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Value investing
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The June 2014 issue of Barclays Wealth's Compass magazine had a very nice succinct article on this topic: "Value investing – does a rules-based approach work?". It examines the performance of value and growth styles of investment in the MSCI World and S&P500 arenas for a few decades back, and reveals a surprisingly complicated picture, depending on sector, region and time-period. Their summary is basically: A closer look however shows that the overall success of value strategies derives mainly from the 1970s and 1980s. ... in the US, value has underperformed growth for over 25 years since peaking in July 1988. Globally, value experienced a 30% setback in the late 1990s so that there are now periods with a length of nearly 13 years over which growth has outperformed. So the answer to "does it beat the market?" is "it depends...". Update in response to comment below: the question of risk adjusted returns is interesting. To quote another couple of fragments from the piece: Since December 1974, [MSCI world] value has outperformed growth by 2.6% annually, with lower risk. This outperformance on a risk-adjusted basis is the so-called value premium that Eugene Fama and Kenneth French first identified in 1992... and That outperformance has, however, come with more risk. Historical volatility of the pure style indices has been 21-22% compared to 16% for the market. ... From a maximum drawdown perspective, the 69% drop of pure value during the financial crisis exceeded the 51% drop of the overall market.
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When people say 'Interest rates are at all time low!" … Which interest rate are they actually referring to?
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You are correct that it could refer to any of the types of interest rates that you've mentioned. In general, though, phrases such as "rising interest rates" and "falling interest rates" refer to the Federal Funds Rate or LIBOR. These are the interest rates at which banks in the U.S. and U.K., respectively, are lending money to each other.
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Selling put and call Loss Scenario Examples
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Here's a simple example for a put, from both sides. Assume XYZ stock trades at $200 right now. Let's say John writes a $190 out of the money put on XYZ stock and sells this put to Abby for the premium, which is say $5. Assume the strike date, or date of settlement, is 6 months from now. Thus Abby is long one put option and John is short one put option (the writer of the option is short the option). On settlement date, let's assume two different scenarios: (1) If the price of the stock decreases by $50, then the put that Abby bought is 'in the money'. Abby's profit can be calculated as being strike price 190 - current stock price 150 - premium paid 5 = $35 So not including any transaction fees, that is a $35 dollar return on a $5 investment. (2) If the price of the stock increases by $50, then the put that Abby bought is worthless and her loss was 100%, or her entire $5 premium. For John, he made $5 in 6 months (in reality you need collateral and good credit to be able to write sizable option positions).
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Pros & cons of investing in gold vs. platinum?
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One might hope for slightly more rationality in the platinum market. Rarely does one hear talk of "platinum bugs", rants about how every society on Earth has valued platinum as the One True Valuable Thing (tm), or seen presidential candidates call for the return to the platinum standard.
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Loan to son - how to get it back
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As per JohnFx's comment above, consider whether it's worth more to you to just write this off. If not, if you feel that your son will be able to consider this without taking it personally, or you're willing to risk that relationship, then talk to him about it. Lay out the reasons why you need the money. If there are other children, it might be a simple matter of fairness to them. Based on your idea of deducting the money from his inheritance, I assume that the value you're docking from his inheritance will go somewhere else. Offer alternatives. You say that you can't take any money from him now, but letting him know that he can pay you in the future in lieu of loss of inheritance might be worthwhile. Be prepared with an idea of what to suggest if he says he can pay you some amount of money. Figure out what might be an acceptable payment plan and how to handle it if, at some point, he can't make payments for a time. This is a potentially ugly situation, and I can't guarantee that it will turn out better, but the more you prepare for the questions he's going to ask, the better off you're going to be.
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In what ways can a public company ask for money?
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There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a "Tesla Bond", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity.
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Where can I get interesting resources on Commodities?
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Here are some pretty big name news agencies which have a section dedicated to commodities: CNN Bloomberg Reuters
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What does it mean that stocks are “memoryless”?
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This is an interesting question that may actually be better suited to Quant.SE. First of all, stock prices are random variables, or, to be more precise, stochastic processes (a time-ordered string of random variables). The alternative to being stochastic is being deterministic, and I doubt you believe that stock prices are deterministic (meaning, they are fully knowable in advance). The fact that real world events drive the randomness has no bearing on whether or not it is random. So, to start, I think you have confused the technical definition of random with a colloquial concept. Now, the heart of the question is whether stock prices are memoryless. Ultimately, this is an empirical question that has been addressed in many academic studies. The conclusion of most of this research is that stock prices are "almost" memoryless, in the sense that the distribution of future stock prices displays very little dependence upon past realizations, although a few persistent anomalies remain. One of the most robust deviations from memorylessness is the increase in the volatility of a stock following large declines. Another is persistence in volatility. In general, in fact, the volatility is far more predictable than the mean of stock price changes. Hence "memorylessness" is a far stronger assumption than the efficient markets hypothesis. The bottom line, however, is that the deviations from memorylessness are relatively small. As such, despite its limitations, it is a decent working assumption in some contexts.
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Is there any drawback in putting all my 401K into a money market fund?
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Yes. There are huge disadvantages to saving money in a money market account. Money market account can be a good place to save some of your emergency fund, because it's basically a cash account and you can withdraw from it at will, with few delays. It's liquid.
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Annualized Rate of Return on Stock Purchased in Tranches
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So, there is no truly "correct" way to calculate return. Professionals will often calculate many different rates of return depending on what they wish to understand about their portfolio. However, the two most common ways of calculating multi-period return though are time-weighted return and money-weighted return. I'll leave the details to this good Investopeadia article, but the big picture is time-weighted returns help you understand how the stock performed during the period in question independent of how you invested it it. Whereas money-weighted return helps you understand how you performed investing in the stock in question. From your question, it appears both methods would be useful in combination to help you evaluate your portfolio. Both methods should be fairly easy to calculate yourself in a spread sheet, but if you are interested there are plenty of examples of both in google docs on the web.
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How do you translate a per year salary into a part-time per hour job?
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There is no fixed formulae, its more of how much you can negotiate Vs how many others are willing to work at a lower cost. Typically in software industry the rates for part time work would be roughly in the range of 1.5 to 2 times that of the full time work for the same job. With the above premise roughly the company would be willing to pay $100,000 for 2000 hrs of Part time work(1), translating into around $50 per hour. How much you actually get would depend on if there is someone else who can work for less say at $30 at hour. (1) The company does not have 2000 hrs of work and hence its engaging part time worker instead of full time at lesser cost.
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How are proceeds from writing covered calls taxed?
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Successful covered calls are short term capital gains. The amount of time you have owned the underlying security is irrelevant. The gain occurred in the option period which will be an amount of days less than needed for a long term capital gain classification. Failed Covered calls can be either as the date you acquired the stock you are forced to sell determines their classification.
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Is there any downside snapping a picture (or scanning a copy) of every check one writes vs. using a duplicate check?
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For me, the main benefit of using duplicate checks is that the copy is created automatically. If I had to take an extra step, whether taking a photo or writing on a stub, I would probably not always remember to do it. There is also the issue that you might need to write a check when you don't have your smartphone with you, or it is broken or has a dead battery, etc. There are various pros and cons of having an electronic record versus a paper record. A paper copy of a check is more vulnerable to physical loss or intrusion, but an electronic record is more vulnerable to hacking. You also have to keep the images organized somehow, and take care of data security and backups for the images. You'll have to evaluate which is the greater concern for you. A minor side point is that check duplicates often omit the account number and obscure your signature. A photo of the original check would include both of these. As far as "evidence", it seems to me they're both equally good evidence that you wrote the check - but that's not really that useful. In most sorts of disputes, what you would need to prove is that you actually delivered the check to the intended recipient, and neither the photo nor the paper copy is evidence of that. You could have written the check, taken your photo / copy, and then torn it up.
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Home loan transferred to Freddie Mac — What does this mean?
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Lenders may sell your mortgage to other lenders for a fee. For example, your lender might sell your mortgage to the highest bidder who may want to purchase your mortgage by making a one time payment. For your lender that's a quick profit, for the new owner of your mortgage, that's long term returns for a one time fee. For your lender, that is forgoing long term returns for short term gains (and transfer of risk in case you default). (Very similar to how bonds work in a stock exchange!) What does this mean to you? Nothing. You will still keep making payments to your original lender. What does 'transfer of ownership has not been publicly recorded mean'? It means, when you are asked about ownership details regarding your mortgage, and this could be in tax forms or refinancing etc., you would enter your original lender's information and not Freddit Mac's! Pro-tip There are lots of scams based on this. You might receive an official looking letter in mail claiming your loan has been sold and you should start making payments to the new owner. DO NOT FALL FOR THIS! Call your original lender (use the phone number from your loan papers, not mail you received) and verify this information. And if this were to happen, your original lender would always inform you first. And hey, congrats on your new home! :)
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Covered call and put options as separate trades
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Yes, if the call expires worthless, leaving you with stock. Then you can exercise your put when the stock goes below put strike price.
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Are Certificates of Deposit worth it compared to investing in the stock market?
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Growth is how well the investment will grow on average. In the long term, this is a sure thing. Volatility is how much the value will jerk up and down in the short term. Do you want both... Or neither? When are you going to use the money? If it's IRA money you can't touch for 30 years, it really ought to be in the market, since growth is hugely important, and volatility is not a big concern. You're in it for the very long game, and volatility will average out, leaving pure growth. If the market drops 25% in 6 months, who cares? Stocks go up, stocks go down. It has 29 years to recover, and it will. If you are planning to buy a house in 6 months, you want that money in something like a CD, because volatility could be devastating: an untimely 25% drop in stock price could really, really suck.
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Are stocks always able to be bought and sold at market price?
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As others have noted, your definition of "market price" is a bit loose. Really whatever price you get becomes the current market price. What you usually get quoted are the current best bid and ask with the last transaction price. For stocks that don't trade much, the last transaction price may not be representative of the current market value. Your question included regulation ("standards bureau"), and I don't think the current answers are addressing that. In the US, the Securities and Exchange Commission (SEC) provides some regulation regarding execution price. It goes by the designation Regulation NMS, and, very roughly, it says that each transaction has to take the best available price at the time that it is executed. There are some subtleties, but that's the gist of it. No regulation ensures that there will be a counterparty to any transaction that you want to make. It could happen, for example, that you have shares of some company that you're never able to sell because no one wants them. (BitCoin is the same in this regard. There is a currently a market for BitCoin, but there's no regulation that ensures there will be a market for it tomorrow.) Outside of the US, I don't know what regulation, if any, exists.
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Difference between a mortgage and buy-to-let in UK
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Another factor that makes Buy to let more expensive is the risk involved. With a buy to let you are dependent on finding a tenant that will keep regular payments. if the property is left empty you need to finance the mortgage yourself putting you under financial strain and raising risk. Also as Chis mentioned they are regarded as a business enterprise, If the mortgage was to be taken by a business that would be very high risk for a bank as the business could dissolve leaving the bank out of pocket. Because of this it can be very difficult to get a buy to let through a business unless you are moving from a personal portfolio. For a regular mortgage these risks don't exist so this is reflected in lower interest repayments. It's because of these differences in risk that banks created buy to let so they can better manage those risks.
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Outstanding car bill, and I am primary but have not driven it for 2 years
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What can you do? Pay the loan or face the debt collectors. The finance company don't care who now keeps the car, or who drives it. There's money outstanding on the loan, and your signature on the loan form. That's why co-signing a loan for someone else so often ends in tears.
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Transfering money from NRE to saving account is taxable or not
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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.
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Understanding the T + 3 settlement days rule
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For margin, it is correct that these rules do not apply. The real problem becomes day trading funding when one is just starting out, broker specific minimums. Options settle in T+1. One thing to note: if Canada is anything like the US, US options may not be available within Canadian borders. Foreign derivatives are usually not traded in the US because of registration costs. However, there may be an exception for US-Canadian trade because one can trade Canadian equities directly within US borders.
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Advice for college student: Should I hire a financial adviser or just invest in index funds?
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Couple of clarifications to start off: Index funds and ETF's are essentially the same investments. ETF's allow you to trade during the day but also make you reinvest your dividends manually instead of doing it for you. Compare VTI and VTSAX, for example. Basically the same returns with very slight differences in how they are run. Because they are so similar it doesn't matter which you choose. Either index funds and ETF's can be purchased through a regular taxable brokerage account or through an IRA or Roth IRA. The decision of what fund to use and whether to use a brokerage or IRA are separate. Whole market index funds will get you exposure to US equity but consider also diversifying into international equity, bonds, real estate (REITS), and emerging markets. Any broker can give you advice on that score or you can get free advice from, for example, Future Advisor. Now the advice: For most people in your situation, you current tax rate is currently very low. This makes a Roth IRA a very reasonable idea. You can contribute $5,500 for 2015 if you do it before April 15 and you can contribute $5,500 for 2016. Repeat each year. You won't be able to get all your money into a Roth, but anything you can do now will save you money on taxes in the long run. You put after-tax money in a Roth IRA and then you don't pay taxes on it or the gains when you take it out. You can use Roth IRA funds for college, for a first home, or for retirement. A traditional IRA is not recommended in your case. That would save you money on taxes this year, when presumably your taxes are already low. Since you won't be able to put all your money in the IRA, you can put the rest in a regular taxable brokerage account (if you don't just want to put it in a savings account). You can buy the same types of things as you have in your IRA. Note that if your stocks (in your regular brokerage account) go up over the course of a year and your income is low enough to be in the 10 or 15% tax bracket and you have held the stock for at least a year, you should sell before the end of the year to lock in your gains and pay taxes on them at the capital gains rate of 0%. This will prevent you from paying a higher rate on those gains later. Conversely, if you lose money in a year, don't sell. You can sell and lock in losses during years when your taxes are high (presumably, after college) to reduce your tax burden in those years (this is called "tax loss harvesting"). Sounds like crazy contortions but the name of the game is (legally) avoiding taxes. This is at least as important to your overall wealth as the decision of which funds to buy. Ok now the financial advisor. It's up to you. You can make your own financial decisions and save the money but it requires you putting in the effort to be educated. For many of us, this education is fun. Also consider that if you use a regular broker, like Fidelity, you can call up and they have people who (for free) will give you advice very similar to what you will get from the advisor you referred to. High priced financial advisors make more sense when you have a lot of money and complicated finances. Based on your question, you don't strike me as having those. To me, 1% sounds like a lot to pay for a simple situation like yours.
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Understanding the phrase “afford to lose” better
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Well.... If you have alllll your money invested, and then there's a financial crisis, and there's a personal crisis at the same time (e.g. you lose your job) then you're in big trouble. You might not have enough money to cover your bills while you find a new job. You could lose your house, ruin your credit, or something icky like that. Think 2008. Even if there's not a financial crisis, if the money is in a tax-sheltered retirement account then withdrawing it will incur ugly penalities. Now, after you've got an emergency fund established, things are different. If you could probably ride out six to twelve months with your general-purpose savings, then with the money you are investing for the long term (retirement) there's no reason you shouldn't invest 100% of the money in stocks. The difference is that you're not going to come back for that money in 6 months, you're going to come back for it in 40 years. As for retirement savings over the long term, though, I don't think it's a good idea to think of your money in those terms. If you ever lose 100% of your money on the stock market while you've invested in diversified instruments like S&P500 index funds, you're probably screwed one way or another because that represents the core industrial base of the US economy, and you'll have better things to worry about, like looking for a used shotgun. Myself, I prefer to give the suggestion "don't invest any money in stocks if you're going to need to take it out in the next 5 years or so" because you generally shouldn't be worried about a 100% loss of all the money in stocks your retirement accounts nearly so much as you should be worried about weathering large, medium-term setbacks, like the dot-com bubble crash and the 2008 financial crisis. I save the "don't invest money unless you can afford to lose it all" advice for highly speculative instruments like gold futures or social-media IPOs. Remember also that while you might lose a lot of your money on the stock market, your savings accounts and bonds will earn you pathetic amounts by comparison, which you will slowly lose to inflation. If you've had your money invested for decades then even during a crash you may still be coming out ahead relative to bonds.
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What to do with a 50K inheritance [duplicate]
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First, don't borrow any more money. You're probably bankrupt right now at that income level. 2k/month is poverty level income, especially in some of the higher cost of living areas of California. At $2k per month of income, and $1300 of rent and utilities, you've only got 700 a month for food. The student loans are probably in deferment while your husband is in school. If so, keep them that way and deal with them when he lands a career track goal after grad school. The car loan is more than you can afford. Seriously consider selling the car to get rid of the note. Then use the cash flow that was going to the car loan to pay off the 'other' debt. A car is usually a luxury, but if it is necessary, be sure it is one that doesn't include a loan. Budget all of your income (consider using YNAB or something like it). Include a budget item to build an emergency fund. Live within your means and look for ways to supplement your income. With three of your own, you'd probably make an excellent baby sitter. As for the inheritance, find a low risk, liquid investment, such as 12 month CDs or savings bonds. Something that you can liquidate without penalty if an emergency arises. Save the money for if you get into a situation where there is no other way out. Hopefully you can have your emergency fund built up so that you don't need to draw on the inheritance. Set a date, grad school + landing + 90 days. If you reach that date and haven't had to use the inheritance, and you have a good emergency fund, put the inheritance in a retirement fund and forget about it. Why retirement fund and not a college fund for the kids? The best gift you can give them is to remain financially independent throughout your life. If you get to the point where you are fully funding your tax advantaged retirement savings, and you are ready to start wealth-building, that is the time to take part of that cash flow and set it aside for college funds.
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Is there a rule that a merchant must identify themself when making a charge
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In some case the customer wants the name to be cryptic or misleading. They don't want to advertise the true nature of the business they visited. In other cases the transaction may be reported through another business. A few years ago the local PTA was having a silent auction as a fundraiser. A local business allowed the PTA to use their credit card reader to process transactions over a certain amount. Of course when the credit card statement arrived it looked like you spent $500 at the florist. I have seen PayPal listed when donating to some small charities. I have noted another case where confusion can occur. I used a debit card to buy a soda from a vending machine: the name and location were the name of the vending machine company and the location of their main office. It didn't say soda machine city A. It said Joe's vending company city B. In most cases the business and the credit card company want to make it easy to identify the transactions to keep the cost of research and charge backs to a minimum.
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Is it practical to take actual delivery on a futures contract, and what is the process?
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Not all futures contracts are deliverable. Some futures are specified as cash settlement only. In the case of deliverable contracts, part of the specification of a futures contract will be the delivery locations. As per my answer to your previous question, please see the CME Rulebook for details of delivery points for the deliverable futures contracts traded on CME, CBOT, NYMEX, and COMEX. Assuming your agreement with your broker allows you to exercise your right to take delivery, your broker will facilitate your delivery. You will be required to pay the contracted amount (your buy price x contract size x number of lots), as well as a delivery fee, insurance, and warehousing fees. In addition, your broker may charge you a fee for facilitating the delivery. You will be required to continue to pay insurance and warehousing fees so long as your holding of the underlying commodity is held in the exchange's designated warehouse. If you wish to take delivery yourself by having the commodity removed from the warehouse and delivered to you personally, then you will need to arrange this delivery yourself. Warehouse/delivery points obviously vary according the contract being exercised. See the CME Rulebook for available delivery points. Some exchanges are more accommodating than others. The practicality of taking delivery very much depends on your personal circumstances. An investment bank taking delivery of treasury bonds would be more practical than an individual investor taking delivery of treasury bonds. This is because the individual investor would be required to deliver the bonds to a brokerage in order to sell them. In the case of non-financial futures deliveries, it is hard to imagine any circumstance where an individual taking delivery would be practical.
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Why do consultants or contractors make more money than employees?
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Note too that being a contractor means that you will unavoidably have periods between contracts; you tend to be out of work more often than a salaried employee would. You need to set your rates so your average income, including those down times, adds up to a living wage including all those benefits that aren't being covered. If a company hires a contractor, they understand that this is part of the trade-off. They avoid making a long-term commitment when they don't have a long-term need, and they accept that this convenience may cost a bit more in the short term.
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Buy home and leverage roommates, or split rent?
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It's doable, but there's a fair amount of risk involved. The biggest issue is that your roommates could move out. It's possible that they could have a falling out, get a job in a different city, or just move on. How difficult would it be to find another roommate? How many roommates can you lose and still afford to pay the mortgage, insurance, taxes, and all the rest of your living expenses? Even if you you retain all of your roommates until the mortgage is paid off, there's still some risk involved. If you were to lose your job, could you continue to make mortgage payments? Worst case scenario is that you could become unemployed for a time while home values in your State/City/neighborhood are crashing. Last, the position on landlord has the potential to be lucrative, but also comes with a fair amount of responsibility. It will be a drain on your time to maintain the house and to make sure you always have tenants. I know you said that your roommates are good about paying on time, but are you willing to evict a friend because they won't/can't pay rent? It's easier to ask the landlord for an extension on rent when you're friends. All that being said, I think that this idea is worth considering. My recommendation is that you consider every aspect of it, and proceed cautiously if you choose to do so.
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Investing in USD from the Eurozone (Jan 2015)
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No, this is not solid advice. It's a prediction with very little factual basis, since US interest rates are kept just as low and debt levels are just as high as in the Eurozone. The USD may rise or fall against the EUR, stay the same or move back and forth. Nobody can say with any certainty. However, it is not nearly as risky as "normal forex speculation", since that is usually very short term and highly leveraged. You're unlikely to lose more than 20-30% of your capital by just buying and holding USD. Of course, the potential gains are also limited.
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Re-financing/consolidating multiple student loans for medical school?
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Several student loans are backed by government guarantee and this will allow you to get attractive rates. This may require them to consolidate the three classes of loans separately. Many commercial banks offer consolidation services, one example is Wachovia discussed at https://www.wellsfargo.com/student/private-loan-consolidation/ Other methods of "consolidation" are of course anything that pays off the original loan. If available, using a parent's home equity line of credit to pay of the loans and then paying back the parents can save money. An additional benefit of HELOC-style loans is that they are very flexible in their payment terms. For example you may pay $25 per year to keep the account open and then only be required to make interest payments. Links: https://origin.bankrate.com/finance/college-finance/faqs-on-student-loan-consolidation-1.aspx
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Ideal investments for a recent college grad with very high risk tolerance?
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Sorry to be boring but you have the luxury of time and do not need high-risk investments. Just put the surplus cash into a diversified blue-chip fund, sit back, and enjoy it supporting you in 50 years time. Your post makes me think you're implicitly assuming that since you have a very high risk tolerance you ought to be able to earn spectacular returns. Unfortunately the risks involved are extremely difficult to quantify and there's no guarantee they're fairly discounted. Most people would intuitively realise betting on 100-1 horses is a losing proposition but not realise just how bad it is. In reality far fewer than one in a thousand 100-1 shots actually win.
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What should my finances look like at 18?
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The golden rule is "Pay yourself first." This means that you should have some form of savings plan set up, preferably a monthly automatic withdrawal that comes out the day after your pay is deposited. 10% is a reasonable number to start with. You are in a wonderful situation because you are thinking about this 10-15 years before most of us do. Use this to your advantage. You are also in a good situation if you can defer the purchase of the house (assuming prices don't rise drastically in the next few years -- which they might.) If your home situation is acceptable, then sit down with the parents and present a plan. Something along the lines of: I'd like to move out and start my life. However, it would be advantageous to stay here for a few years to build up a down payment and reserve. I'm happy to help out with expenses, but do need a couple years of rent-free support to get started. Then go into monk mode for one year. It's doable, and you can save a lot of cash. Then you're on the road to freedom.
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60% Downpayment on house?
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I put about that down on my place. I could have purchased it for cash, but since my investments were returning more interest than the loan was costing me (much easier to achieve now!), this was one of the safest possible ways of making "leverage" work for me. I could have put less down and increased the leverage, but tjis was what I felt most comfortable with. Definitely make enough of a down payment to avoid mortgage insurance. You may want to make enough of a down payment that the bank trusts you to handle your property insurance and taxes yourself rather than insisting on an escrow account and building that into the loan payments; I trust myself to mail the checks on time much more than I trust the bank. Beyond that it's very much a matter of personal preference and what else you might do with the money.
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Car finance (loan) insurance requirements (store car)
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Okay, definitive answer for this particular company (Toyota Finance) is (somewhat surprisingly, and glad I asked) it must be fully insured at all times, including liability, even if being stored. I asked at a dealership and they answered "just fire and theft (of course)" but I ended up calling their finance department and the answer was the opposite. So there you go. Thanks for the answers (and for trying to talk me out of wasting money).
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How to calculate how far a shorted stock's price can rise before broker issues a margin call?
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Most brokers have a margin maintenance requirement of 30%. In your example, it would depend on how much money you're borrowing from your broker on margin. Consider this: You have $250, and short AAPL at $500 on margin. This would be a common scenario (federal law requires investors to have at least 50% of their margin equity when opening a transaction). If your broker had a requirement of 30%, they would require that for your $500 position, you have at least $500 * .3 = $150 equity. Since you are currently above that number at $250, you will not be hit with a margin call. Say the price of AAPL doubles, and now your position is worth $1000. $1000 * .3 = $300, which is $50 above your initial equity. Your broker will now consider you eligible for a margin call. Most will not execute the call right away, you will often have some time to either sell/cover stock or add funds to your account. But not all brokers will warn you if you are breaking margin requirements, and sometimes margin calls can take you by surprise if you are not paying attention. Also, many will charge interest on extra margin borrowed.
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What's the difference between Term and Whole Life insurance?
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For most people Term is the way to go. I consider life insurance a necessity not an investment. See this article on SmartMoney.
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How can I find ISIN numbers for stock options?
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Because an equity option can be constructed at essentially any price by two willing counterparties on an exchange, there are not enough ISINs to represent the entire (i.e. infinite) option chain for even a single stock on a single expiration date. As a result, ISINs are not generated for each individual possible options contract. Instead the ISIN is used only to refer to the "underlying" symbol, and a separate formula is used to refer to the specific option contract for that symbol: So that code you pasted is not an ISIN but rather the standard US equity option naming scheme that you need to provide in addition to the ISIN when talking to your broker. Note that ISINs and formulas for referring to option contracts in other countries can behave quite differently. Also, there are many countries and markets that don't need ISINs because the products in question only exist on a single exchange. In those cases the exchange is pretty much free to make up whatever ID scheme it wants. P.S. Now I'm curious how option chains are identified for strike prices above $99,999. I looked up the only stock I can think of that trades above that price (BRK.A), but it doesn't seem to have an option chain (or at least Google doesn't show it) ...
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Why would a restaurant offer a very large cash discount?
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This could be a case of the new chip card technology and dealing with slow reimbursement turnaround time. I recently visited a restaurant who was not using the chip technology, and it refused my card after several attempts. I found out from my bank it was because the restaurant was not set up for chip and I had not eaten there before....I know at the other end it takes far longer for the funds to get to the merchant; banks don't want to part with other people's money.
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What is a “fiat” currency? Are there other types of currency?
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fiat in Latin means "let it be" or "let it happen" - as in "fiat lux!" meaning "let there be light!". Thus, fiat money means money that are created by the government decree - they would be random worthless pieces of paper otherwise, so the government says "let this paper be worth $100" and it becomes $100. Non-fiat money have some value that is beyond declaration - e.g., gold coin has the value of gold that is made of. Since 1971, almost all world currencies are fiat money.
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Why ever use a market order?
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I don't think you're missing anything. Many modern trading systems actually warn you when trying to enter a market order, asking if you are sure that you wouldn't prefer to set a limit. I fully agree with you that it is usually just better to define a limit even 20% higher than just doing a market trade. Let me give you some examples when you still might prefer to use a market order instead of a limit: But even in those two examples a (wide) limit order might just be the safer thing to do. So, what it really comes down to is speed: A market order has no other criterias to be defined, is thus entered faster and saves you a few seconds that might be crucial.
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Is the “Bank on Yourself” a legitimate investment strategy, or a scam?
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Technically, this doesn't seem like a scam, but I don't think the system is beneficial. They use a lot of half-truths to convince you that their product is right for you. Some of the arguments presented and my thoughts. Don't buy term and invest the rest because you can't predict how much you'll earn from the "rest" Also Don't invest in a 401k because you can't predict how much you'll earn They are correct that you won't know exactly how much you'll have due to stock market, but that doesn't mean the stock market is a bad place to put your money. Investing in a 401k is risky because of the harsh 401k withdrawal rules Yes, 401ks have withdrawal rules (can't typically start before 59.5, must start by 70.5) but those rules don't hamper my investing style in any way. Most Term Life Insurance policies don't pay out They are correct again, but their conclusions are wrong. Yes, most people don't die while you have a term insurance policy which is why Term life insurance is relatively cheap. But they aren't arguing you don't need insurance, just that you need their insurance which is "better" You need the Guaranteed growth they offer The chart used to illustrate their guaranteed growth includes non-guaranteed dividends. They invest $10,000 per year for 36 years and end up with $1,000,000. That's a 5% return! I use 10% for my estimate of stock market performance, but let's say it's only 8%. The same $10,000 per year results in over $2 Million dollars. Using 10.5% (average return of the S&P 500 over it's lifetime) the result is a staggering $3.7 MILLION. So if I'm looking at $3.7M vs. $1M, It costs me $2.7 Million dollars to give me the same coverage as my term life policy. That's one expensive Term Life Insurance policy. My personal favorite: Blindly following the advice of Wall Street and financial “gurus” such as Dave Ramsey and Suze Orman got you where you are. Are you happy with the state of your finances? Do you still believe their fairytale, “Buy Term (insurance) and Invest the Difference”? Yes, I sure do believe that fairytale and I'm prospering quite well thank you. :) While I don't think this is a scam, it's outrageously expensive and not a good financial choice.
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Paying for things on credit and immediately paying them off: any help for credit rating?
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One of the factors of a credit score is the "length of time revolving accounts have been established". Having a credit card with any line of credit will help in this regard. The account will age regardless of your use or utilization. If you are having issues with credit limits and no credit history, you may have trouble getting financing for the purchase. You should be sure you're approved for financing, and not just that the financing option is "available" (potentially with the caveat of "for well qualified borrowers"). Generally, if you've gotten approved for financing, that will come in the form of another credit card account (many contracting and plumbing companies will do this in hopes you will use the card for future purchases) or a bank loan account (more common for auto and home loans). With the credit card account, you might be able to perform a balance transfer, but there are usually fees associated with that. For bank loan accounts, you probably can't pay that off with a credit card. You'll need to transfer money to the account via ACH or send in a check. In short: I wouldn't bet on paying with your current credit card to get any benefit. IANAL. Utilizing promotional offers, whether interest-free for __ months, no balance transfer fees, or whatever, and passing your debt around is not illegal, not fraudulent, and in many cases advised (this is a link), though that is more for people to distribute utilization across multiple cards, and to minimize interest accrued. Many people, myself included, use a credit card for purchasing EVERYTHING, then pay it off in full every month (or sometimes immediately) to reap the benefit of cash back rewards and other cardholder benefits. I've also made a major payment (tuition, actually) on a Discover card, and opened up a new Visa card with 18-months of no interest and no balance transfer fees to let the bill sit for 12 months while I finished school and got a job.
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Ballpark salary equivalent today of “healthcare benefits” in the US?
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Many answers here have given what look to be useful perspectives on your question. I want to point out an interesting technical issue. If an employer contracts with an insurer, it agrees to cover all employees (or all that fill some pre-specified definition and no one else), and to offer only a limited range of options. If you buy insurance directly, you obviously have a huge range of choices, including the (technically illegal) one of no insurance at all. Your first thought is probably, "Hey, that's great! More options, more chances to pick the plan that's right for me." Sorry, no. Yes, you have more options, but so does everyone else. If you are working for some large company, you get insurance, period. If you suspect you have an expensive health condition, you cannot buy more insurance; if you believe yourself to be healthy as a horse, you cannot get skimpier insurance and pocket the difference. Healthy people and sick people are all in the same predictable pool. If you buy insurance freely, the insurer knows that the sicker you are, the more likely you are buy insurance, a phenomenon called adverse selection. As a result, the premiums (fees) a person buying his own insurance pays are much higher, because most of his fellow policy-holders are sickly -- even if he himself is just risk-averse. On the other hand, if you are risk-neutral, if you can survive a $10,000 bill if it happens to arise, you can save big by finding the skimpiest imaginable insurance, where all your fellow policy-holders will be hale and healthy people like yourself.
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How to fund sabbatical to prepare house for sale?
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I'll write this up as a more formal answer, here. I'd suggest looking into a Home Equity Line of Credit, or HELOC. You didn't mention in your question how much equity you have in the home, but assuming at least 20%, you might be able to open a HELOC with a line of $40,000. My experience is that you can do 50% of your equity, but depends on the bank. Here are a few notes that are generally in play with HELOC's (YMMV, so be sure to know the specifics before signing on the line) Doing this, at least when we did 8 years ago, did not subject us to PMI. There are certainly plenty of things to research, but it sounds like you're pretty astute based on how you're evaluating the financial side of this endeavor. There are no guarantees in real estate. Houses could be selling like crazy now, but in 6 months they might not. It certainly sounds like that's a lower risk in your area, but you never know what might happen. If you're taking on this extra line of credit, make sure that it's something you could afford should the worst case scenario happen. Equity loans are also available. This is a more traditional fixed-rate loan rather than line of credit, so you'd be looking at set monthly payments rather than the flexibility of paying interest only when you need to. There's a brief write-up on the differences here. I have also heard of a construction loan, which falls into the same category as the aforementioned options, but I can't speak to today's market on those.
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What are a few sites that make it easy to invest in high interest rate mutual funds?
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If you want a ~12% rate of return on your investments.... too bad. For returns which even begin to approach that, you need to be looking at some of the riskiest stuff. Think "emerging markets". Even funds like Vanguard Emerging Markets (ETF: VWO, mutual fund, VEIEX) or Fidelity Advisor Emerging Markets Income Trust (FAEMX) seem to have yields which only push 11% or so. (But inflation is about nil, so if you're used to normal 2% inflation or so, these yields are like 13% or so. And there's no tax on that last 2%! Yay.) Remember that these investments are very risky. They go up lots because they can go down lots too. Don't put any money in there unless you can afford to have it go missing, because sooner or later you're likely to lose something half your money, and it might not come back for a decade (or ever). Investments like these should only be a small part of your overall portfolio. So, that said... Sites which make investing in these risky markets easy? There are a good number, but you should probably just go with vanguard.com. Their funds have low fees which won't erode your returns. (You can actually get lower expense ratios by using their brokerage account to trade the ETF versions of their funds commission-free, though you'll have to worry more about the actual number of shares you want to buy, instead of just plopping in and out dollar amounts). You can also trade Vanguard ETFs and other ETFs at almost any brokerage, just like stocks, and most brokerages will also offer you access to a variety of mutual funds as well (though often for a hefty fee of $20-$50, which you should avoid). Or you can sign up for another fund providers' account, but remember that the fund fees add up quickly. And the better plan? Just stuff most of your money in something like VTI (Vanguard Total Stock Market Index) instead.
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Single employee - paying for health insurance premiums with pre-tax money
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Pre tax insurance is not possible unless the emplyer provides hsa and do a payroll deduction. Obamacare is all post tax and you can do deduction if your expenses exceeds 10%of your income
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Avoiding timing traps with long term index investing
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What are the risks pertaining to timing on long term index investments? The risks are countless for any investment strategy. If you invest in US stocks, and prices revert to the long term cyclically adjusted average, you will lose a lot of money. If you invest in cash, inflation may outpace interest rates and you will lose money. If you invest in gold, the price might go down and you will lose money. It's best to study history and make a reasonable decision (i.e. invest in stocks). Here are long term returns by asset class, computed by Jeremy Siegel: $1 invested in equities in 1801 equals $15.22 today if was not invested and $8.8 million if it was invested in stocks. This is the 'magic of compound interest' and cash / bonds have not been nearly as magical as stocks historically. 2) How large are these risks? The following chart shows the largest drawdowns (decreases in the value of an asset) since 1970 (source): Asset prices decrease in value frequently. Financial assets are volatile, but historically, they have increased over time, enabling investors to earn compounded returns (exponential growth of money is how to get rich). I personally view drawdowns as an excellent time to buy - it's like going on a shopping spree when everything in the store is discounted. 3) In case I feel not prepared to take these risks, how can I avoid them? The optimal asset allocation depends on the ability to take risk and your tolerance for risk. You are young and have a long investment horizon, so if stocks go down, you will have plenty of time to wait for them to go back up (if you're smart, you'll buy more stocks when they go down because they're cheap), so your ability to bear risk is high. From your description, it seems like you have a low risk tolerance (despite a high ability to be exposed to risk). Here's the return of various asset classes and how the average investor has fared over the last 20 years (source): Get educated (read Common Sense on Mutual Funds, A Random Walk Down Wall Street, etc.) and don't be average! Closing words: Investing in a globally diversified portfolio with a dollar cost averaging strategy is the best strategy for most investors. For investors that are unable to stay rational when markets are volatile (i.e. the investor uncontrollably sells their stocks when stocks decrease 20%), a more conservative asset allocation is recommended. Due to the nature of compounded interest, a conservative portfolio is likely to have a much lower future value.
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What options do I have at 26 years old, with 1.2 million USD?
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Wow, everyone tells you different investment strategies. You have all your life ahead of you. Your main focus should not be getting the best return rate, but ensuring your existence. Who cares if you get 7% if you'll lose all in the next market crash and stand on the street with no education, no job and nothing to fall back on? I would go a completely different route in your place: The best advise given above was to not consider this as an option to never work again. It's not enough money for that, unless you want to live poorly and always be afraid that the next financial crises wipes you out completely.
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Should I learn to do my own tax?
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If you've been using TurboTax, let me suggest a compromise: Let TTax fill out the forms, but then print them out and go through it again by hand. If you don't get the same numbers, investigate why. If you do, you can probably conclude that you could do it by hand if you really want to, especially if you have the previous year's returns as a reference. (I've gone through every version of this from before personal tax software existed thru hand-constructed spreadsheets to commercial software and e-filing (federal only; I refuse to pay for something that reduces THEIR work). I can't use the free online version -- my return's got complications it won't handle -- and I'm uncomfortable putting that much data on a machine I don't control, so I'm still buying software each year. I COULD save the money, but it's worth a few bucks to me to make the process less annoying.) Late edit: Note that a self-constructed spreadsheet is one answer to the annoyance of pencil and paper -- you're still doing all the data manipulation yourself, but you're recording HOW you manipulated it as you go, and if numbers change you don't have to redo all the work. And it avoids raw math errors. It does require that you enter all the formulas rather than just their results, and figuring out how to express some things in stylesheet form can be a nuisance, but it isn't awful... and once you've done it (assuming you got it right) updating it for the next year is usually not hard unless you've introduced a completely new set of issues.
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Relative worth of investment versus spending for the economy
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I believe you're looking for some sort of formula that will determine how changes in savings, investing, and spending will affect economic growth. If such a formula existed (and worked) then central planning would work since a couple of people could pull some levers to encourage more savings, or more investing, or more spending - depending on what was needed at that particular time. Unfortunately, no magic formula exists and so no person has enough knowledge to determine what the proper amount of savings, investing, or spending should be at a given time. I found this resource particular helpful in describing the interactions between savings, consumption, and investing.
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How does the purchase of shares on the secondary market benefit the issuing company?
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First, the stock does represent a share of ownership and if you have a different interpretation I'd like to see proof of that. Secondly, when the IPO or secondary offering happened that put those shares into the market int he first place, the company did receive proceeds from selling those shares. While others may profit afterward, it is worth noting that more than a few companies will have secondary offerings, convertible debt, incentive stock options and restricted stock that may be used down the road that are all dependent upon the current trading share price in terms of how useful these can be used to fund operations, pay executives and so forth. Third, if someone buys up enough shares of the company then they gain control of the company which while you aren't mentioning this case, it is something to note as some individuals buy stock so that they can take over the company which happens. Usually this has more of an overall plan but the idea here is that getting that 50%+1 control of the company's voting shares are an important piece to things here.
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How to distinguish gift from payment for the service?
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Most people will never need to pay federal gift taxes. The federal gift taxes start after giving away 5.34 million over the course of your life. This number is adjusted annually for inflation. There are only two states that I know of which impose state gift taxes (Connecticut and Minnesota); in Connecticut, you need to start paying taxes if the lifetime value of your gifts exceed two million. In Minnesota, it starts at 1 million. The federal tax is paid for by the person making the gift, unless other arrangements are made. There is an annual exclusion amount of approximately $14,000. You can give up to this amount to any number of recipients and it is not considered taxable. Therefore, when you give $100 to someone, it is not a taxable event. If you do make a gift to an individual in excess of 14k, you'll need to file a gift tax return (IRS Form 709). When you file form 709, you won't need to pay taxes until the 5.34 million is exceeded. Instead, you can claim an exemption. Since most people don't exceed that amount, its rare to ever pay taxes even when exceeding the annual exclusion amount. The annual exclusion amount is adjusted each year for inflation.
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Should I charge my children interest when they borrow money?
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Because this is Money.SE and you're connecting it to offspring, I'd think about a discussion with them to get their agreements. From my perspective, anything (my wife and) I have will go to offspring in the end. As such, everything borrowed and not repaid simply reduces the estate by that much. Among multiple offspring, such reductions should be against the borrower rather than spreading it out. That should be accounted for in whatever will is created. This would be the discussion point. It might also be discussed how or even if any interest should accrue for unpaid amounts. If, for example, a 1% APR is agreed upon for unpaid loans, then the final principle+interest amount is taken off of the borrower's inheritance. Existing outstanding loans might (or might not!) be useful examples for sample calculations if desired or needed. (If nothing else, they might serve as reminders that loans were not forgotten.) By having such a discussion, you can show that you are trying to plan for a fair distribution of your estate, perhaps thereby sidestepping any concern about charging interest to offspring for repaid loans. At the same time, you're handing over some financial responsibility, giving them a power of personal choice, which seems to be a part of what you're concerned about. Once such a discussion is started, it's possible that any question of interest will resolve itself naturally. The discussion almost necessarily must include all offspring at once. One will find it harder to negotiate from a standpoint of pure self-interest without objection from another. Think beforehand about what will be said and about what responses might come. Think things through as much as you can.
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Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here?
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The rent payment is in principle taxable. However, you should be able to take advantage of the "rent a room" scheme, and the proposed rent falls well under the £7,500/year tax threshold for that. So no tax will be actually payable and you don't have to formally declare it as long as you stay below that threshold. You should also be fairly well legally protected in case you do split up in future and you want to remove her. As you would be living there too, she would just be a lodger, not a tenant (technically, an "excluded occupier"). If you did want her to leave you would only need to give reasonable notice and wouldn't need a formal court order if you needed to force her to go. As JBentley points out, there have been court cases where domestic partners contributing to household expenses while the other partner paid the mortgage have later been able to claim that this implied joint ownership. This was on the basis of a "constructive trust" being implicitly setup by the way they arranged their finances. In your case, if there's a clear intention, formalised in writing, for the money to be treated as rent rather than a contribution towards purchasing the property, I think it should make it very hard to claim the contrary later. I would also suggest you be clear about whether the rent includes a share of the utility bills, and that things like groceries would be handled separately and split 50:50 or whatever. As pointed out in a comment, there are template agreements for lodgers you could use a starting point (e.g. this one), but it's likely you'd need to customise it to your circumstances. Another point made in another answer is that there's potential upcoming legislation to give some rights to cohabiting partners. In the current draft, those would kick in after three years or having children. If the bill does come into effect, you'd also be able to sign an opt out, but only after getting legal advice, and it would still be possible (though presumably hard) to persuade a court to overturn an opt out. Overall that does create a small risk to you, but not one that comes directly from your girlfriend paying rent. It's likely that if you are both on an equal financial footing and had always kept your finances separate, that there wouldn't be any award made anyway. And you can't run your entire life on hypothetical risks.
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Should I pay cash or prefer a 0% interest loan for home furnishings?
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There are lots of good points here already, but something that hasn't been mentioned yet is what would happen if the purchased items break or are somehow defective? Depending on the warranty and how trustworthy the company is, there could be an advantage to not having fully paid for the item yet when a defect is discovered, as it might incentivize the company to be more attentive to your warranty claim, since they are faced with knowing that you could stop making payments if they don't act in a timely manner. Note I'm not suggesting you stop making payments in this case, just that companies (and banks) are oftentimes more willing to work with you when you owe them money.
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I'm 18. How to build good monthly income at my 20's?
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Market rate of return averages about 8% annually (sometimes more, sometimes less or negative). To get 30k monthly -- even taking that as pretax -- you're talking about 360k yearly. Divide that by 0.08 and you need to have savings of 4.5 million--- and really you should double that for safety.. Tl;dr: forget it. Added thought: If you really have $20k/month coming in, you really have no business asking the Internet for advice. Hire a professional financial advisor (not a broker, someone who is paid a flat fee for their expertise and has no incentives to give you less-than-optimal advice). . The money they will save/make for you will more than pay for their hire.
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Would it make sense to sell a stock, then repurchase it for tax purposes?
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What you're talking about is called "tax gain harvesting," and it is considered good tax management. From The Oblivious Investor, investors in the 10% or 15% bracket pay 0% tax on long-term capital gains. For an interesting take on never paying income taxes again, check out Go Curry Cracker. You can claim up to $70,000 or so in capital gains before paying any taxes if you are the 10% or 15% tax bracket.
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Reason for “qualified” buyer requirements to exercise stock options/rights spun off from parent company?
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The fact that your shares are of a Canadian-listed corporation (as indicated in your comment reply) and that you are located in the United States (as indicated in your bio) is highly relevant to answering the question. The restriction for needing to be a "qualified institutional buyer" (QIB) arises from the parent company not having registered the spin-off company rights [options] or shares (yet?) for sale in the United States. Shares sold in the U.S. must either be registered with the SEC or qualify for some exemption. See SEC Fast Answers - Securities Act Rule 144. Quoting: Selling restricted or control securities in the marketplace can be a complicated process. This is because the sales are so close to the interests of the issuing company that the law might require them to be registered. Under Section 5 of the Securities Act of 1933, all offers and sales of securities must be registered with the SEC or qualify for some exemption from the registration requirements. [...] There are regulations to follow and costs involved in such registration. Perhaps the rights [options] themselves won't ever be registered (as they have a very limited lifetime), while the listed shares might be? You could contact investor relations at the parent company for more detail. (If I guessed the company correctly, there's detail in this press release. Search the text for "United States".)
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Should I Use an Investment Professional?
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People ... are nearly twice as likely to ... feel confident Great, confidence is amazing. That and $5 will buy you a cup of coffee. 44% [who hired a pro] have $100K or more [vs.] 9% of DIYers There's no way to examine these numbers without a link to the source, but it stands to reason that if you have a plan that you're sticking to you'll save more money than if you are just investing haphazardly. It's too bad that we can't see what the returns are for those using a pro vs. DIYers. That would be much more valuable than an arbitrary dollar level. Unfortunately $100K isn't really that much money if you live in the US, so it's an irrelevant talking point. The real question is whether investment knowledge is readily available to the masses or if having a person who specializes in finance is required to make good decisions about investment. I think the fact that the conventional wisdom prefers index funds to actively managed funds demonstrates that investment professionals are less useful than they might have been even a decade or two ago. If money should be spent on professional advice, it's probably better spent on CPAs or other tax professionals who can help optimize your investments for tax efficiency, though even that is now available as more common knowledge.
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How to choose a company for an IRA?
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The fees for Vanguard and Fidelity IRA housing cannot be lower, because they are zero. Depending on the fund you invest in, one or the other will have pretty low fees and are often the lowest in the industry. I don't qualify for TIAA-CREF, but my mother does and she loves them. She can call up and get some advice for free. I would not qualify it as the best advice in the world, but it certainly isn't horrible. So it really depends on what you are looking for. If you want a little investment advice, I would go with TIAA-CREF. If you are a do it yourself-er go with Vanguard.
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How can a person protect his savings against a country default?
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These have the potential to become "end-of-the-world" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece.
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What happens if I intentionally throw out a paycheck?
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How/when does my employer find out? Do they get a report from their bank stating that "check 1234 for $1212.12 paid to John Doe was never deposited" or does it manifest itself as an eventual accounting discrepancy that somebody has to work to hunt down? The accounting department or the payroll company they use will report that the check was not deposited. The bank has no idea that a check was written, but the accounting deportment will know. The bank reports on all the checks that were cashed. Accounting cares because the un-cashed check for $1212.12 is a liability. They have to keep enough money in the bank to pay all the liabilities. It shouldn't be hard for them to track down the discrepancy, they will know what checks are outstanding. Can my employer punish me for refusing the money in this way? Do they have any means to force me to take what I am "owed?" They can't punish you. But at some time in the future they will will tell their bank not to honor the check. They will assume that it was lost or misplaced, and they will issue a new one to you. When tax time comes, and I still have not accepted the money, would it be appropriate to adjust my reported income down by the refused amount? You can't decide not to report it. The company knows that in year X they gave you a check for the money. They are required to report it, since they also withheld money for Federal taxes, state taxes, payroll taxes, 401K, insurance. They also count your pay as a business expense. If you try and adjust the numbers on the W-2 the IRS will note the discrepancy and want more information. Remember the IRS get a copy of every W-2. The employer has to report it because some people who aren't organized may not have cashed a December check before the company has to generate the W-2 in late January. It would confuse everything if they could skip reporting income just because a check wasn't cashed by the time they had to generate the W-2.
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Price graphs: why not percent change?
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The actual price is represented on charts and not the change in price as a percentage, because it is the actual price which is used in all other parts of analysis (both technical and fundamental), and it is the actual figure the security is bought and sold at. A change in price has to be relative to a previous price at a previous time, and we can easily work out the change in price over any given time period. I think what you are concerned about is how to compare a certain actual price change in low priced securities to the same actual price change in a higher priced securities. For example: $1.00 rise in a $2.00 stock representing a 50% increase in price; $1.00 rise in a $10.00 stock representing a 10% increase in price. On a standard chart both of these look the same, as they both show a $1.00 increase in price. So what can we do to show the true representation of the percentage increase in price? It is actually quite simple. You view the chart using a log scale instead of a standard scale (most charting packages should have this option). What may look like a bubble on a standard scale chart, looks like a healthy uptrend on a log scale chart and represents a true picture of the percentage change in price. Example of Standard Price Scale VS LOG Price Scale on a Chart Standard Price Scale On the standard scale the price seems to have very little movement from Mar09 to Jan12 and then the price seems to zoom up after Jan12 to Mar13. This is because a 4% increase (for example) of $0.50 is only $0.02, whilst a 4% increase of $7.00 $0.28, so the increases seem much bigger at the end of the chart. LOG Price Scale On the LOG chart however, these price changes seem to be more evenly displayed no matter at what price level the price change has occurred at. This thus give a better representation of how fast or slow the price is rising or falling, or the size of the change in price.
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Student loan payments and opportunity costs
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The only real consideration I would give to paying off the debt as slowly as possible is if inflation were much higher than it is now. If you had a nice medium to low interest (fixed rate) loan, like yours, and then inflation spiked to 7-8%, for example, then you're better off not paying it now because it's effectively making you money (and then when inflation calms back down, you pay it off with your gains). However, with a fairly successful and active Federal Reserve being careful to avoid inflation spikes, it seems unlikely that will occur during your time owing this debt - and certainly isn't anywhere near that point now. Make sure you're saving some money not for the return but for the safety net (put it in something very safe), and otherwise pay off your debt.
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Can I cash a cashier's check at any bank?
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At least in the US, a Cashier's Check is just like a regular personal check - only it's guaranteed by the bank itself, so the person accepting it can be pretty certain the check won't be returned for insufficient funds...if the check is genuine! Most banks therefore have a policy for cashier's checks that is very similar to their policies on regular checks and money orders: if you are a member with an account in good standing, they'll make all or part of the money available to you according to their fund availability policy, which is usually anywhere from "immediately" to 7-10 days. With amounts over $5,000, banks will tend to put a hold on the funds to ensure it clears and they get their money. If you are not a member then many banks will refuse to cash the check at all, unless the cashier's check is drawn on on that brand of bank. So if the cashier's check is issued by, say, Chase Bank, Chase banks will usually be willing to cash out the entire check to you immediately (with properly provided ID). Because the bank is guaranteed by them they are able to check their system and ensure the check is real and can clear the check instantly. This policy isn't just up to individual banks entirely, as it is defined by United States federal banking policies and federal regulations on availability of funds. If you really must cash the check without a holding period and won't/can't have a bank account of your own to perform this, then you will generally need to go into a branch of the bank that is guaranteeing the check to be able to cash it out fully right away. Note that since the check might be issued by a bank with no branch near you, you should have a back-up plan. Generally banks will allow you to setup a special/limited savings-only account to deposit your check, even if you don't have a checking account, so if no other option works you might try that as well. The funds availability policies are the same, but at least you'll be able to cash it generally in 10 days time (and then close the account and withdraw your money).
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I'm currently unemployed and have been offered a contract position. Do I need to incorporate myself? How do I do it?
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Do you need to incorporate? This depends on whether the company prefers you to be incorporated. If you are going through a recruiting company, some of them are willing to deal with non-incorporated people (Sole Proprietor) and withhold taxes from your cheques for you. If you do want to incorporate, you can do it yourself, go through a paralegal, or you can even do it online. I did mine in Ontario for about $300 (no name search - i just have a numbered corporation like 123456 Ontario Inc.) through www.oncorp.com - there are other sites that do it as well. Things to consider - if you're contracting through a corporation you most likely need to: Talk to an accountant about these for clarification - most of them will give you an initial consultation for free. Generally speaking, accountant fees for corporate filing taxes averages about $1000-2000 a year.
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Should you keep your stocks if you are too late to sell?
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Personally, I have been in that situation too often that now I am selling at the first tick down! (not exactly but you get the idea..) I have learned over the years to not fall in love with any stock, and this is a very hard thing to do. Limit your losses and take profit when you are satisfied with them. Nothing prevents you from buying back in this stock but why buying when it is going down? Just my 2 cents.
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Company is late in paying my corporate credit card statement - will it hurt my credit?
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After doing some investigating, my employers contract with the credit card company has a clause that basically specifies that despite my name being on the credit card, and bills being sent to me, all liability is on the company. Additionally, the employer reserves the right to garnish wages in the event of a balance on the card. So it looks like it won't affect my credit score. I appreciate all of the advice.
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Freelance site with lowest commission fees?
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Your own site/business. I’m in freelancing and internet business for 15 years, 20 years IT experience. Currently i use freelance websites for cheap Asian employees, very seldom for EU/USA employees, and if only if local competition is heavily out-pricing qualified staff. Till I went "limited" i.e., founded a limited corporation I was jobbing as freelancer and sole proprietor, both with limited success due to the strong Asian competition i myself currently hire. The point where freelancing got "not sustainable" as primary income was 2006 for me, don’t want to get into detail but every freelancer who was active back then knows what I mean, it was like whole India got internet. If you have absolutely no references, do it for the references a limited time and see the fee you pay as service for you to get references, then start your own web identity, either as freelancer or as corporation. Make sure you take your very satisfied customers with you. Every "very satisfied" customer in your contact list means 10 new customers which mean 2 new customers which mean 0.2 new customers and so on. Honestly, this info is solely based on experience of this niche fro ma European citizen perspective, if you’re based anywhere else the situation might be totally different.
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Should I pay off my student loans or keep it in the bank? [duplicate]
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Many years ago I heard a multi-level marketing pitch that pointed out how many doctors don't get out of debt until they are well into their 50's. The selling point was that you can get rich quick, as rich as a doctor, with nothing more then a bit of elbow grease. Of course the pitch failed to mention that most doctors, buy the things doctors buy, when they get that first big job. The big house, expensive cars nerf the income that they receive and they are probably stuck with years of student loan payments. I assume that you are one of the "lucky" ones that have graduated college with a well paying job. By lucky I mean you concentrated on obtaining a skill for which the marketplace has a need. Why not continue to live like a college student for a few more months and pay off all of your student loans ASAP? Get rid of them like you were purging the phone number of that high maintenance girl you dated during a short time of insanity.
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Why is a stock trade flat on large volume?
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Large volume just means a lot of market participants believe they know where the stock price will be (after some amount of time). The fact that the price is not moving just means that about 50% of those really confident traders think the stock will be moving up, and about 50% of those really confident traders think the stock will be moving down.
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Snowball debt or pay off a large amount?
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First, make sure you have some money in a savings account that you can use instead of credit cards for making future purchases that go beyond what you have in your checking account. $1000 is a good amount to start with, so just take that out of the $5000. Then pay off the Best Buy card. You shouldn't be worried about the minimum payment. Determine what you can pay per month (say, $400), and take the minimum payments out of that. Then choose one card to get the rest of your $400, plus the remaining $1500 of your $5000. This should be the highest-interest card, mathematically, but it may or may not be your best choice; it depends on your personality. Some people get a psychological lift out of seeing debts disappear, and it gives them more motivation to keep going. Those people may be better served by paying off the smallest debts first, to get them out of the way. I'm an INTP, so it bothers me more to think that I'll be paying a little more in interest over the long term by taking that route.
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What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere?
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You are not actually entitled to any raise at all, unless you had something contractually (legally binding) which made that so. I'm answering this from the UK, but it has been common practice for people over the last 10 years or so to receive no yearly raise, in some sectors. This is what I would consider a bad raise - if wages are not kept in line with inflation, you are effectively earning less every year. In this regard I would not work for any employer who did not offer an annual raise that was at the very least covering the rate of inflation (these rates are easy to find in your country by Googling it). In terms of a standard raise, I would argue there is no such thing. This depends on the industry/sector you work in, your employers opinion of your performance (note I've used the word opinion because sometimes you may think the effort you put in is different to what they think - be prepared to give evidence of what you've achieved for them, with things to back it up). A good raise is anything which is way above a standard raise. Since there is no concise definiton of a standard raise, this is also hard to quantify. As others have mentioned do not stay in a role where you are not being given a raise that covers inflation, because it means every year you have less purchasing power, which is akin to your salary going down. It's very easy to justify to an employer you're leaving - and indeed one you're going to - why you're making the move under these conditions.
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Is there a good forum where I can discuss individual US stocks?
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If it's an active stock, the Yahoo message boards are inhabited by some clueful people. But the signal-to-noise ratio is relatively low, and there are a lot of "interesting" characters who inhabit the boards as well.
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Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?
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I primarily intend to add on to WBT's answer, which is good. It has been shown that "momentum" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term value investor, of course fundamental valuation should be your first thing to look at - but as long as you're comfortable with the company's price as compared to its value, you should absolutely hang onto it if it's been going up. The old saying on Wall Street is "Cut your losses, and let your winners ride." As WBT said, there may be some tangible emotional benefit to marking your win while you're ahead and not risking that it tanks, but I'd say the odds are in your favor. If an undervalued company starts rising in stock price, maybe that means the market is starting to recognize it for the deal it is. Hang onto it and enjoy the fruits of your research.
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What is the US Fair Tax?
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In a nutshell - Value Added Tax. America, as usual, discovers what others have known and used for years. The idea of not taxing income that's tied to it is ridiculous. If you're only taxing spending but not income, people will just take spending elsewhere (Canada, Mexico, further away), and the economy will go down the drain. That's similar to the way people avoid paying sales tax now, except that it will be in orders of magnitude. Why should a corporation by office supplies in the US, if it has a branch in China? Edit Also, Fair Tax doesn't take into account moving money overseas. I've mentioned living elsewhere down below, and that also got me thinking of how I personally would certainly gain from that ridiculous thing called "Fair Tax". Basically, that's exactly how the "rich folks", those who push for it, will gain from it. Being able to move money out of the US basically makes it a perfect tax shelter. You don't pay taxes on the income (that you have in the US), and you don't pay taxes on the spendings (that you have elsewhere, because in that country income is taxable so you only pay VAT or sales taxes). This means that all the wealthy people, while investing and gaining money from the American economy (stocks, property, etc), will actually not be spending it in the US. Thus, no taxes paid to the US, dollars flowing out. Perfect. Actually, I should be all for this stupid idea. Very fair to me, no need to pay any taxes at all, because food will probably be exempt anyway.
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Are buyouts always for higher than the market value of a stock?
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Can a company not bargain with a dying company for example and buy a falling stock at lower than market value? Of course. If the shareholders agree to it. But why would they, if the market value is higher, agree to sell to someone who offers less? If there's a compelling reason - it can happen. It might happen during a hostile takeover, for example. In the case of buying the company for more than market value, are the stocks bought for significantly more, or slightly more than the current market value? Again, depends on how valuable the shareholders think the company is. If the shareholders think that the company has a potential which has not yet affected the stock price, they'll want a higher premium (and they'd think that, otherwise why would they hold the stock?). How much higher? Depends on the bargaining abilities of the sides.
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How should I report my RSUs in my tax return
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Here's an article on it that might help: http://thefinancebuff.com/restricted-stock-units-rsu-sales-and.html One of the tricky things is that you probably have the value of the vested shares and withheld taxes already on your W-2. This confuses everyone including the IRS (they sent me one of those audits-by-mail one year, where the issue was they wanted to double-count stock compensation that was on both 1099-B and W-2; a quick letter explaining this and they were happy). The general idea is that when you first irrevocably own the stock (it vests) then that's income, because you're receiving something of value. So this goes on a W-2 and is taxed as income, not capital gains. Conceptually you've just spent however many dollars in income to buy stock, so that's your basis on the stock. For tax paid, if your employer withheld taxes, it should be included in your W-2. In that case you would not separately list it elsewhere.
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Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?
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I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life. "You can't go wrong taking a profit" "When a stock doubles sell half and let it ride", etc. It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and had 100 shares left for the 7 to 1 split. The 700 shares are worth $79,000. But, if I simply let it ride, 1000 shares split to 14,000. $1.4M. I suppose turning $5,000 into $130K is cause for celebration, but it will stay with me as the lost $1.3M opportunity. Look at the chart and tell me the value of selling stocks at their 52 week high. Yet, if you chart stocks heading into the dotcom bubble, you'll see a history of $100 stocks crashing to single digits. But none of them sported a P/E of 12.
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What is a trust? What are the different types of trusts?
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Trusts are a way of holding assets with a specific goal in mind. At its simplest, a trust can be used to avoid probate, a sometimes lengthy process in which a will is made public along with the assets bequeathed. A trust allows for fast transfer and no public disclosure. Depending on the current estate tax laws (the death tax) a trust can help preserve an estate exemption. e.g. Say the law reverts back to a $1M exemption. Note, this is $1M per deceased person, not per beneficiary. My wife and I happened to have assets of exactly $2M, and I die tomorrow. Now she has $2M, and when she passes, the estate has that $2M and estate taxes are based on this total, $1M fully taxed. But - If we set up trusts, that first million can be put into trust on my death, the interest and some principal going to the surviving spouse each year, but staying out of the survivor's estate. Second spouse dies, little or no tax due. This is known as a bypass trust. Another example is a spendthrift trust. Say, hypothetically, my sister in law can't save a nickel to save her life. Spends every dime and then some. So the best thing my mother in law can do to provide for her is to leave her estate in trust with specific instructions on how to distribute some percent each year. This is not a tax dodge of any kind, it's strictly to protect the daughter from her own irresponsibility. A medical needs trust is a variant of the above. It can provide income to a disabled person without impacting their government benefits adversely. This scratches the surface, illustrating how trusts can be used, there are more variation on this, but I believe it covers the basics. With the interest in this topic, I'm adding another issue where the trust can be useful. In my article On my Death, Please, Take a Breath I described how an inherited IRA was destroyed by ignorance. The beneficiary, fearing the stock market, withdrew it all and was nailed by taxes. He was on social security and no other income, so by taking small withdrawals each year would have had nearly no tax due. (and could have avoided 'market' risk by selling within the IRA and buying treasuries or CDs.) He didn't need a trust of course, just education. The deceased, his sister, might have used a Trust to manage the IRA and enforce limited withdrawals. Mixing IRAs and trust is complex, but the choice between a $2000 expense to create a trust or the $40K tax bill he got is pretty clear to me. He took pride in having sold out as the market soon tanked, but he could have avoided the tax loss as well. He was confusing the account (In this case an IRA, but it could have been a 401(k) or other retirement account) with the investments it contained. One can, and should, keep the IRA in tact, and simply adjust the allocation according to one's comfort level. Note - Inheritance tax laws change frequently, and my answer above was an attempt to be generic. The current (2014) code allows $5.34M to be left by one decedent with no estate tax.
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Am I legally allowed to offset the tax I pay on freelance work? (UK)
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Yes, you can deduct from your taxable profits (almost) any expenses incurred in the course of your business. See here for HMRC's detailed advice on the subject. The fact that you have salaried PAYE employment as well makes no difference.
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Which market orders to meet this recommendation : 'Take a position on the purchase of the fooBar share, protect your capital by placing a stop'
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You would place a stop buy market order at 43.90 with a stop loss market order at 40.99 and a stop limit profit order at 49.99. This should all be entered when you place your initial buy stop order. The buy stop order will triger and be traded once the price reaches 43.90or above. At this point both the stop loss market order and the stop limit profit order will become active. If either of them is triggered and traded the other order will be cancelled automatically.
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How to approach building credit without a credit card
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Apply for a secured credit card (several financial institutions provide these, including most banks. WalletHub gives you a way to search/filter for these cards quite easily). You will need to deposit funds to cover your credit limit. Deposit as much as they allow, I believe it is 500.00. Pay for EVERYTHING with the card. Monitor your balance due and keep paying it off, to bring the balance due down so you can continue using your card. I know you mentioned your area requires you to be 19, not sure if that still applies if you are applying online, in another state. Also, there's no real reason to get a card with an annual fee in this case. The main reason for an annual fee would be a lower interest charge - simply don't get charged interest, and you'll be better off with not having to pay for a card annually. Good luck.
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Online streaming video/audio financial/stock programs
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The CNBC site is littered with videos. Whenever I click a link to one of their articles, it seems to be a video instead. Not like having the channel streamed, but most of the top stories.
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If NYSE has market makers, what is the role of NYSE ARCA which is an ECN
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Electronic trading is many orders of magnitude cheaper and more liquid than floor trading and is rapidly displacing it. Stil, electronic trading accounts for 79% of stock trading volume in the U.S. Polcari is losing the battle. Floor trading is still offered, but it's only used for bulk orders, so electronic trading is servicing small trades at minimum prices while floor trading is now the concierge service.
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Is housing provided by a university as employer reported on 1040?
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You should ask a CPA or tax lawyer to what extent living in specific housing provided by the employer as a job requirement is exempt from taxation. You might find a nice surprise. Your tax professional can also help you to report the items properly if mis-reported. Much of this is in the article you cite in the question, but perhaps a look at some of the original sources is warranted and will show why some expert advice might be useful. I would argue that an RA who is required to police and counsel undergrads in a college dorm in exchange for a room or a flat is closer to a worker with quarters on a ship or at an oil well than a full professor who receives a rental home in a neighborhood near the university as a benefit. In the first case living at the provided premises is necessary to do the job, but in the second case it is merely a benefit of the job. The IRS Publication 15-B guidance on employer provided housing is not entirely clear, so you might want to get some additional advice: Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. It is furnished on your business premises. It is furnished for your convenience. The employee must accept it as a condition of employment. Different tests may apply to lodging furnished by educational institutions. See section 119(d) of the Internal Revenue Code for details. If you allow your employee to choose to receive additional pay instead of lodging, then the lodging, if chosen, isn’t excluded. The exclusion also doesn't apply to cash allowances for lodging. On your business premises. For this exclusion, your business premises is generally your employee's place of work. For example, if you're a household employer, then lodging furnished in your home to a household employee would be considered lodging furnished on your business premises. For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. For your convenience. Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. This is true even if a law or an employment contract provides that the lodging is furnished as pay. However, a written statement that the lodging is furnished for your convenience isn't sufficient. Condition of employment. Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. Examples include employees who must be available at all times and employees who couldn't perform their required duties without being furnished the lodging. It doesn't matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. Example of qualifying lodging. You employ Sam at a construction project at a remote job site in Alaska. Due to the inaccessibility of facilities for the employees who are working at the job site to obtain lodging and the prevailing weather conditions, you furnish lodging to your employees at the construction site in order to carry on the construction project. You require that your employees accept the lodging as a condition of their employment. You may exclude the lodging that you provide from Sam's wages. Additionally, since sufficient eating facilities aren’t available near your place of employment, you may also exclude meals you provide to Sam from his wages, as discussed under Meals on Your Business Premises , later in this section. Example of nonqualifying lodging. A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. If Joan chooses to live at the hospital, the hospital can't exclude the value of the lodging from her wages because she isn't required to live at the hospital to properly perform the duties of her employment. One question would be how the conflict with IRC 119(d) is resolved for someone who must live in the dorm to watch over the dorm and its undergrads. Here's 26USC119(d) from LII: (d) Lodging furnished by certain educational institutions to employees (1) In general In the case of an employee of an educational institution, gross income shall not include the value of qualified campus lodging furnished to such employee during the taxable year. (2) Exception in cases of inadequate rent Paragraph (1) shall not apply to the extent of the excess of— (A) the lesser of— (i) 5 percent of the appraised value of the qualified campus lodging, or (ii) the average of the rentals paid by individuals (other than employees or students of the educational institution) during such calendar year for lodging provided by the educational institution which is comparable to the qualified campus lodging provided to the employee, over (B) the rent paid by the employee for the qualified campus lodging during such calendar year. The appraised value under subparagraph (A)(i) shall be determined as of the close of the calendar year in which the taxable year begins, or, in the case of a rental period not greater than 1 year, at any time during the calendar year in which such period begins. (3) Qualified campus lodging For purposes of this subsection, the term “qualified campus lodging” means lodging to which subsection (a) does not apply and which is— (A) located on, or in the proximity of, a campus of the educational institution, and (B) furnished to the employee, his spouse, and any of his dependents by or on behalf of such institution for use as a residence. (4) Educational institution, etc. For purposes of this subsection— (A) In generalThe term “educational institution” means— (i) an institution described in section 170(b)(1)(A)(ii) (or an entity organized under State law and composed of public institutions so described), or (ii) an academic health center. (B) Academic health centerFor purposes of subparagraph (A), the term “academic health center” means an entity— (i) which is described in section 170(b)(1)(A)(iii), (ii) which receives (during the calendar year in which the taxable year of the taxpayer begins) payments under subsection (d)(5)(B) or (h) of section 1886 of the Social Security Act (relating to graduate medical education), and (iii) which has as one of its principal purposes or functions the providing and teaching of basic and clinical medical science and research with the entity’s own faculty.
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What happens after a counterparty defaults on a derivative trade?
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The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can "net off" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the "hard" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.
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How late is Roth (rather than pretax) still likely to help?
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Years before retirement isn't related at all to the Pretax IRA/Roth IRA decision, except insomuch as income typically trends up over time for most people. If tax rates were constant (both at income levels and over time!), Roth and Pretax would be identical. Say you designate 100k for contribution, 20% tax rate. 80k contributed in Roth vs. 100k contributed in Pretax, then 20% tax rate on withdrawal, ends up with the same amount in your bank account after withdrawal - you're just moving the 20% tax grab from one time to another. If you choose Roth, it's either because you like some of the flexibility (like taking out contributions after 5 years), or because you are currently paying a lower marginal rate than you expect you will be in the future - either because you aren't making all that much this year, or because you are expecting rates to rise due to political changes in our society. Best is likely a diversified approach - some of your money pretax, some posttax. At least some should be in a pretax IRA, because you get some tax-free money each year thanks to the personal exemption. If you're working off of 100% post-tax, you are paying more tax than you ought unless you're getting enough Social Security to cover the whole 0% bucket (and probably the 10% bucket, also). So for example, you're thinking you want 70k a year. Assuming single and ignoring social security (as it's a very complicated issue - Joe Taxpayer has a nice blog article regarding it that he links to in his answer), you get $10k or so tax-free, then another $9k or so at 10% - almost certainly lower than what you pay now. So you could aim to get $19k out of your pre-tax IRA, then, and 51k out of your post-tax IRA, meaning you only pay $900 in taxes on your income. Of course, if you're in the 25% bucket now, you may want to use more pretax, since you could then take that out - all the way to around $50k (standard exemption + $40k or so point where 25% hits). But on the other hand, Social Security would probably change that equation back to using primarily Roth if you're getting a decent Social Security check.
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How are shares used, and what are they, physically?
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For some very small private companies I know of (and am part of), paper stocks do exist. You can sit at the table with the damn things in your hand and wave them in people's faces. They tell everyone how much of the company you own as a result of the money you ponied up. On the other hand, most stocks are now electronic. Nothing to hold. Just electronic records to review. They still represent how much you own of the company because of some amount of money you have put at risk, but they aren't anywhere near as much fun as the old-fasioned paper proofs. (As MrChrister notes, you can pay a small fee to get paper if you like, even for some big companies. Some of these paper stocks are remarkably elaborate and fine looking, but hardly necessary.) (You can see more info about what stocks are and what sort of stocks exist here: http://www.wikinvest.com/wiki/What_is_a_stock%3F)
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Payroll taxes on exercised stock options
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To explain the capital gains part of the question, non qualified stock options (NSOs) are always treated like earned income and have payroll taxes withheld. It's advantageous for the company to issue these because they can deduct them as expenses just as they do your salary. Articles talking about capital gains would probably be referring to incentive stock options (ISOs) or possibly even restricted stock units (RSUs). If you were granted the option to buy the stock and/or hold it for a period of time, then the stock options could be treated as capital gains, short-term gains if you held them for less than a year, and long-term gains if you held them for more than a year. This payment for your NSOs is exactly like a cash bonus. The withholding follows the same guidelines. You may wish to look at what this will mean for your annual salary and adjust your W-4 withholding up or down as appropriate depending on whether the 25% federal withholding rate is more or less than what you think your final marginal rate will be with this bonus included in your annual salary.
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Investment for beginners in the United Kingdom
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Most investors should not be in individual stocks. The market, however you measure it, can rise, yet some stocks will fall for whatever reason. The diversification needed is to have a number of shares of different stocks, and that a bit higher than most investors are able to invest and certainly not one starting out. I suggest you look at either mutual funds or ETFs, and keep studying. (I'm told I should have offered the UK equivalent Investment Trusts , OEIC, or Unit Trusts)
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Is it a wise decision to sell my ESPP stock based on this situation?
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Eric is right regarding the tax, i.e. ordinary income on discount, cap gain treatment on profit whether long term or short. I would not let the tax tail wag the investing dog. If you would be a holder of the stock, hold on, if not, sell. You are considering a 10-15% delta on the profit to make the decision. Now. I hear you say your wife hasn't worked which potentially puts you in a lower bracket this year. I wrote Topping off your bracket with a Roth Conversion which would help your tax situation long term. Simply put, you convert enough Traditional IRA (or 401(k) money) to use up some of the current bracket you are in, but not hit the next. This may not apply to you, depending on whether you have retirement funds to do this. Note - The cited article offers numbers for a single person, but illustrates the concept. See the tax table for the marginal rates that would apply to you.
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For a single company listed in multiple exchanges in different countries, are the shares being offered the same?
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Yes and no. There are two primary ways to do this. The first is known as "cross listing". Basically, this means that shares are listed in the home country are the primary shares, but are also traded on secondary markets using mechanisms like ADRs or Globally Registered Shares. Examples of this method include Vodafone and Research in Motion. The second is "dual listing". This is when two corporations that function as a single business are listed in multiple places. Examples of this include Royal Dutch Shell and Unilever. Usually companies choose this method for tax purposes when they merge or acquire an international company. Generally speaking, you can safely buy shares in whichever market makes sense to you.
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How to decide on split between large/mid/small cap on 401(k) and how often rebalance
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I really like keshlam's answer. Your age is also a consideration. If you make your own target fund by matching the allocations of whatever Vanguard offers, I'd suggest re-balancing every year or every other year. But if you're just going to match the allocations of their target fund, you might as well just invest in the target fund itself. Most (not all, just most) target funds do not charge an additional management fee. So you just pay the fees of the underlying funds, same as if you mirrored the target fund yourself. (Check the prospectus to see if an additional fee is charged or not.) You may want to consider a more aggressive approach than the target funds. You can accomplish this by selecting a target fund later than your actual retirement age, or by picking your own allocations. The target funds become more conservative as you approach retirement age, so selecting a later target is a way of moving the risk/reward ratio. (I'm not saying target funds are necessarily the best choice, you should get professional advice, etc etc.)
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How are credit unions initially financed
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Estimated Start-Up and Operating Costs in Chartering a Credit Union notes in part: Given the significant costs involved, most groups seek grant money and non-member deposits (if pre-approved for the low-income designation) to help subsidize the pre-chartering costs and annual operating expenses. Thus, in forming the union there would be the money from members and possible grants to ensure completion of the chartering process which is how one starts a CU in the US.
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What is high trading volume in a stock indicative of? Is high liquidity a good thing or a bad thing?
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In general, there should be a "liquidity premium" which means that less-liquid stocks should be cheaper. That's because to buy such a stock, you should demand a higher rate of return to compensate for the liquidity risk (the possibility that you won't be able to sell easily). Lower initial price = higher eventual rate of return. That's what's meant when Investopedia says the security would be cheaper (on average). Is liquidity good? It depends. Here's what illiquidity is. Imagine you own a rare piece of art. Say there are 10 people in the world who collect this type of art, and would appreciate what you own. That's an illiquid asset, because when you want to sell, maybe those 10 people aren't buying - maybe they don't want your particular piece, or they all happen to be short on funds. Or maybe worse, only one of them is buying, so they have all the negotiating leverage. You'll have to lower your price if you're really in a hurry to sell. Maybe if you lower your price enough, you can get one of the 10 buyers interested, even if none were initially. An illiquid asset is bad for sellers. Illiquid means there aren't enough buyers for you to get a bidding war going at the time of your choosing. You'll potentially have to wait around for buyers to turn up, or for a stock, maybe you'd have to sell a little bit at a time as buyers want the shares. Illiquid can be bad for buyers, too, if the buyer is for some reason in a hurry; maybe nobody is selling at any given time. But, usually buyers don't have to be in a hurry. An exception may be if you short sell something illiquid (brokers often won't let you do this, btw). In that case you could be a forced buyer and this could be very bad on an illiquid security. If there are only one or two sellers out there, they now have the negotiating leverage and they can ask whatever price they want. Illiquidity is very bad when mixed with margin or short sales because of the potential for forced trades at inopportune times. There are plenty of obscure penny stocks where there might be only one or two trades per day, or fewer. The spread is going to be high on these because the bids at a given time will just be lowball offers from buyers who aren't really all that interested, unless you want to give your stock away, in which case they'll take it. And the asks are going to be from sellers who want to get a decent price, but maybe there aren't really any buyers willing to pay, so the ask is just sitting there with no takers. The bids and asks may be limit orders that have been sitting open for 3 weeks and forgotten about. Contrast with a liquid asset. For example, a popular-model used car in good condition would be a lot more liquid than a rare piece of art, though not nearly as liquid as most stocks. You can probably find several people that want to buy it living nearby, and you're not going to have to drop the price to get a buyer to show up. You might even get those buyers in a bidding war. From illiquid penny stocks, there's a continuum all the way up to the most heavily-traded stocks such as those in the S&P500. With these at a given moment there will be thousands of buyers and sellers, so the spread is going to close down to nearly zero. If you think about it, just statistically, if there are thousands of bids and thousands of asks, then the closest bid-ask pair is going to be close together. That's a narrow spread. While if there are 3 bids and 2 asks on some illiquid penny stock, they might be dollars away from each other, and the number of shares desired might not match up. You can see how liquidity is good in some situations and not in others. An illiquid asset gives you more opportunity to get a good deal because there aren't a lot of other buyers and sellers around and there's some opportunity to "negotiate" within the wide spread. For some assets maybe you can literally negotiate by talking to the other party, though obviously not when trading stocks on an exchange. But an illiquid asset also means you might get a bad deal, especially if you need to sell quickly and the only buyers around are making lowball offers. So the time to buy illiquid assets is when you can take your time on both buying and selling, and will have no reason for a forced trade on a particular timeline. This usually means no debt is involved, since creditors (including your margin broker) can force you to trade. It also means you don't need to spend the money anytime soon, since if you suddenly needed the money you'd have a forced trade on your hands. If you have the time, then you put a price out there that's very good for you, and you wait for someone to show up and give you that price - this is how you get a good deal. One more note, another use of the term liquid is to refer to assets with low or zero volatility, such as money market funds. An asset with a lot of volatility around its intrinsic or true value is effectively illiquid even if there's high trade volume, in that any given point in time might not be a good time to sell, because the price isn't at the right level. Anyway, the general definition of a liquid investment is one that you'd be comfortable cashing out of at a moment's notice. In this sense, most stocks are not all that liquid, despite high trading volume. In different contexts people may use "liquid" in this sense or to mean a low bid-ask spread.
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Tax implications of exercising ISOs and using proceeds to exercise more ISOs
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This may be a good or a bad deal, depending on the fair market value (FMV) of the stock at the time of exercise. Let's assume the FMV is $6, which is the break even point. In general this would probably be treated as two transactions. So overall you would be cash neutral, but your regular tax income would be increased by $30,000 and your AMT income by $60,000.
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Looking for suggestions for relatively safe instruments if another crash were to happen
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One approach is to invest in "allocation" mutual funds that use various methods to vary their asset allocation. Some examples (these are not recommendations; just to show you what I am talking about): A good way to identify a useful allocation fund is to look at the "R-squared" (correlation) with indexes on Morningstar. If the allocation fund has a 90-plus R-squared with any index, it probably isn't doing a lot. If it's relatively uncorrelated, then the manager is not index-hugging, but is making decisions to give you different risks from the index. If you put 10% of your portfolio in a fund that varies allocation to stocks from 25% to 75%, then your allocation to stocks created by that 10% would be between 2.5% to 7.5% depending on the views of the fund manager. You can use that type of calculation to invest enough in allocation funds to allow your overall allocation to vary within a desired range, and then you could put the rest of your money in index funds or whatever you normally use. You can think of this as diversifying across investment discipline in addition to across asset class. Another approach is to simply rely on your already balanced portfolio and enjoy any downturns in stocks as an opportunity to rebalance and buy some stocks at a lower price. Then enjoy any run-up as an opportunity to rebalance and sell some stocks at a high price. The difficulty of course is going through with the rebalance. This is one advantage of all-in-one funds (target date, "lifecycle," balanced, they have many names), they will always go through with the rebalance for you - and you can't "see" each bucket in order to get stressed about it. i.e. it's important to think of your portfolio as a whole, not look at the loss in the stocks portion. An all-in-one fund keeps you from seeing the stocks-by-themselves loss number, which is a good way to trick yourself into behaving sensibly. If you want to rebalance "more aggressively" then look at value averaging (search for "value averaging" on this site for example). A questionable approach is flat-out market-timing, where you try to get out and back in at the right times; a variation on this would be to buy put options at certain times; the problem is that it's just too hard. I think it makes more sense to buy an allocation fund that does this for you. If you do market time, you want to go in and out gradually, and value averaging is one way to do that.
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What are the financial advantages of living in Switzerland?
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As per Wikipedia of right now, here are unemployment figures for Switzerland and surrounding countries: Liechtenstein, unfortunately, does not have a large job market, given its total population of about 37,000 people. And note that the German figure of 4.5% is the lowest it has been for decades - I'd expect this number to go up and the Swiss one to stay constant. Bottom line: you will have an easier time finding a job in Switzerland. (Plus all the other good points the other answers raised: great mountains, great chocolate, low taxes, clean streets etc.)
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What is a stock warrant? How do warrants work?
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In general, a warrant is a security issued by a company allowing the holder to purchase a certain number of a particular class of shares at a certain price for a particular period of time. They differ from exchange traded options (i.e. calls and puts) in that they are issued by the company that issued the underlying shares that they allow you to purchase whereas calls and puts are generally written by other investors. The other big difference between options and warrants is that options are standardized. Any call or put you buy on a particular exchange has basically the same set of rules governing use. By contrast, a warrant may have all kinds of stipulations that must occur before you can execute, such as price events (e.g. only if the stock hits a certain price) or business events (e.g. only if the company elects to defer payment on a bond issued at the same time as the warrant). Warrants are generally a bad choice for small and inexperienced investors since each warrant issue is different and you often need a lawyer or other qualified professional to fully understand all to possible outcomes.
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