&P and provides detailed, but not overwhelming, information regarding the types of preferreds, the risks & common terminology: http://us.spindices.com/documents/education/practice-essentials-us-preferreds.pdf Page 1: PREFERRED SECURITIES DEFINED Borrowing from two worlds, a preferred security has both equity and fixed income characteristics. As such, the preferred structure offers a flexible approach to structuring a preferred offering for an issuer. Companies have many reasons to issue preferred securities. Financial institutions, for example, need to raise capital. Many times they will use the preferred market because of any required regulatory requirements, in addition to cost considerations. Banks and financial institutions are required to maintain a certain level of Tier 1 capital—which includes common equity and perpetual non-cumulative preferreds—as protection against the bank’s liabilities. Issuing more common equity comes at a cost, including the dilution of existing shares, which a company may not want to bear. Preferred securities are a cheaper alternative approach to raising the capital. Companies often use preferred stock for strategic reasons. Some of these uses include: |
How exactly do dividend reinvestment plans (DRIPs) work? | null | I think Wikipedia offers a very good explanation: A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive quarterly dividends directly as cash; instead, the investor's dividends are directly reinvested in the underlying equity. The investor must still pay tax annually on his or her dividend income, whether it is received or reinvested. This allows the investment return from dividends to be immediately invested for the purpose of price appreciation and compounding, without incurring brokerage fees or waiting to accumulate enough cash for a full share of stock. So essentially, a dividend reinvestment plan is offered by companies directly, allowing investors to bypass brokerages, and immediately re-invests dividends rather than paying them out in cash. Investopedia also gives a straighforward definition: A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date. A DRIP is an excellent way to increase the value of your investment. Most DRIPs allow you to buy shares commission free and at a significant discount to the current share price. Most DRIPS don't allow reinvestments much lower than $10. I had a hard time finding a comprehensive listing of companies that offered DRPs (or DRIPs), but MyDollarPlan.com offers these suggestions: Finding a Dividend Reinvestment Plan: Computershare offers one-stop shopping for hundreds of dividend reinvestment plans. They offer a searchable list that can be filtered to easily find a dividend reinvestment plan that fits your needs. You can also use OneShare. Probably the best way to find out if a company offers a dividend reinvestment plan is to visit the company website. Most companies have an Investor Relations area that will highlight the various options available to shareowners. For example: Coca-Cola, Disney, and Wal-Mart. Hope this helps! @YMCbuzz |
Trading : how to deal with crashes (small or big) | null | You can buy out of the money put options that could minimize your losses (or even make you money) in the event of a huge crash. Put options are good in that you dont have to worry about not getting filled, or not knowing what price you might get filled with a stop-loss order, however, put options cost money and their value decays over time. It's just like buying insurance, you always have to pay up for it. |
What is today's price of 15 000 Euro given 15 years ago? | null | What you are positioning as a loan was not a loan at all. Your father bought something to be delivered in the future. Your aunt does not want to deliver it, so she should buy it back at whatever the current market value is. What is the price that your dad believes her share of the inheritance is currently worth? Is that based on actual appraisals and some sort of objective audit? If so, your aunt doesn't have much of a case. If not, then she could seek an audit to bolster her bargaining position. How much did your aunt benefit from having a place to live for the last 15 years. Was that benefit greater than some larger amount of money at an unknown future date? That's probably why she sold her inheritance 15 years ago. Now that the inheritance looks like it is going to be available soon, she wants to trade back after having enjoyed the use of your father's money. That might be okay, but simply paying back the original sum with inflation, but without interest, doesn't seem fair to your father. She may not be able to afford to give any more than what she is offering, in which case, she might want to consider offering the original sum now and some portion of her inheritance as interest on that original sum. I'm not taking sides in this one. If it were one of my siblings, I'd be inclined to give the benefit of the doubt and take a smaller amount back if I felt that the lesson was learned (and if I felt that he/she would make wise use of my gift to him/her). I have no idea what your father's current economic situation is, nor am I aware of any other baggage that might influence his feelings about his sister. It's as likely as not that money isn't really what is bothering him, in which case, the amount she repays may have little to do with bridging the divide between them. You might need to ask different questions in the Interpersonal Skills stack if you want to help your father feel better. |
Why does the share price tend to fall if a company's profits decrease, yet remain positive? | null | You are omitting how the company made 120 million in the previous year and may be facing a shrinking market and thus have poor future prospects. If the company is shrinking, what will the shares be worth down the road. Remember companies like AOL or Blackberry? There was a time they had big profits before things changed which is the part you aren't considering here. If the company has lost something big on its earnings, e.g. the oil wells it owned have run out of reserves or the patents on its key drugs have expired, then there could be the perception that the company won't be able to compete in the future to continue to deliver earnings. Some companies may well end up going broke as one could look at GM for a company that used to be one of the largest car companies in the world and yet it ended up going broke. |
Why can't poor countries just print more money? | null | Printing money doesn't mean that their wealth increases. It just devalues the money they already have. So it will just take more money to buy goods from another country. Printing money will also lead to over inflation which has its own set of problems such as: |
What are the pros and cons of investing in foreign markets? | null | The main rule of investing is finding the highest risk-adjusted capital return. Broadly speaking, an individual would seek to invest in a business where the profit is bigger than the overall risk taken.This is why diversification has proven to be one of the best ways to enhance risk-adjusted returns. It is believed that a diversified portfolio should hold at least eight uncorrelated assets that are spread across multiple areas, both industry-wise and geography-wise. Uncorrelated assets are those assets that are in no way related and do not influence one another. This means that in the eventuality of one investment failing, it will not affect the entire portfolio. Investing in foreign countries adds to geographical diversification and improves stability. Experts believe that one of the biggest mistakes investors make is to ignore the opportunities outside of their country. This includes small investors also, who don’t think they have portfolio sizable enough to include foreign investments. So index funds come to the aid of small investors by offering diversified foreign exposure. |
What's the point of a chargeback when they just ask the merchant whether they owe money to the buyer? | null | When you initiate a chargeback, the merchant has the right to dispute the chargeback. If they can provide proof that the purchase actually took place, the chargeback will fail. We don't know all the details of your situation, of course, but it appears from what you have said that the tax chain probably has documents that you signed agreeing to the charges. They prepared your return (even if they did a poor job), and so from their perspective, they have decided that they deserve to be paid. Whether or not they did a good job is a matter of opinion, of course; their position might be that they did it correctly, and the second business did it poorly. The chargeback is a powerful tool, but it is not a magic button that makes a charge disappear. If the merchant can show that a sale did indeed take place and show that the proper amount was charged, the chargeback will fail. For a service, it isn't enough usually to simply state that you were unsatisfied; if you received the service at the agreed-upon price, the charge is valid. A chargeback is sort of a nuclear option when it comes to getting a refund. There are negative ramifications and expenses every time a merchant gets a chargeback (even if they ultimately win), and so often they will be willing to work something out to avoid a chargeback. You should go to the merchant first, if you can, and ask for a refund before considering the chargeback option. If you file a chargeback without even giving them the opportunity to work it out with you, the merchant will usually want to fight back. |
Make your money work for you | null | First of all, never is too late to develop good habits. So, you know what you want to do and you are going about the how now... First, you should pay off any consumer debt except from mortgage which should be planned for. Prioritize your consumer debt (credit cards, consumer loans, etc) according to the interest rates, starting with the one with the highest interest and going to the one with the lowest one. Because you should make quite the investments to pay off this interest debt and still make a profit. Second, you should start saving some money. The 10% rule of thumb is a good one and for starters having aside the money you need to get by for at least 3 months is quite okay. As they say, cash is king. Now, that you actually realize the amount you can spare each month to start investing (assuming you had to do something of the aforementioned) it's time to see the risk you are comfortable taking. Different risk-taking views lead to different investing routes. So, assuming once again that you are risk averse (having a newborn baby and all) and that you want something more than just a savings account, you can start looking for things that don't require much attention (even more so if you are going on you own about it) such as low risk mutual funds, ETF (Exchange Traded Funds) and index funds to track indexes like FTSE and S&P500 (you could get an average annual return of 10-12%, just google "top safe etfs" for example and you could take a quick look at credible sites like forbes etc). Also, you can take a look at fixed income options such as government bonds. Last but not least, you can always get your pick at some value companies stocks (usually big companies that have proven track record, check warren buffet on this). You should look for stocks that pay dividends since you are in for the long run and not just to make a quick buck. I hope I helped a bit and as always be cautious about investing since they have some inherent risks. If you don't feel comfortable with making your own investment choices you should contact a specialist like a financial planner or advisor. No matter what the case may be on this, you should still educate yourself on this... just to get a grasp on this. |
Company stock listed in multiple exchanges? | null | If a company's shares trade in multiple exchanges, the prices in every exchange are very near to each other, otherwise you could earn money by doing arbitrage deals (buying in one, selling in the other) - and people do that once it becomes worth it. Which stock exchange you use is more a convenience for the buyer/seller - many investment banks offer only something local/near, and you have to go to specific investment banks to use other exchanges. For example, in Germany, it is easy to deal in Frankfurt, but if you want to trade at the the NASDAQ, you have to run around and find a bank that offers it, and you probably have to pay extra for it. In the USA, most investment banks offer NASDAQ, but if you want to trade in Frankfurt, you will have run around for an international company that offers that. As a stock owner/buyer, you can sell/buy your shares on any stock exchange where the company is listed (again, assuming your investment broker supports it). So you can buy in Frankfurt and sell in Tokyo seconds later, as nothing needs to be physically moved. Companies that are listed in multiple stock exchangs are typically large, and offer this to make trading their shares easier for a larger part of the world. Considering your 'theoretical buy all shares' - the shares are not located in the exchanges, they are in the hands of the owners, and not all are for sale, for various reasons. The owners decide if and when they want them offered for sale, and they also decide which stock exchange they offer them on; so you would need to go to all exchanges to buy them all. However, if you raise your offer price in one exchange only slightly, someone will see the arbitrage and buy them in the other locations and offer them to you in your stock exchange; in other words, for a small fee the shares will come to you. But again, most shares are typically not for sale. It's the same as trying to buy all Chevy Tahoes - even if you had the money, most owners wouldn't know or care about you. You would have to go around and contact every single one and convince them to sell. |
Recent college grad. Down payment on a house or car? | null | When I was in that boat a few years ago, I went for the car first. My thoughts: If I get the car first, I'm guaranteed to have a car that runs well. That makes it more convenient to commute to any job, or for social functions. I ended up dropping about $20k into a car (paid cash, I don't like being in debt). I chose to buy a really nice car, knowing it will last for many years to come - I'm expecting to not replace it for about 10 years from the purchase. I would urge you to consider paying in full for the car; dumping $20k+ is a lot, and there are plenty of nice cars out there in the $10-20k range that will work just fine for years to come. One benefit of paying in full is that you don't have a portion of your income tied into the car loan. The main reason I chose not to go for the house first had more to do with the difference in commitment. A home mortgage is a 30-year commitment on a large chunk of your income. With the job market and housing markets both currently working against you, it's better to wait until you have a large safety net to fall into. For example, it's always recommended to have several months worth of living expenses in savings. Compared to renting, having 6 or more months of mortgage payments + utilities + insurance + property taxes + other mandatory expenses (see: food, gas) comes out to a significant amount more that you should have saved (for me, I'm looking at a minimum of about $20k in savings just to feel comfortable; YMMV). Also, owning a house always has more maintenance costs than you will predict. Even if it's just replacing a few light bulbs at first, eventually you'll need something major: an appliance will die, your roof will spring a leak, anything (I had both of those happen in the first year, though it could be bad luck). You should make sure that you can afford the increased monthly payments while still well under your income. Once you're locked in to the house, you can still set aside a smaller chunk of your income for a new car 5-10 years down the road. But if you're current car is getting down to it's last legs, you should get that fixed up before you lock yourself in to an uncomfortable situation. Don't be in too much of a hurry to buy a house. The housing market still has a ways to go before it recovers, and there's not a whole lot to help it along. Interest rates may go up, but that will only hurt the housing market, so I don't expect it to change too much for the next several months. With a little bit of sanity, we won't have another outrageous housing bubble for many years, so houses should remain somewhat affordable (interest rates may vary). Also keep in mind that if you pay less that 20% down on the house, you may end up with some form of mortgage interest, which is just extra interest you'll owe each month. |
Fund or ETF that simulates the investment goals of an options “straddle” strategy? | null | Why bother with the ETF? Just trade the options -- at least you have the ability to know what you actually are doing. The "exotic" ETFs the let you "double long" or short indexes aren't options contracts -- they are just collections of unregulated swaps with no transparency. Most of the short/double long ETFs also only attempt to track the security over the course of one day -- you are supposed to trade them daily. Also, you have no guarantee that the ETFs will perform as desired -- even during the course of a single day. IMO, the simplicity of the ETF approach is deceiving. |
250k USD in savings. What's next? | null | You're off to a great start. Here are the steps I would take: 1.) Pay off any high-interest debt. 2.) Keep six to twelve months in a highly liquid emergency fund. If the banks aren't safe, also consider having one or two months of cash or cash-equivalents on the premises. 3.) Rent a larger apartment, if possible, until you've saved more. The cost of the land and construction will consume a very large portion of your net worth. Given the historical political instability in that region, mentioned by the previous comments, I would hesitate to put such a large percentage of your wealth in to real estate. 4.) Get a brokerage account that's insured and well known. If you're willing to take the five percent hit to move assets offshore, then consider Vanguard. I'm not sure if they'll give you an account but they're generally acknowledged as an amazing broker in the US with low fees and amazing funds. Five percent (12,500) is worth it in my opinion. As you accumulate more wealth, you can stop moving cash overseas and keep a larger mix domestically. 5.) Invest in your business and yourself even more. As far as finding new investment opportunities, I would go through the list of all the typical major asset classes and consider the pros and cons: fixed-income, stocks, currencies, real estate / REITs, own a small business, commodities etc., |
How to make a decision for used vs new car if I want to keep the car long term? | null | New cars are sold for about $500 over their blue book value. They drop in value by about 20% their first year. Used cars are sold for about $2,500 above their blue book. They depreciate like normal. My advice based on my personal experience is to get a new car. When buying a used car, remember that the previous owner sold it for a reason. You are buying someone else's problems. Average car is flipped every 4 years when it takes 5 years to pay it off. Don't do that...keep it for 5+ years if you get a new car. My knowledge comes from being a Chevrolet car salesman. This info is generalized and about 10 years old. |
New car: buy with cash or 0% financing | null | Cash price is $22,500. Financed, it's the same thing (0% interest) but you pay a $1500 fee. 1500/22500 = 6.6%. Basically the APR for your loan is 1.1% per year but you are paying it all upfront. Opportunity cost: If you take the $22,500 you plan to pay for the car and invested it, could you earn more than the $1500 interest on the car loan? According to google, as of today you can get 1 year CD @ 1.25% so yes. It's likely that interest rates will be going up in medium term so you can potentially earn even more. Insurance cost: If you finance you'll have to get comprehensive insurance which could be costly. However, if you are planning to get it anyway (it's a brand new car after all), that's a wash. Which brings me to my main point: Why do you have $90k in a savings account? Even if you are planning to buy a house you should have that money invested in liquid assets earning you interest. Conclusion: Take the cheap money while it's available. You never know when interest rates will go up again. |
Student loan payments and opportunity costs | null | Already a lot of great answers, but since I ask myself this same question I thought I'd share my 2 cents. As @user541852587 pointed out, behavior is of the essence here. If you're like most recent grads, this is probably the first time in your life you are getting serious about building wealth. Can you pay your loans down quickly and then have the discipline to invest just as much -- if not more -- than you were putting towards your loans? Most people are good at paying bills in full and on time, yet many struggle to "pay themselves" in full and on time. As @Brandon pointed out, you can do both. I find this makes a great deal of practical sense. It helps form good behaviors, boosts confidence, and "diversifies" those dollars. I have been paying double payments on my student loans while at the same time maxing out my IRA, HSA, & 401k. I also have a rental property (but that's another can of worms). I'm getting on top and feeling confident in my finances, habits, etc. and my loans are going down. With each increase in pay, I intend to pay the loans down faster than I invest until they're paid off. Again -- I like the idea of doing both. |
what is difference between stock and dividend? | null | From Wikipedia - Stock: The stock (also capital stock) of a corporation constitutes the equity stake of its owners. It represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt. Stockholders' equity cannot be withdrawn from the company in a way that is intended to be detrimental to the company's creditors Wikipedia - Dividend: A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, it can re-invest it in the business (called retained earnings), and pay a fraction of this reinvestment as a dividend to shareholders. Distribution to shareholders can be in cash (usually a deposit into a bank account) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or share repurchase. Wikipedia - Bond: In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, i.e. the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the second market. Thus, stock is about ownership in the company, dividends are the payments those owners receive, which may be additional shares or cash usually, and bonds are about lending money. Stocks are usually bought through brokers on various stock exchanges generally. An exception can be made under "Employee Stock Purchase Plans" and other special cases where an employee may be given stock or options that allow the purchase of shares in the company through various plans. This would apply for Canada and the US where I have experience just as a parting note. This is without getting into Convertible Bond that also exists: In finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. It is a hybrid security with debt- and equity-like features. It originated in the mid-19th century, and was used by early speculators such as Jacob Little and Daniel Drew to counter market cornering. Convertible bonds are most often issued by companies with a low credit rating and high growth potential. |
I spend too much money. How can I get on the path to a frugal lifestyle? | null | As others have said, doing a monthly budget is a great idea. I tried the tracking expenses method for years and it got me nowhere, I think for these reasons: If budgeting isn't your cup of tea, try the "pay yourself first" method. Here, as soon as you get a paycheck take some substantial portion immediately and use it to pay down debt, or put it in savings (if you have no debt). Doing this will force you to spend less money on impulse items, and force you to really watch your spending. If you take this option, be absolutely sure you don't have any open credit accounts, or you'll just use them to make up the difference when you find yourself broke in the middle of the month. The overall key here is to get yourself into a long term mind set. Always ask yourself things like "Am I going to care that I didn't have this in 10 years? 5 years? 2 months? 2 days even? And ask yourself things like "Would I perfer this now, or this later plus being 100% debt free, and not having to worry if I have a steady paycheck". I think what finally kicked my butt and made me realize I needed a long term mind set was reading The Millionaire Next Door by Tom Stanley. It made me realize that the rich get rich by constantly thinking in the long term, and therefore being more frugal, not by "leveraging" debt on real estate or something like 90% of the other books out there tell you. |
If I send money to someone on student visa in USA, will he need to pay taxes on that? | null | If i am not wrong, any business activities such should be declared on Year End Tax filing. If your friend is going to own that website either it is commercial or nonprofit, he has to declare in the year end taxation. |
How to realize capital gains before going from non-resident alien to resident alien in USA | null | Is this possible and will it have the intended effect? From the US tax perspective, it most definitely is and will. Is my plan not very similar to Wash Sale? Yes, except that wash sale rules apply for losses, not gains. In any case, since you're not a US tax resident, the US wash sale rules won't apply to you. |
Taxing GoFundMe Donations | null | I'm going to post this as an answer because it's from the GoFundMe website, but ultimately even they say to speak with a tax professional about it. Am I responsible for taxes? (US Only) While this is by no means a guarantee, donations on GoFundMe are simply considered to be "personal gifts" which are not, for the most part, taxed as income in the US. However, there may be particular, case-specific instances where the income is taxable (dependent on amounts received and use of the monies, etc.). We're unable to provide specific tax advice since everyone's situation is different and tax rules can change on a yearly basis. We advise that you maintain adequate records of donations received, and consult with your personal tax adviser. Additionally, WePay will not report the funds you collect as earned income. It is up to you (and a tax professional) to determine whether your proceeds represent taxable income. The person who's listed on the WePay account and ultimately receives the funds may be responsible for taxes. Again, every situation is different, so please consult with a tax professional in your area. https://support.gofundme.com/hc/en-us/articles/204295498-Am-I-responsible-for-taxes-US-Only- And here's a blurb from LibertyTax.com which adds to the confusion, but enforces the "speak with a professional" idea: Crowdfunding services have to report to the IRS campaigns that total at least $20,000 and 200 transactions. Money collected from crowdfunding is considered either income or a gift. This is where things get a little tricky. If money donated is not a gift or investment, it is considered taxable income. Even a gift could be subject to the gift tax, but that tax applies only to the gift giver. Non-Taxable Gifts These are donations made without the expectation of getting something in return. Think of all those Patriots’ fans who gave money to GoFundMe to help defray the cost of quarterback Tom Brady’s NFL fine for Deflategate. Those fans aren’t expecting anything in return – except maybe some satisfaction -- so their donations are considered gifts. Under IRS rules, an individual can give another individual a gift of up to $14,000 without tax implications. So, unless a Brady fan is particularly generous, his or her GoFundMe gift won’t be taxed. Taxable Income Now consider that same Brady fan donating $300 to a Patriots’ business venture. If the fan receives stock or equity in the company in return for the donation, this is considered an investment and is not taxable . However, if the business owner does not offer stock or equity in the company, the money donated could be considered business income and the recipient would need to report it on a tax return. https://www.libertytax.com/tax-lounge/two-tax-rules-to-know-before-you-try-kickstarter-or-gofundme/ |
Are REIT worth it and is it a good option to generate passive income for a while? | null | There are tax strategies you could take advantage of if you own the property. Find local real estate investors that like 'buy and hold'. Additional strategy is to buy a property and sell it with owner financing (you use a Residential Mortgage Loan Officer to facilitate.) What is great is you can get a great % real return on your money without being a landlord. |
Buy US ETF as foreigner — a bad idea? | null | A quick update for people finding this thread through Google. With the help of a few awesome Bogleheads, I compiled all the relevant research done into two Wiki articles: This includes comparing US to Irish domiciled ETFs, how to calculate tax withholding leakage and estate tax concerns. Hope you find this useful. |
What are some examples of unsecured loans | null | Unsecured loans are loans that have not been “secured” with any kind of collateral. For example, the bank does not have the ability to take your property or automobile if you stop making payments on an unsecured loan. These loans are sometimes referred “signature loans” due to the face your signature on the loan agreement is all that you deliver to the table. Unsecured loans are available in a variety of flavors. |
How can foreign investor (residing outside US) invest in US company stocks? | null | (Note: out of my depth here, but in case this helps...) While not a direct answer to your question, I'll point out that in the inverse situation - a U.S. investor who wants to buy individual stocks of companies headquartered outside US - you would buy ADRs, which are $-denominated "wrapper" stocks. They can be listed with one or multiple brokerages. One alternative I'd offer the person in my example would be, "Are you really sure you want to directly buy individual stocks?" One less targeted approach available in the US is to buy ETFs targeted for a given country (or region). Maybe there's something similar there in Asia that would eliminate the (somewhat) higher fees associated with trading foreign stocks. |
Is there a term for total money owed to you? | null | Is there a word for that $20k owed? Trade Receivables, Accounts Receivables, or just Receivables Is there a different word for that $30k "hypothetical" total? Current Assets (Includes Inventory and other short term assets) |
Non-EU student, living in Germany, working for a Swiss company - taxes? | null | Finally, I got response from finance center: "It doesn't matter where do you study, what does matter is where you live. So, once you live in Germany, you pay taxes in Germany. And it doesn't matter who you work for." So, there are two options to pay taxes: it's paid by an employer or an employee: If I would work for Swiss company, I need to show how much money I make every month (or year) to Finance Center. |
Options tax treatment | null | You owe no tax on the option transaction in 2015 in this case. How you ultimately get taxed depends on how you dispose of the position. If it expires, then you will have a short-term capital gain on the option position at expiration. If it is exercised, then the option is "gone" for tax purposes and your basis in the underlying is adjusted. From IRS Publication 550: If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the amount you received for the call when figuring your gain or loss. The gain or loss is long term or short term depending on your holding period of the stock. In your case, this will be a long-term capital gain. For completeness, if you buy to cover the option back from the market before expiration or exercise, then it is also a short-term capital gain. Also, keep in mind that this all assumes that this covered call is "qualified" so that it does not count as a straddle. You can find more about that in Pub 550. https://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010630 All of this is for US tax purposes. |
Average Price of a Stock | null | I would have to disagree with the other responders. In technical analysis of stock charts, various short and long term moving averages are used to give an indication of the trend of the stock in the short and long term, as compared to the current price. I would prefer to use the term moving average (MA) rather than average as the MA is recalculated every day (or at appropriate frequencies for your data) on the period you are using. I would also expand on the term "moving average". There are two that are commonly used Going back to the question, of the value of this number, For example if the current price is above the 200 day EWMA and also above the 30 day EWMA, then the stock is broadly trending upwards. Conversely if current price is below the 200 day EWMA and also below the 30 day EWMA, then the stock is broadly trending downwards. These numbers are chosen on the basis of the market you are trading in, the volatility and other factors. For another example of how a number of moving averages are used together, please have a read of Daryl Guppy's Multiple Moving Average, though this does not use moving averages as large as 200 days. |
How to exclude stock from mutual fund | null | Mutual funds invest according to their prospectus. If they declare that they match the investments to a certain index - then that's what they should do. If you don't want to be invested in a company that is part of that index, then don't invest in that fund. Short-selling doesn't "exclude" your investment. You cannot sell your portion of the position in the fund to cover it. Bottom line is that money has no smell. But if you want to avoid investing in a certain company and it is important to you - you should also avoid the funds that invest in it, and companies that own portions of it, and also probably the companies that buy their products or services. Otherwise, its just "nice talk" bigotry. |
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