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train · 20.9k rows

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4ad7d61f9580a1a04ad19cc0f6b57b8f	Should I charge my children interest when they borrow money?	[ { "docid": "dec07f6c5b9c7e847b529784a16bef05", "text": "\"I think there's value in charging family members/friends interest if it will make them take the loan seriously. The problem is that if you're thinking about charging interest because the person seems to be borrowing from you too cavalierly, it may be too late to make them take it seriously. In the situation you describe, if you're concerned about the loans being paid back, I think you need to have a serious conversation with the kids and make it clear you expect them to pay the loans back on whatever schedule you agreed to. If, based on your knowledge of your kids, you think charging interest would help motivate them to do this, great. If not, charging interest is unlikely to accomplish anything that the conversation itself won't accomplish. If you haven't previously outlined a specific schedule or set of expectations for how you want to be paid back, just doing that (in writing) may be enough to make them realize it's not a joke. The conventional wisdom is that you shouldn't lend money to anyone unless you're either a) okay with never being paid back; or b) willing to pursue legal remedies to ensure you're paid back. Most people aren't willing to sue their own family members over small loans, which means in most cases it's not a good idea to loan money to family unless you're \"\"okay with\"\" never being repaid (whatever level of \"\"okay with\"\" makes sense for you). I should note that I don't have kids; my advice here is just how I would handle it if I were considering loaning money to my brother or a close friend or the like. This means I don't really know anything about \"\"teaching the kids about the real world\"\", but I have to say my hunch is that if your kids are 25+ and married, it's too late to radically change their views on how \"\"the real world\"\" works; unless they had a very sheltered early adulthood, they've been living in the real world for too long and will have their own ideas of how it works.\"", "title": "" }, { "docid": "4399251698e20b9d4823ceead594e568", "text": "\"Tell them you will not loan them any more money until their existing debts are paid off. This is closer to how the real world works and it won't come across as vengeful or like your changing your initial \"\"contract\"\". If they protest, lovingly tell them that your money is not their money, and that an interest free loan from their father is a privilege, not a right. As far as charging interest on your loans, go for it! Charge them 5% or something small. Just don't do it on the existing loans or that will come across as changing your initial \"\"contract\"\" again, and perhaps once they've proven themselves to be reliable borrowers they can once again earn the privilege to have an interest free loan. The book \"\"The Millionaire Next Door\"\" has really good thoughts on this in its section on Economic Outpatient Care.\"", "title": "" }, { "docid": "6bca2d910c31dc208916b2043ea172e7", "text": "Parents are eminently capable of gifting to their children. If it's a gift call it a gift. If it's not a gift, it's either a loan or a landmine for some future interpersonal familial interaction (parent-child or sibling-sibling). I an concerned by some phrasing in the OP that it is partially down this path here. If it's a loan, it should have the full ceremony of a loan: written terms and a payment plan (which could fairly be a 0% interest, single balloon payment in 10 years or conditional on sale of a house or such; it's still not a gift).", "title": "" }, { "docid": "6d39044187784072e5de609094da1042", "text": "Going from personal experience, my parents let my brother and me borrow money from them all the time. However there was always some noteworthy things to take into account. As an example, I borrowed a large sum of money on my student loan (we will just say it was $50,000). I had saved nearly $30,000 on my own and my parents lent me $10,000. I paid the remaining off over the course of about a year and a half. After this loan was paid off - I started paying my parents back. They dictated that I should not worry about paying them until my other interest loans were paid off. Once they were, my priority was to pay back my parents. Its supposed to help your children get ahead a little bit rather then sucking out interest from them. As long as the money was not needed elsewhere and is spent on something important I would not worry about it. Just make sure they are aware they are expected to pay it back in a reasonable amount of time or with specific requirements (such as after other loans are paid off).", "title": "" }, { "docid": "f6e987c2461971e562570648848152ab", "text": "Would you expect your parents to charge you interest if you borrowed from them? Yes, if they said so when the money was borrowed. No, if there were no terms communicated when the money was borrowed. Expectations need to be clearly laid out up-front. What is your advice? I think you are asking the wrong question of whether or not you should charge interest. The real issue is that you are concerned about the 'borrowing', which are really turning out to be 'gifts'. The money amounts are not the issue as much as the lack of responsibility. Going back to your children and asking for interest will not fix this issue. This is my advice: This is a difficult process, and may not go over well with your children. Remember that this is not hurting them. You are actually hurting them more by allowing them to put off developing good habits, independence, and maturity. It is hard to see someone make choices that hurt themselves and others, but you cannot prevent them from making that choice. If they never feel the results of that choice, they will lack the motivation to change.", "title": "" }, { "docid": "0d60d0291fb26e11498224481db0d4a9", "text": "\"This is not really the focus of your question, but it's worth noting that if you live in the United States (which your profile says you do), there are tax implications for you (but not for your children), depending on whether or not you charge your children (enough) interest. If you charge less interest than the appropriate Applicable Federal Rate (for May 2016, at least 0.67%), you must pay taxes on the interest payments you would have received from the debtor if you had charged the AFR, provided that the loan is for $10,001 or more (p. 7). This is referred to as \"\"imputed\"\" income.\"", "title": "" }, { "docid": "fe514221c75e11f726c366ac296ebabf", "text": "\"This is largely a cultural issue. I would be appalled at the very idea that my parents would charge me interest for lending me money. Just as they would be appalled if I were to do so if lending them money. I find the idea of attempting to make money off of your children fundamentally wrong. I realize that you only want to do this to teach them, that you have their best interests in mind and not your own profit. Nevertheless, what will actually happen were you to charge them interest is that you would accrue a monetary gain at the expense of your children. Is that really something you would be comfortable with? Now, as I stated at the beginning, this is clearly a cultural issue. Based on the other answers here, many cultures, probably including your own, find nothing wrong with this. I've even heard of people charging their adult children rent when they come home for the holidays, something that is completely baffling to me. The point I am trying to make is that asking other people's opinions on whether you should do this is not very useful unless those people share your own cultural background. My family and culture are such that the idea of charging interest to one's family members seems downright immoral to me. Given that you are asking here, it seems like you might be on the fence about it yourself. However, I freely admit that my answer is colored by my own cultural prejudices and may very well not be applicable to you. Still, ask yourself, is a relatively small amount of money in the grand scheme of things—or, for that matter, an entire fortune—worth jeopardizing your relationship with your children? Do you really believe that having their parents retroactively charge them interest for a loan will somehow teach them something about the \"\"real world\"\" that your already adult children don't know? One of the main reasons they came to you and didn't go to a bank is precisely that they expected the loan to be interest free. So, sure, tell them that you won't lend any more until they repay what they owe. Even better, sit them down and have an honest, adult conversation, explaining that the absence of the money they owe is making itself felt in your household and work out a way they can repay you. What, in my opinion, you most certainly shouldn't do is treat your relationship with your children as a regular business transaction. It isn't and I am sure you don't want it to be.\"", "title": "" }, { "docid": "efb67fdb36add186c2b1c0a521abe042", "text": "If they have borrowed money without paying it back, what makes you think you could get interest paid? The problem that you face first is to make clear to them that a loan is a loan. As long as they can get free money off you, they will keep borrowing.", "title": "" }, { "docid": "0d1246ed1d6f0a9677726f03e26d78a8", "text": "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.", "title": "" }, { "docid": "8d3b75350c331295b5bc4b82ae976247", "text": "\"As per the age of your son you mentions i would suggest Yes, charge them an interest amount but lesser than the market rate. And give them a valid reason behind taking interest on given amount. The reason you might grab from below real incident happen with me at the time of Diwali last year. I am 26, and i am currently doing job and my salary is not so much that i can accomplish all my dreams of buying expensive Watch and many things. So i borrowed some strong amount from my mom. She gave me the amount but she asked me to pay interest of 5% and when i asked the reason behind demanding the interest she said something which was valuable things. She said me \"\"If i would not give you money then you will definitely ask money from some money lenders or your friends because now that watch is your first priority. And in that case you need to pay the higher interest rate to them. And in life there might be situation where we would not capable to help you in terms of financial. So this is the time you should learn to pay interest and responsibility of borrowing amount and repaying it on time with interest rate. This will help you also to learn a lesson and our money will be withing home I am not expert in parenting because i am still unmarried but i shared my point of view for your question. Thanks\"", "title": "" }, { "docid": "135b37b7948dbd97c8af6da4003abfa7", "text": "In terms of preserving good relationships one approach is to charge a nominal rate of interest. maybe a few percent of the total and agree a time when it should be paid back. This may actually make them feel better about borrowing them money, especially, especially if it is something like business loan or buying a house or car. If they need the money for a real crisis and they have no clear strategy for paying it back then it may just be better all around if you make it clear that it is a gift. What you don't want to do is set up a situation where you are creating unnecessary problems down the road and that will very much depend on your individual relationship and how seriously you take the loan. Here it is important that you are completely open and honest about the arrangement so take the time to make sure that both parties understand exactly what they expect from each other.", "title": "" } ]	[ { "docid": "19bc40de0fa8ac43da9a0c74b6dbc19b", "text": "You expect interest because you forgo the opportunity of using the money as well as the risk of losing the money if the borrower can not pay you back. This is true also with gold - you would expect interest if you loaned someone your gold for a time period. When you deposit your money in the bank you are loaning your money to the bank who then loans the money to others. This is how the bank is able to pay interest on your accounts.", "title": "" }, { "docid": "0e7a7d141918f575069aaded7d9d5d53", "text": "The government pays interest on its debts just like anyone else, but since it's already the government and already taking advantage of credit (your money loaned to it through the bonds), it doesn't need the extra benefit of taxing the interest it pays. It's better off just issuing bonds at a lower interest rate and letting you keep all the interest, instead of a higher interest rate which will have some amount taxed and returned to it anyway. The government wants a cut of private loan interest just like any other income, which is why interest on private bonds/loans is taxable. Edit: What about municipal bonds? Wouldn't the federal government benefit from taxing interest on municipal bonds? Municipal bonds are issued to support public infrastructure & services such as construction of water supply infrastructure. Since the goal is to improve facilities for the public benefit, and government programs ostensibly aim to provide public benefits as well, it allows the full proceeds of the bonds to go to the designated projects at the lowest possible interest rate (and the public pays the interest through city rates). Taxing municipal bonds would result in a higher cost to the public for the same end result (because of higher interest rates), with the net interest going to the federal & state governments via income tax on the interest.", "title": "" }, { "docid": "3bf2007efcb1606b85d40d03de6b5b05", "text": "I think about debt as a good option for capital investments that offer a return. In my opinion, a house and clothes you need for that new job are good things to borrow for. School is ok, depending on the amount. Car is ok, if it's a 3 year loan. The rest is not good. You should try to carry as little debt as possible, but don't let it dominate your life. If faced between the choice of paying ahead on your student loan and blowing $300 on an XBox, you should pay the loan. If the choice is between taking your kid to the zoo and paying the loan, have fun at the zoo.", "title": "" }, { "docid": "661a4eac7c078a020740d3c5e30bed82", "text": "\"Just to go against the grain here. Sometimes, loaning money to friends is the right thing to do. For example, they had a loved one die, and need the money to cover funeral expenses until the life insurance pays out. Here, you may consider it your ethical duty to loan the money (or you may not). It does not make sense from a financial point of view (you are unlikely to charge interest and you are taking all the risk), but sometimes you put your financial prudence aside because \"\"being a good person and a great friend\"\" is more important. It is true that the general rule should be not to loan money to friends, and particularly never loan money you cannot afford to lose. But there are exceptions to every rule. I'll note that you may be best off with a plain-english, non-lawyery contract. Make it absolutely as simple as possible. As others have pointed out, specify a repayment date or schedule. Note what happens if they miss the deadline. Specify interest, if appropriate. Get it signed by you and the other person. And make sure you consider what happens if your friend doesn't honour the agreement. For that kind of money, it is also worth considering collateral.\"", "title": "" }, { "docid": "9c74fb51ad148293159d665e83931a00", "text": "\"He's paying the interest and you're paying the principal. If you're making minimum monthly payments, you'll still be doing the same thing 25-30 years from now. I think Parker's advice was very, very good, but I'd like to add to it a little of my own. Whatever dollar amount your son is sending to you as payment, encourage him to continue doing that. Only instead of paying you, have him put that money into a savings plan of some kind. You mentioned that he's struggling now, yet able to come up with approximately (my best guess) $200/mo. I guarantee you that if he puts that $200/mo back into his pocket, he'll still be struggling every month yet have nothing to show for it. My suggestion changes nothing in his daily life, yet gives him $2400 at the end of every year. I was in a somewhat similiar situation as your son, only to the tune of $13,000. About 20 years ago, I got a loan and bought a new truck in which to use to go back and forth to work every day. The first 5 months the payments to the bank went as planned. Then my wife announces that \"\"we're\"\" pregnant. So my parents figured it would be best to just pay off my loan to the bank, avoiding any further interest charges, and take that truck payment and put it away for a rainy day. At 33 y/o, with my first child on the way, I finally started saving some of my money. It was good advice on their part because the rainy days came! They never asked me to pay them back, however I did offer. I've been tucking away $300-400/mo in the bank every month since then because I just got into the habit. Good thing I did too. In the past 10 years I've had to bury both of my parents, one sister and two wives and I'll tell ya, one thing that was comforting was the fact that I had the money. The little truck I bought 20 years ago is now my son's. It has around 260,000 miles on it now. When he trades it in for a newer vehicle, I will probably loan him the money and have him make payments to me rather than the bank. I, too, am not one to pay interest if I can help it. If he defaults, he's my son. I just won't buy him another vehicle! Or maybe he'll get into the same habit of saving money the same way I did. Like JohnFx said, money loaned to family should be regarded as a gift, otherwise you'll end up losing your money AND your family member! Hope some of this helps you make your decision.\"", "title": "" }, { "docid": "e6a05a201fa315f59ff8f24e7e0a57ce", "text": "One of many things to consider is that in the United States student loan interest is tax deductible. That fact could change the math enough to make it worth putting A's money elsewhere depending on his interest rate and income bracket.", "title": "" }, { "docid": "787ed768b2077e8cfaa2f0122df8b11b", "text": "Debt is no fun. Getting out of debt to replace it with more debt is no fun. In both cases, you are making an investment in your child's future. That's laudable, but there might be other ways to economize on the education costs. I prefer HELOC debt because I can deduct the interest (as you pointed out) and it usually allows re-borrowing if other cash-flow problems crop up. The downside of borrowing against your house is that your house could be foreclosed if you become insolvent, and you will lose your buffer if you max out the equity now. The same problem exists with a 2nd mortgage. The fact that you would still have a mortgage either way does make the option more attractive though (or less unattractive anyway).", "title": "" }, { "docid": "6c26cb8169b5246436c64281f34e0b34", "text": "\"I think you're asking yourself the wrong question. The real question you should be asking yourself is this: \"\"Do I want to a) give my parents a $45,000 gift, b) make them $45,000 loan, or c) neither?\"\" The way you are talking in your question is as if you have the responsibility and authority to manage their lives. Whether they choose bankruptcy, and the associated stigma and/or negative self-image of financial or moral failure, or choose to muddle through and delay retirement to pay off their debt, is their question and their decision. Look, you said that loaning it to them was out, because you'd rather see them retire than continue to work. But what if they want to continue to work? For all the stress they're dealing with now, entrepreneurial people like that are not happy You're mucking about in their lives like you can run it. Stop it. You don't have the right; they're adults. There may come a time when they are too senile to be responsible for themselves, and then you can, and should, step up and take responsibility for them in their old age, just as they did for you when you were a child. But that time is not now. And by the way, from the information you've given, the answer should be C) neither. If giving or loaning them this kind of money taps you out, then you can't afford it.\"", "title": "" }, { "docid": "681f7184bde61e9ceafddbd27414387a", "text": "You really can't. Credit rating is determined by financial history, and until your kids are old enough to legally sign a contract they have essentially no financial history. Interesting out-of-the-box thought, but not workable.", "title": "" }, { "docid": "9995f39a64da432da936cff80e0fefde", "text": "\"There are many flaws with your idea. Say I want to borrow $225,000.00 to accrue interest on a 1.20% APY account. I promise ... that I cannot withdraw nor touch the account by legal contract. If you break the contract and lose the money, the lender is out the money. They can take you to court and will win, but if you don't have the money, then they don't get paid. (You can't squeeze water out of a rock even if a judge orders you to.) By sharing the interest with me on a loan, they keep a percentage that they'd normally get... If you're \"\"investing\"\" the money at 1.2%, and the lender gets some amount less than that, then they are getting much less than they \"\"normally\"\" get. Lenders typically get somewhere from 5-15% on loans. The money can also be used to fund a stock/trading account. Regardless of whether I profit, I pay interest on the loan and split the profit shares 24/7. How can the lender lose with legal enforcing? Again, if you lose the money, no amount of legal enforcing can force you to pay money that you don't have. Even if you go to jail for fraud the lender still doesn't get paid. Simply, no bank would ever agree to this.\"", "title": "" }, { "docid": "231c8283c9656c1c1a24480712f7b79b", "text": "The standard approach is to reach an agreement and put it in writing. What you agree upon is up to you, but in the US if you want to avoid gift taxes larger loans need to be properly documented and must charge at least a certain minimal interest rate. (Or at least you must declare and be taxed upon that minimal income even if you don't actually charge it. Last I looked, the federal requirement was somewhere under 0.3%, so this isn't usually an issue. There may also be state rules.) When doing business with friends, treat it as business first, friendship second. Otherwise you risk losing both money and friendship. Regarding what rate to charge: That is something you two have to negotiate, based on how much the borrower needs the money, how much lending the money puts the lender at risk, how generous each is feeling, etc. Sorry, but there is no one-size-fits-all answer here. What I charge (or insist on paying to) my brother might be different from what I charge my cousin, or a co-worker, or best friend, or... If both parties think it's fair, it's fair. If you can't reach an agreement, of course, the loan doesn't happen.", "title": "" }, { "docid": "9369686ff9624d06b4a4d5eeb8a3d237", "text": "When you pay interest on a loan used to fund a legitimate investment or business activity, that interest becomes an expense that you can deduct against related income. For example, if you borrowed $10k to buy stocks, you could deduct the interest on that $10k loan from investment gains. In your case, you are borrowing money to invest in the stock of your company. You would be able to deduct the interest expense against investment gain (like selling stock or receiving dividends), but not from any income from the business. (See this link for more information.) You do not have to pay taxes on the interest paid to your father; that is an expense, not income. However, your father has to pay taxes on that interest, because that is income for him.", "title": "" }, { "docid": "d1bddb921a5215528c109be80cf7c46b", "text": "Timo's concern may be accurate, but talking to the bank is the next step. If I am the banker, I'm happier that (a) there's 25% down, and (b) it's not an additional loan as some might get from a parent. It's not that your parents have a lien for the 25% as a lender would, the structure is ownership, they own 25%. An important, if not obvious, distinction. Timo is right that as an asset of the parents, the ownership stake is at risk if their finances run into issues. Other than that, so long as all is done above board, your proposal can work. The bank will want your parents to sign the note of course, you can't mortgage property you don't fully own.", "title": "" }, { "docid": "7ba5c8e77be27b5bbb0c9e0ac99adff3", "text": "\"@MrChrister - Savings is a great idea. Coudl also give them 1/2 the difference, rather than the whole difference, as then you both get to benefit... Also, a friend of mine had the Bank of Dad, where he'd keep his savings, and Dad would pay him 100% interest every year. Clearly, this would be unsustainable after a while, but something like 10% per month would be a great way to teach the value of compounding returns over a shorter time period. I also think that it's critical how you respond to things like \"\"I want that computer/car/horse/bike/toy\"\". Just helping them to make a plan on how to get there, considering their income (and ways to increase it), savings, spending and so on. Help them see that it's possible, and you'll teach them a worthwhile lesson.\"", "title": "" }, { "docid": "a5508414a61fc0d5f77fd9551e59b8de", "text": "To add to what others have said, INSTALLMENT CREDIT is a stronger factor when building credit. An installment credit is essentially a loan with a fixed repay amount such as a student loan and a car loan. Banks (when it comes to buying your first home) want to see that you are financially able to repay a big debt (car loan). But be careful, if you cannot pay cash, you cannot afford it. My rule of thumb is that when I'm charging something to my CC, I MUST pay it off when it posts to my account. I just became debt free (paid off about 15k in CC and student loan debt in 18 months) and I love it.", "title": "" } ]	fiqa
6f99b0a37d93191aa421e68cf4d489fc	Is insurance worth it if you can afford to replace the item? If not, when is it?	[ { "docid": "7a7440be938e7e166722826f52ec0a9c", "text": "This entirely depends on two factors: Now let's look at what AppleCare gives you: What it covers is any manufacturing defect. It also covers you for phone support, as otherwise it's a $49-per-incident charge even for simple issues. It also covers any software issues that you may come across as long as the issues pertain to Apple software or the operating system itself. What it doesn't cover is any damage caused by the user. If you snap the corner of the screen, drop it, spill liquid on it, modify it, etc... then you're responsible for paying the repair costs. If you're outside of phone support, then you're going to have to pay someone to fix any problems you come across. Now if we're to trust this handy study done in 2009, then we can say that the 3-year failure rate for Macbooks and Macbook Pros is 17.4%. We could go ahead and say that $350 / $2000 = 17.5% so the chances match up, but what's the likelihood that Apple is going to cover the full $2000? Only under extreme cases are you losing the full $2000 (theft, shock damage, etc...), and those are all cases that Apple won't cover anyways. Instead we're looking at cases such as (Please keep in mind it has been several years since I worked for Apple, so these figures may be off): So this reduces our possible savings significantly. Let's then also look at what the warranty becomes after they fixed a part: A replacement part or Apple Product, including a user-installable part that has been installed in accordance with instructions provided by Apple, assumes the remaining term of the Warranty or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you. Which means in this case that you have a 90-day warranty after they've fixed an issue. This significantly reduces the likelihood of a same part going bad multiple times in a row. Therefore the chances of that $350 being worthwhile are very much against you. Even if the system does fail in some way, it is likely that the repair would be cheaper than the AppleCare. The chances of running into a repair or series of repairs that pays for the AppleCare and then some are astonishingly low. I would still get it if you were giving it to someone who was significantly lacking in any technology concepts (such as a parent or grandparent) as they are more likely to utilize the extended phone support, especially for smaller things that they might nag you about!", "title": "" }, { "docid": "3818fe9bb023c347f74da394e87c2c71", "text": "\"In general, if you can afford to replace something, you are able to \"\"self-insure\"\". You really want to understand a little of the statistics before you can make a generic call, but my rule of thumb is that insurance via \"\"extended warranty\"\" is rarely a good deal. Here is a simple expected value math formula you can apply (when the > is true, then you should buy it): replacement cost x likelihood of using warranty % > cost of insurance You can then back-compute, what is the likelihood that I'd need to lose this item to break even? Given your numbers: $2000 x Y > $350 or Y > (350/2000) or Y > 17.5% So if you think there is a 17.5% or greater chance that you'll need to have you system replaced (i.e. not just a simple fix) AND (as Scott pointed out) you'll be able to actually use the replacement warranty then the applecare is a good purchase. Note, this only applies to items you can replace out-of-pocket without significant burden, because if you didn't have the $10k to replace your car, it wouldn't matter if the insurance wasn't such a good deal (especially if you need the car to get to work, etc.) So the obvious question is: \"\"Why would a for-profit company ever offer insurance on something they are statistically likely to lose money on?\"\" The obvious answer is \"\"they wouldn't,\"\" but that doesn't mean you should never buy this type of insurance, because you may have statistically significant circumstances. For instance, I purchased a $40 remote helicopter as a gift for my children. I also paid the $5 for a \"\"no questions asked\"\" warranty on it because, knowing my kids, I knew there was a nearly 100% chance they would break it at least once. In this case, this warranty was well worth the $5, because they did break it! Presumably they make money on these warranties because most of the purchasers of the plan are more attentive (or too lazy to make the claim) than in this case. Edit note: I incorporated Scott's comment about likelihood of being able to utilize the warranty into a combined \"\"likelihood of using warranty\"\" term. This term could be broken up into likelihood of needing replacement x likelihood of actually getting company to replace it I didn't do this above because it makes it a little harder to understand, and may not be a major factor in all cases, but you can definitely add it after the fact (i.e. if there's only a 90% chance Applecare will pay out at all, then divide the 17.5% by 0.9 to get 19.4% likelihood of needing the replacement for it to be cost effective). More complete formulas can be derived also (including terms for full replacement costs vs repair costs and including terms for \"\"deductible\"\" type costs or shipping), but I'm trying to keep things relatively simple for those who aren't statistics nerds like I am.\"", "title": "" }, { "docid": "fe4f85b085aaa3d915721a7845363821", "text": "\"In regards to purchasing full coverage on your car even if you can afford to replace it, consider the hassle you have to deal with an accident that is not just the cost. As an example, my sister's car was stolen and wrecked. It was her problem to go recover the car on the other side of the state such that she would not be paying the storage \"\"fees\"\" imposed by the sheriff of the other county. Had she had insurance they would have taken care of it call. Another story is that I rented a car and side swiped in the parking lot by a hit and run. I was responsible for the minor damage. I started down the path of paying out of pocket because it was small enough that I did not want to submit a claim. The rental car agency started to pile on extra fees such that it was worth it to turn in a claim. My insurance company was savvy enough to be able to dispute the extra charges. After I submitted it to the insurance company I basically did nothing. They took care of everything. So, in summary, when you buy full coverage on your car, it is not just a financial decision. It is also about not having to deal with a hassle.\"", "title": "" }, { "docid": "49fd455ca96a97dcc7da59dbe49f84fe", "text": "The answer to this question is very different depending on the type of item. From a purely financial perspective you would want to answer these questions which you may not have enough information to answer: Realistically the question I prefer to ask are: When something fails there is a big difference to me between having the cash and having an insurance policy that is suppose to cover it even if they are theoretically the same value. Some insurance policies may even be better than cash, like homeowners insurance might help take care of details like finding a contractor to fix the issue, finding temporary housing if your house burns down, etc.", "title": "" }, { "docid": "4cfffdac2d5dcc80ccfa0c1f8f6469a9", "text": "Insurance is for events that are both and Unexpected and, for many people, catastrophic events are, for example, sickness, disability, death, car accidents, house fires, and burglaries, for which you may buy health, disability, life, auto, home, and renter's insurance. It may be catastrophic for a family relying on a very old earner for that earner to die, and you can buy life insurance up to a very old age, but the premiums will reflect the likelihood of someone of that age dying within the covered period. The more expected an event is, the more anything referred to as insurance is actually forced savings. Health insurance with no copays on regular checkups expects the insured to use them, so the cost of those checkups plus a profit for the insurance company is factored into the premiums ahead of time. A wooden pencil breaking may be unexpected. Regardless of foreseeability, no one buys insurance on wooden pencils, as the loss of a pencil is not catastrophic. What is catastrophic can be context dependent. Health-care needs are typically unforeseeable, as you don't know when you'll get sick. For a billionaire, needing health-care, while unforeseeable, the situation would not be catastrophic, and the billionaire can easily self-insure his or her health to the same extent as most caps offered by health insurance companies. If you're on a fixed budget buying a laptop, if it unexpectedly failed, that would be catastrophic to you, so budgeting in the cost of insurance or an extended warranty while buying your laptop would probably make sense. Especially if you need that $2000 laptop, spending an extra 17.5% would safeguard against you having to come out of pocket and depleting your savings to replace it, even though that brings you to a grand total of $2350 before taxes. However, if you're in that tight of a situation, I would strongly recommend you to find a less expensive option that would allow you to self-insure. If you found a used laptop for much less (I can even see Apple selling refurbished Macs for less than $1000) you might decide that your budget allows you to self-insure, and you could profit from being careful with your hardware and resolving to cover any issues with it yourself.", "title": "" }, { "docid": "f38fba56cf8d9e865fc49ca5b711a520", "text": "Extended warranty or insurance is a tricky thing. In general, the big screen TV, or other electronics are going to become obsolete before they fail. Laptops, even Macs, are at risk for higher failure rates than other electronics. The question remaining is whether after the item has reached its 3rd or 4th birthday, if you would already be in the market for a newer model. In the big picture, if you have the money to buy a new replacement, or pay for a repair, you are better off to avoid the insurance. The highest failures are in the first year (aka 'infant mortality') and after N years, closer to 7-10, enough for obsolescence, than in years 2-5.", "title": "" }, { "docid": "bd45222f9427b319e0e1d00777de6503", "text": "As a rule, purchasing fairly priced (minus a spread) insurance on items you can afford to replace is a bad idea. However, in addition to the points mentioned in the previous answers, one should note that many types of insurance are UNDERpriced because on average people do not make claims even though they are entitled to them. If you purchase something moderately priced at Best Buy and get the extended warranty and it breaks down a year later, you will be unlikely to even remember that you purchased the insurance much less go through the trouble of making a claim. More likely you will just go buy a replacement or whatever the latest and greatest iteration is. It's like homeowner's insurance--an amazing number of things is covered but no one ever makes claims, so it is cheap. If you are a person who remembers and utilizes warranties and insurance, there are many types of insurance that will save you money in expectation. The other thing is that you know more about your own riskiness than the insurer does. I had a girlfriend who bought super comprehensive insurance on her crappy old car. I was quite stern with her about it but could not change her mind. She totaled it a few months later. They bought her a replacement. She got in a more serious accident with that car and got yet another one in addition to payment of her medical care, which did not even go to her health care insurance. Yes, her rates went up, but not fast enough to deal with how risky she was. Another example: I used to carry an e-book reader around in my shirt pocket and read it any time I had a chance. Cheap item and not that delicate, but since I had it with me all the time and used it constantly, it was a big risk for the store. The extended warranty would have been a great idea. In short, avoid extended warranties and insurance on things you can afford to lose unless you know that you are high risk or are otherwise more likely than average to make a claim.", "title": "" }, { "docid": "c63ab6d354c6076f549f7bf1be156a96", "text": "As many other posters have pointed out, unless you know (and your insurer doesn't) that because of any reason you are more likely than the average to damage your computer, insuring it doesn't really make a lot of sense if you can comfortably replace it should the worst happen. In this particular case of a laptop, insurance is especially unattractive because computers depreciate fairly quickly. If you break it... ...and you're insured, you will get the very same laptop you bought more than a year ago. ...and you're not insured, you can choose to either find the same laptop at a substantially lower price (Apple does not really lower prices that much but you can probably get a refurbished unit, just like you could get with AppleCare) or spend the original amount in a newer and more powerful laptop.", "title": "" }, { "docid": "a7fe4f6a428b10d9af4eac146034bde4", "text": "Generically, like farnsy noted in the other answer, you will only come ahead in dollar terms when you are significantly riskier than the average insuree. Otherwise the insurance company would have higher rates to make a profit. In the case of Apple Care there can arguably be other factors involved. If you did not insure your $2000 laptop and it broke (unfixably) just after the warranty period, would you replace it with a new Apple product? Maybe not, so Apple could lose a customer. That means they have an incentive to keep you happy. If your product breaks but insurance replaces it, you are a happier customer and more likely to buy other Apple products. This is not an incentive for traditional insurance companies that only do business in insurance. Now, with the profit margins Apple likes in general, I don't know if they've underpriced their insurance. I sort of doubt it even. But their margins on it are probably not high, meaning it's a closer call even if you are only averagely risky.", "title": "" }, { "docid": "7cf3a0af9562c14c623d6225f986f0ce", "text": "\"The key point to answer the question is to consider risk aversion. Assume I suggest a game to you: Throw a coin and if you win, you get $5, if you lose nothing happens. Will you play the game? Of course, you will - you have nothing to lose! What if I suggest this: If you win, you get $10,000,005 and if you lose you must pay $10,000,000 (I also accept cars, houses, spouses, and kidneys as payment). While the expected value of the second game is the same as for the first, if you lose the second game you are more or less doomed to spend the rest of your life in poverty or not even have a rest of your life. Therefore, you will not wish to play the second game. Well, maybe you do - but probably only if you are very, very rich and can easily afford a loss (even if you had $11,000,000 you won't be as happy with a possible raise to $21,000,005 as you'd be unhappy with dropping to a mere $1,000,000, so you'd still not like to play). Some model this by taking logarithms: If your capital grows from $500 to $1000 or from $1000 to $2000, in both cases it doubles, hence is considered the same \"\"personal gain\"\", effectively. And, voíla, the logartithm of your capital grows by the same amount in both cases. This refelcts that a rich man will not be as happy about finding a $10 note as a poor man will be about finding a nickel. The effect of an insurance is that you replace an uncertain event of great damage with a certain event of little damage. Of course, the insurance company plays the same game, with roles swapped - so why do they play? One point is that they play the game very often, which tends to nivel the risks - unless you do something stupid and insure all inhabitants of San Francisco (and nobody else) against eqarthquakes. But also they have enough capital that they can afford to lose the game. In a fair situation, i.e. when the insurance costs just as much as damage cost multiplied with probability of damage, a rational you would eagerly buy the insurance because of risk aversion. Therefore, the insurance will in effect be able to charge more than the statistically fair price and many will still (gnawingly) buy it, and that's how they make a living. The decision how much more one is willing to accept as insurance cost is also a matter of whether you can afford a loss of the insured item easily, with regrets, barely, or not all.\"", "title": "" }, { "docid": "f0acd74b1c1a72d4d78b6c12ab35e02e", "text": "Another factor to consider is that resale value of the laptop is quite bit more if it is still under warranty. This would apply to people who replace their laptop often. It is higher because the purchaser can be assured they are not getting a lemon. I determined this by comparing prices on ebay before selling my computer. Of course, if you keep your laptop longer than the warranty, this means nothing. But for me it meant I could sell my old laptop quickly and for a better price. Because I used my laptop for work and totally depended on it, even one day of downtime would cost me a lot, so it was worthwhile to keep a relatively new laptop under warranty. Also, for those using Apple Care, there is an undocumented perk: Apple covered an out of warranty repair on a time capsule under my apple care for my laptop even tho they were not purchased at the same time.", "title": "" }, { "docid": "38573197afde4dc246a9c9e232113a11", "text": "Can you afford to replace it? What does that mean? Even if insuring means overpaying, it does spread the risk. NB: This example is not about the Applecare program, which I think is a waste of money for many people. Others have explained very well if it would work for you or not. I have a Macbook but no Applecare. I have an expensive smartphone with insurance for dropping and water damage, but not theft. After one year I cancel this insurance. I don't have $200K in my bank account.", "title": "" } ]	[ { "docid": "bc1dcede73c8ceea3e5cbabdc536be5b", "text": "I would not do this personally for most house items, since I really view them as consumables. I am using household items until they wear out, not placing my money in an investment that needs to retain or return value. If you have any investment-like items, or if the value represents a significant (you decide this) portion of your annual income or net worth, then track it with inventory and schedule it on an insurance policy. If your home is destroyed and you have an inaccurate inventory or no inventory at all, what does insurance provide for replacement of property? Maybe more importantly, will insurance even care about your own personal inventory? (Isn't it easy to scam, through value inflation?) For insurance, you need to start with the details of your homeowners policy. Often there will be a general blanket amount of what they will reimburse. If you have items over that amount, or need more coverage, you will need to schedule the items up-front with insurance. This way, the value of expensive items are known and agreed on by all parties before an event. It ensures a quick claim resolution, and it is the cleanest and easiest way to deal with the insurance company. You need to talk to your agent about the unique aspects of your policy. You need to make sure the policy will cover your liabilities.", "title": "" }, { "docid": "5a8fb59d672228ef0294113ad9e05b3d", "text": "\"Insurance is bought for peace of mind and to divert disaster. Diverting disaster is a good/great thing. If your house burned down, if someone hit your car, or some other devastating event (think medical) happened that required a more allocation than you could afford the series of issues may snowball and cause you to lose a far greater amount of money than the initial incident. This could be in the form of losing work time, losing a job, having to buy transportation quickly paying a premium, having to incur high rate debt and so on. For the middle income and lower classes medical, house, and medical insurance certainly falls into these categories. Also why a lot of states have buyout options on auto insurance (some will let you drive without insurance by proving bonding up to 250K. Now the other insurance as I have alluded to is for peace of mind mainly. This is your laptop insurance, vacation insurance and so on. The premise of these insurances is that no matter what happens you can get back to \"\"even\"\" by paying just a little extra. However what other answers have failed to clarify is the idea of insurance. It is an agreement that you will pay a company money right now. And then if a certain set of events happen, you follow their guidelines, they are still in business, they still have the same protocols, and so on that you will get some benefit when something \"\"disadvantageous\"\" happens to you. We buy insurance because we think we can snap our fingers and life will be back to normal. For bigger things like medical, home, and auto there are more regulations but I could get 1000 comments on people getting screwed over by their insurance companies. For smaller things, almost all insurance is outsourced to a 3rd party not affiliated legally with a business. Therefore if the costs are too high they can simply go under, and if the costs are low they continue helping the consumer (that doesn't need help). So we buy insurance divert catastrophe or because we have fallen for the insurance sales pitch. And an easy way to get around the sales pitch - as the person selling you the insurance if you can have their name and info and they will be personally liable if the insurance company fails their end of the bargain.\"", "title": "" }, { "docid": "02006de697d6284b52199b1acfc57e5c", "text": "At what point can you not afford the repair, and how will that repair affect your home? In your scenario, you would be claiming $1, which I could agree is universally bad. A good tip is to raise the deductible to the point you feel you can cover on your own so you aren't tempted. (It would lower your premium too) This is what an emergency fund is for. In your examples, if you have $10K in an emergency fund, don't file a claim. If you have no emergency fund, and your roof is missing, I would suggest filing a claim. If you have no money, but the claim is to fix something that you could ignore (missing a back porch? Lock the back door and don't go out of it) then save the $10K and pay for it out of pocket. When it doubt, pay for it out of pocket if possible.", "title": "" }, { "docid": "faf771838eccce369d94d11fa1701ebc", "text": "\"The problem above is actually a pretty good list of the concerns around life insurance. While there is no correct answer to the question as posed, this will vary among different WSCs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. Buying life insurance, like almost all insurance, is on average a money losing purchase. This is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it. Think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. People, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences. The big reason to make this trade off is if the loss will have big lasting consequences. To stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event. For myself, the protection is not worth the warranty cost, but that is not true for everyone. Life insurance is a pretty extreme case of this, but I find the best question to ask is \"\"if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?\"\" For some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense. For some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high. The example you suggest seems on the border and good questions to ask are: Thinking about those questions may help you understand if the protection offers is worth the cost.\"", "title": "" }, { "docid": "465a6b3b78e069cecdc45c1ed7f22fc6", "text": "\"Lots of people make poor decisions in crises. Some panic, and don't make any decision at all. Insurance for affordable things can provide emotional security: If something goes wrong, the purchaser will not have to make a painful financial decision in a crisis. Many people do not want to have the burden of arguing about money, or having to spend precious cash, or borrow money, or raid savings accounts, just at the time they are already reeling from another loss. Having insurance \"\"just take care of it\"\" can save them an emotional double-whammy. Several kinds of insurance fill this perceived need:\"", "title": "" }, { "docid": "7749ecf6124f78a622a98723b96f1a0b", "text": "\"Annual property tax and home insurance come to mind as things that are easily forgotten, but surely the biggest true, \"\"I didn't see that coming,\"\" is a major car repair. There are a number of things that can go wrong with a car with little warning and end up costing a thousand dollars or more. Since most people are dependent upon their car for getting to work, doing anything but fixing or replacing the car is not an option. If you fix it, that's an out of pocket expense that most aren't prepared for. If the car has some age, you might be inclined to replace it, but doing so in a rush costs a lot more than taking your time in such a decision.\"", "title": "" }, { "docid": "ec14b01f26939b3b715582b7563c1223", "text": "\"You're asking for opinions here, because it's a matter of how you look at it. I'll give it a shot anyway. For insurance purposes - there's a clear answer: you insure based on how much it would cost you to replace it. For some reason, you're considering as a possibility negotiating with the insurance company about that, but I've never heard of insuring something at a \"\"possible sales value\"\" unless you're talking about a one of a kind thing, or a particularly valuable artifact: art, jewelry, etc. That it would be appraised and insured based on the appraised value. Besides, most of the stuff usually loses value once you bought it, not gains, so insuring per replacement costs makes more sense because it costs more. As to your estimations of your own net worth to yourself - its up to you. I would say that something only worth what people would pay for it. So if you have a car that you just bought brand new, replacing it would cost you $X, but you can only sell it for $X-10%, because it depreciated by at least 10% once you've driven it off the dealer's lot. So I would estimate your worth as $X-10% based on the car, not $X, because although you spent $X on it - you can never recover it if you sell it, so you can't claim to have it as your \"\"net worth\"\".\"", "title": "" }, { "docid": "f6175b7471ef574c8884ec620a6fda1b", "text": "Can you afford to replace your home if it suffers major damage in a fire or earthquake? Is your home at risk of flooding? In the United States, one can purchase insurance for each of these risks, but the customer has to ask about each of them. (Most default American homeowners policies cover fire and wind damage, but not earthquake or flooding. I am not sure about hurricane or tornado damage.) Your most cost-effective insurance against fire, earthquake, or flood damage is to prevent or minimize such damage. Practical measures cannot completely eliminate these risks, so homeowners' insurance is still a good idea (unless you are so rich you can easily afford to replace your home). But you can do things like: Your most cost-effective health insurance is to have clean water, wash your hands before handling food, eat healthily (including enough protein, vitamins, and minerals), exercise regularly, and not smoke. Your medical insurance can cover some of the inevitable large medical expenses, but cannot make you healthy.", "title": "" }, { "docid": "bc9736300627a5a9469e0cc63d941993", "text": "As someone who has worked for both an insurance carrier and an insurance agent, the reason people buy insurance is two fold: to spread risk out, and to get the benefits (when applicable) of approaching risk as a group. What you are really doing when you buy insurance is you are buying in to a large group of people who are sharing risk. You put money in that will help people when they take a loss, and in exchange get a promise of having your losses covered. There is an administrative fee taken by the company that runs the group in order to cover their costs of doing business and their profits that they get for running the group well (or losses they take if they run it poorly.) Some insurances are for profit, some are non-profit; all work on the principle of spreading risk around though and taking risk as a larger group. So let's take a closer look at each of the advantages you get from participating in insurance. The biggest and most obvious is the protection from catastrophic loss. Yes, you could self-insure with a group size of one, by saving your money and having no overhead (other than your time and the time value of your money) but that has a cost in itself and also doesn't cover you against risk up front if you aren't already independently wealthy. A run of bad luck could wipe you out entirely since you don't have a large group to spread the risk around. The same thing can still happen to insurance companies as well when the group as a whole takes major losses, but it's less likely to occur because there are more rare things that have to go wrong. You pay an administrative overhead for the group to be run for you, but you have less exposure to your own risks in exchange for a small premium. Another significant but less visible advantage is the benefit of being part of a large group. Insurance companies represent a large group of people and lots of business, so they can get better rates on dealing with recovering from losses. They can negotiate for better health care rates or better repair rates or cheaper replacement parts. This can potentially save more than the administrative overhead and profit that they take off the top, even when compared to self-insuring. There is an element of gambling to it, but there are also very real financial benefits to having predictable costs. The value of that predictability (and the lesser need for liquid assets) is what makes insurance worth it for many people. The value of this group benefit does decrease a lot as the value of the insurance coverage (the amount it pays out) decreases. Insurance for minor losses has a much smaller impact on liquidity and is much easier to self insure. Cheaper items that have insurance also tend to be high risk items, so the costs tend to be very high relative to the amount of protection. If you are financially able, it may make more sense to self-insure in these cases, particularly if you tend to be more cautious. It may make sense for those who are more prone to accidents with their devices to buy insurance, but this selection bias also drives the cost up further. Generally, the reason to buy insurance on something like a cellphone is because you expect you will break it. You are going to end up paying for an entire additional phone over time anyway and most such policies stop paying out after the first replacement anyway. The reason why people buy the coverage anyway, even when it really isn't in their best interest is due to two factors: being risk averse, as base64 pointed out, and also being generally bad at dealing with large numbers. On the risk averse side, they think of how much they are spending on the item (even if it is less compared to large items like cars or houses) and don't want to lose that. On the bad at dealing with large numbers side, they don't think about the overall cost of the coverage and don't read the fine print as to what they are actually getting coverage for. (This is the same reason that you always see prices one cent under the dollar.) People often don't really subconsciously get that they are paying more even if they would be able to eat the loss, so they pay what feels like a small amount to offset a large risk. The risk of loss is a higher fear than the known small, easy payment that keeps the risk away and the overall value proposition isn't even considered.", "title": "" }, { "docid": "47ebe7169646dcba24dc8ba34307af1c", "text": "\"IMO it's usually not worth it and here's why. There's a statistical distribution of how likely a unit may fail depending on its age. Probability is high for a short period after the unit comes into use because there are parts that were not thoroughly tested and manufacturing defects. Then all those defective parts fail and get replaces and the unit likely functions without faults for years. Then it reaches it lifetime end and again probability becomes much higher - parts wear out and start failing one by one. Every unit comes with a manufacturer warranty of one to two years already and that warranty will likely cover any defect causes by materials and manufacturing defects - the period when fault probability is initially high. \"\"Extended warranty\"\" only covers the unit for two-to-five years and most units have lifetime of about ten years. This means that the \"\"extended warranty\"\" is in effect when it is least useful.\"", "title": "" }, { "docid": "5ab3e118c60058987f14696f65d3471e", "text": "\"You don't mention what kind of insurance you're talking about, but I'll just address one angle on the question. For some kinds of insurance, such as health insurance (in the US), auto insurance, and homeowner's insurance, you may be insuring against an event that you would not be able to pay for without the insurance. For instance, if you are at fault in a car accident and injure someone, they could sue you for $100,000. A lot of people don't have $100,000. So it's not even a matter of \"\"I'll take the risk of having to pay it when the time comes\"\"; if the time comes, you could lose virtually everything you own and still have to pay more from future earnings. You're not just paying $X to offset a potential loss of $Y; you're paying $X to offset a potential derailment of your entire life. It is plausible that you could assign a reasonable monetary value to that potential \"\"cost\"\" that would mean you actually come out ahead in the insurance equation. It is with smaller expenses (such as insuring a new cellphone against breakage) that insurance becomes harder to justify. When the potential nonfinancial \"\"collateral damage\"\" of a bad event are less, you must justify the insurance expenses on the financial consequences only, which, as you say, is often difficult.\"", "title": "" }, { "docid": "7a3779a096b650123dcf697d0cb11ef3", "text": "Yes, it should be. As, where one has insurance, its an expense one would expect one to continue to incur in a normal budgetary emergency, even drop in the extreme.", "title": "" }, { "docid": "5d047c32af2e68df91707cccae2fdf08", "text": "Your basic point is correct; the savvy move is to use insurance only to cover losses that would be painful or catastrophic for you. Otherwise, self-insure. In the specific example of car insurance, you may be missing that it doesn't only cover replacement of the car, it also covers liability, which is a hundreds-of-thousands-of-dollars risk. The liability coverage may well be legally required; it may also be required as a base layer if you want to get a separate umbrella policy up to millions in liability. So you have to be very rich before this insurance stops making sense. In the US at least you can certainly buy car insurance that doesn't cover loss of the car, or that has a high deductible. And in fact, if you can afford to self-insure up to a high deductible, on average as you say that should be a good idea. Same is true of most kinds of insurance, a high deductible is best as long as you can afford it, unless you know you'll probably file a claim. (Health insurance in particular is weird in many ways, and one is that you often can estimate whether you'll have claims.) On our auto policy, the liability and uninsured motorist coverage is about 60% of the cost while damage to the car coverage is 40%. I'm sure this varies a lot depending on the value of your cars and how much you drive and driving record, etc. On an aging car the coverage for the car itself should get cheaper and cheaper since the car is worth less, while liability coverage would not necessarily get cheaper.", "title": "" }, { "docid": "3a2d0cb962219105b787335a74806013", "text": "\"Discussions around expected values and risk premiums are very useful, but there's another thing to consider: cash flow. Some individuals have high value assets that are vital to them, such as transportation or housing. The cost of replacing these assets is prohibitive to them: their cashflow means that their rate of saving is too low to accrue a fund large enough to cover the asset's loss. However, their cashflow is such that they can afford insurance. While it may be true that, over time, they would be \"\"better off\"\" saving that money in an asset replacement fund, until that fund reaches a certain level, they are unprotected. Thus, it's not just about being risk averse; there are some very pragmatic reasons why individuals with low disposable income might elect to pay for insurance when they would be financially better off without it.\"", "title": "" }, { "docid": "f40c475fb249c3e0a57175f3693ac6eb", "text": "It's not about moving the market or liquidity the non current months have reduced liquidity, checking today. ES_F June today the most recent 5 min bar has 809 volume. while the september has 10616 volume on the same bar. 2. Commision p/l should be subtracted as actual actual. I'm not necessarily worried about moving the market or liquidity im more or less worried about slippage. As some good strategies can decay very fast due to it.", "title": "" } ]	fiqa
b59074ff58ed812a254032987a03d398	Do companies only pay dividends if they are in profit?	[ { "docid": "6b26c6ae27d69eeeec92b4c8b16ce259", "text": "Yes the company can still pay dividends even if they aren't making a profit. 1) If the firm has been around, it might have made profits in the past years, which it might be still carrying (check for retained earnings in the financial statements). 2) Some firms in the past have had taken up debt to return the money to shareholders as dividends. 3) It might sell a part of it's assets and return the gain as dividends. 4) They might be bought by some other firm, which returns cash to shareholders to keep them happy. It pays to keep an eye on the financial statements of the company to check how much liquid money they might be carrying around to pay shareholders as dividends. They can stop paying dividends whenever they want. Apple didn't pay a dividend while Steve Jobs was around, even though they were making billions in profits. Many companies don't pay dividends because they find it more beneficial to continue investing in their business rather than returning money to shareholders.", "title": "" } ]	[ { "docid": "2f950e48b5b647f608e84a5e1e387e60", "text": "Yes, as long as you own the shares before the ex-dividend date you will get the dividends. Depending on your instructions to your broker, you can receive cash dividends or you can have the dividends reinvested in more shares of the company. There are specific Dividend ReInvestment Plans (or DRIPs) if you are after stock growth rather than income from dividend payments.", "title": "" }, { "docid": "3f55bb3f3499c894a67cb3c1ac0d20ce", "text": "If you assume the market is always 100% rational and accurate and liquid, then it doesn't matter very much if a company pays dividends, other than how dividends are taxed vs. capital gains. (If the market is 100% accurate and liquid, it also doesn't really matter what stock you buy, since they are all fairly priced, other than that you want the stock to match your risk tolerance). However, if you manage to find an undervalued company (which, as an investor, is what you are trying to do), your investment skill won't pay off much until enough other people notice the company's value, which might take a long time, and you might end up wanting to sell before it happens. But if the company pays dividends, you can, slowly, get value from your investment no matter what the market thinks. (Of course, if it's really undervalued then you would often, but not always, want to buy more of it anyway). Also, companies must constantly decide whether to reinvest the money in themselves or pay out dividends to owners. As an owner, there are some cases in which you would prefer the company invest in itself, because you think they can do better with it then you can. However, there is a decided tendency for C level employees to be more optimistic in this regard than their owners (perhaps because even sub-market quality investments expand the empires of the executives, even when they hurt the owners). Paying dividends is thus sometimes a sign that a company no longer has capital requirements intense enough that it makes sense to re-invest all of its profits (though having that much opportunity can be a good thing, sometimes), and/or a sign that it is willing, to some degree, to favor paying its owners over expanding the business. As a current or prospective owner, that can be desirable. It's also worth mentioning that, since stocks paying dividends are likely not in the middle of a fast growth phase and are producing profit in excess of their capital needs, they are likely slower growth and lower risk as a class than companies without dividends. This puts them in a particular place on the risk/reward spectrum, so some investors may prefer dividend paying stocks because they match their risk profile.", "title": "" }, { "docid": "354b30beb9a55fa25cc1a12b002fd1ca", "text": "This is how capital shares in split capital investment trusts work they never get any dividend they just get the capital when the company is wound up", "title": "" }, { "docid": "a60299283d4304455f80044b59c59161", "text": "Generally value funds (particularly large value funds) will be the ones to pay dividends. You don't specifically need a High Dividend Yield fund in order to get a fund that pays dividends. Site likes vanguards can show you the dividends paid for mutual funds in the past to get an idea of what a fund would pay. Growth funds on the other hand don't generally pay dividends (or at least that's not their purpose). Instead, the company grows and become worth more. You earn money here because the company (or fund) you invested in is now worth more. If you're saying you want a fund that pays dividends but is also a growth fund I'm sure there are some funds like that out there, you just have to look around", "title": "" }, { "docid": "f0a0740c1b6d3078decfcc0ed1551c3a", "text": "No, just as the profits from the bank do not go to their personal accounts and instead go to the banks coffers, where they are paid out as a dividend. If your company makes a mistake and loses money, do they draw it from your account?", "title": "" }, { "docid": "743d2e65a512c9a50e965e0a1b4a80f0", "text": "\"Dividends telegraph that management has a longer term focus than just the end of quarter share price. There is a committment to at least maintain (if not periodically increase) the dividend payout year over year. Management understands that cutting or pausing dividends will cause dividend investors in market to dump shares driving down the stock price. Dividends can have preferential tax treatment in some jurisdictions, either for an individual compared to capital gains or compared to the corporation paying taxes themselves. For example, REITs (real estate investment trusts) are a type of corporation that in order to not pay corporate income tax are required to pay out 95% of income as dividends each year. These are not the only type, MLP (master limited partnerships) and other \"\"Partnership\"\" structures will always have high dividend rates by design. Dividends provide cash flow and trade market volatility for actual cash. Not every investor needs cash flow, but for certain investors, it reduces the risks of a liquidity crisis, such as in retirement. The alternative for an investor who seeks to use the sale of shares would be to maintain a sufficient cash reserve for typical market recessions.\"", "title": "" }, { "docid": "eb0b832c419be0fca81b784603de9143", "text": "Earnings per share are not directly correlated to share price. NV Energy, the company you cited as an example, is an electric utility. The growth patterns and characteristics of utilities are well-defined, so generally speaking the value of the stock is driven by the quality of the company's cash flow. A utility with a good history of dividend increases, a dividend that is appropriate given the company's fiscal condition, (ie. A dividend that is not more than 80% of earnings) and a good outlook will be priced competitively. For other types of companies cash flow or even profits do not matter -- the prospects of future earnings matter. If a growth stock (say Netflix as an example) misses its growth projections for a quarter, the stock value will be punished.", "title": "" }, { "docid": "c7dd76f29cf8950aa0e1eeaa822ed576", "text": "Yes, absolutely. Consider Microsoft, Updated Jan. 17, 2003 11:59 p.m. ET Software giant Microsoft Corp., finally bowing to mounting pressure to return some of its huge cash hoard to investors, said it will begin paying a regular annual dividend to shareholders. From Wall Street Journal. Thus, for the years prior to 2003, the company didn't pay dividends but changed that. There can also be some special one-time dividends as Microsoft did the following year according to the Wall Street Journal: The $32 billion one-time dividend payment, which comes to $3 for each share of Microsoft stock, could be a measurable stimulus to the U.S. economy -- and is expected to arrive just in time for holiday shopping. Course companies can also reduce to stop dividends as well.", "title": "" }, { "docid": "4731dfb1db064ae942c8e2fd7c36e757", "text": "\"Dividends are declared by the board of directors of a corporation on date A, to stock holders of record on date B (a later date). These stockholders then receive the declared dividend on date C, the so-called payment date. All of these dates are announced on the first (declaration) date. If there is no announcement, no dividend will be paid. The stock typically goes down in price by approximately the amount of the dividend on the date it \"\"goes ex,\"\" but then moves in price to reflect other developments, including the possibility of another declaration/payment, three months hence. Dividends are important to some investors, especially those who live on the income. They are less important to investors who are out for capital gains (and who may prefer that the company reinvest its money to seek such gains instead of paying dividends). In actual fact, dividends are one component of \"\"total\"\" or overall return. The other component is capital gains, and the sum of the two represents your return.\"", "title": "" }, { "docid": "187da176de28134ca36a1b9726d3e13a", "text": "The shareholders have a claim on the profits, but they may prefer that claim to be exercised in ways other than dividend payments. For example, they may want the company to invest all of its profits in growth, or they may want it to buy back shares to increase the value of the remaining shares, especially since dividends are generally taxed as income while an increase in the share price is generally taxed as a capital gain, and capital gains are often taxed at a lower rate than income.", "title": "" }, { "docid": "613fb19903e86d17b4d0dae3b5a7afe7", "text": "One reason to prefer a dividend-paying stock is when you don't plan to reinvest the dividends. For example, if you're retired and living off the income from your investments, a dividend-paying stock can give you a relatively stable income.", "title": "" }, { "docid": "67678b24e00d599afb2ad4f0fb52c905", "text": "\"First, note that a share represents a % of ownership of a company. In addition to the right to vote in the management of the company [by voting on the board of directors, who hires the CEO, who hires the VPs, etc...], this gives you the right to all future value of the company after paying off expenses and debts. You will receive this money in two forms: dividends approved by the board of directors, and the final liquidation value if the company closes shop. There are many ways to attempt to determine the value of a company, but the basic theory is that the company is worth a cashflow stream equal to all future dividends + the liquidation value. So, the market's \"\"goal\"\" is to attempt to determine what that future cash flow stream is, and what the risk related to it is. Depending on who you talk to, a typical stock market has some degree of 'market efficiency'. Market efficiency is basically a comment about how quickly the market reacts to news. In a regulated marketplace with a high degree of information available, market efficiency should be quite high. This basically means that stock markets in developed countries have enough traders and enough news reporting that as soon as something public is known about a company, there are many, many people who take that information and attempt to predict the impact on future earnings of the company. For example, if Starbucks announces earnings that were 10% less than estimated previously, the market will quickly respond with people buying Starbucks shares lowering their price on the assumption that the total value of the Starbucks company has decreased. Most of this trading analysis is done by institutional investors. It isn't simply office workers selling shares on their break in the coffee room, it's mostly people in the finance industry who specialize in various areas for their firms, and work to quickly react to news like this. Is the market perfectly efficient? No. The psychology of trading [ie: people panicking, or reacting based on emotion instead of logic], as well as any inadequacy of information, means that not all news is perfectly acted upon immediately. However, my personal opinion is that for large markets, the market is roughly efficient enough that you can assume that you won't be able to read the newspaper and analyze stock news in a way better than the institutional investors. If a market is generally efficient, then it would be very difficult for a group of people to manipulate it, because someone else would quickly take advantage of that. For example, you suggest that some people might collectively 'short AMZN' [a company worth half a trillion dollars, so your nefarious group would need to have $5 Billion of capital just to trade 1% of the company]. If someone did that, the rest of the market would happily buy up AMZN at reduced prices, and the people who shorted it would be left holding the bag. However, when you deal with smaller items, some more likely market manipulation can occur. For example, when trading penny stocks, there are people who attempt to manipulate the stock price and then make a profitable trade afterwards. This takes advantage of the low amount of information available for tiny companies, as well as the limited number of institutional investors who pay attention to them. Effectively it attempts to manipulate people who are not very sophisticated. So, some manipulation can occur in markets with limited information, but for the most part prices are determined by the 'market consensus' on what the future profits of a company will be. Additional example of what a share really is: Imagine your neighbor has a treasure chest on his driveway: He gathers the neighborhood together, and asks if anyone wants to buy a % of the value he will get from opening the treasure chest. Perhaps it's a glass treasure chest, and you can mostly see inside it. You see that it is mostly gold and silver, and you weigh the chest and can see that it's about 100 lbs all together. So in your head, you take the price of gold and silver, and estimate how much gold is in the chest, and how much silver is there. You estimate that the chest has roughly $1,000,000 of value inside. So, you offer to buy 10% of the chest, for $90k [you don't want to pay exactly 10% of the value of the company, because you aren't completely sure of the value; you are taking on some risk, so you want to be compensated for that risk]. Now assume all your neighbors value the chest themselves, and they come up with the same approximate value as you. So your neighbor hands out little certificates to 10 of you, and they each say \"\"this person has a right to 10% of the value of the treasure chest\"\". He then calls for a vote from all the new 'shareholders', and asks if you want to get the money back as soon as he sells the chest, or if you want him to buy a ship and try and find more chests. It seems you're all impatient, because you all vote to fully pay out the money as soon as he has it. So your neighbor collects his $900k [$90k for each 10% share, * 10], and heads to the goldsmith to sell the chest. But before he gets there, a news report comes out that the price of gold has gone up. Because you own a share of something based on the price of gold, you know that your 10% treasure chest investment has increased in value. You now believe that your 10% is worth $105k. You put a flyer up around the neighborhood, saying you will sell your share for $105k. Because other flyers are going up to sell for about $103-$106k, it seems your valuation was mostly consistent with the market. Eventually someone driving by sees your flyer, and offers you $104k for your shares. You agree, because you want the cash now and don't want to wait for the treasure chest to be sold. Now, when the treasure chest gets sold to the goldsmith, assume it sells for $1,060,000 [turns out you underestimated the value of the company]. The person who bought your 10% share will get $106k [he gained $2k]. Your neighbor who found the chest got $900k [because he sold the shares earlier, when the value of the chest was less clear], and you got $104k, which for you was a gain of $14k above what you paid for it. This is basically what happens with shares. Buy owning a portion of the company, you have a right to get a dividend of future earnings. But, it could take a long time for you to get those earnings, and they might not be exactly what you expect. So some people do buy and sell shares to try and earn money, but the reason they are able to do that is because the shares are inherently worth something - they are worth a small % of the company and its earnings.\"", "title": "" }, { "docid": "65341cfd9b4397498cdd8102ad2dbd20", "text": "No. Share are equity in companies that usually have revenue streams and/or potential for creating them. That revenue can be used to pay out dividends to the shareholders or to grow the company and increase its value. Most companies get their revenue from their customers, and customers rarely give their money to a company without getting some good or service in exchange.", "title": "" }, { "docid": "95016e01b71321938f2cd9859aed3f34", "text": "If you have a public company and shareholder A owns 25% and shareholder B owns 25%, and lets say the remaining 50% is owned by various funds/small investors. Say profits are 100mil, and a dividend is payed. Say 50 mil worth is payed out as dividend and 30 mil is kept as retained earnings for future investment. Can the remaining 20 mil be distributed to shareholders A and B, so that they both get 10mil each? Can certain shareholders be favored and get a bigger cut of profits than the dividends pay out is my question basically.", "title": "" }, { "docid": "abb4cdd47e8ddd5e34572e51cc065730", "text": "Shareholders can [often] vote for management to pay dividends Shareholders are sticking around if they feel the company will be more valuable in the future, and if the company is a target for being bought out. Greater fool theory", "title": "" } ]	fiqa
ee9975b65de729538e4343b5429193a2	I keep getting overcharged at the grocery store. Foul play?	[ { "docid": "7576ea11783d7147c84c20fb5a63c954", "text": "Of course, there is no way for us to know whether or not the clerk is trying to rip you off $1.29 at a time, but I can't understand the possible motivation for doing so. I would imagine that most people would catch this at some point, so for a store to consistently overcharge for something like this is really bad for business. They would be risking upsetting a customer all for the potential gain of $1.29. I have to assume that it is not malice, but incompetence. We don't know what caused the clerk to be confused, but it is not really our concern. From what I can tell, you've gotten the right price in the end. You were ultimately charged for two drinks, and the extra $1.29 that you were charged was refunded. Since it happened three times, you have to decide how badly you want these drinks in the future. If you choose to return, you'll just have to expect the possibility that it will ring up incorrectly, and you'll have to get it fixed. If that seems like too much hassle, then don't return to this store.", "title": "" } ]	[ { "docid": "213ed5c9eb29e06a86cd6f4a29690ecf", "text": "Maybe the prices aren't better always but there's a perceived higher quality. When you shop there, it feels like you're getting a better value. Who can forget two buck Chuck? And lots of their goods are repackaged. It's an open secret that some of the goods you buy there is name brand with a new box. TJ cultivates this image of being the place where they stuff expensive food into a new box and sell it half off. Shopping there feels like winning the lottery. They could only do this by limiting their variety. A shame that the article points it out as if a failing, like they pay employees more despite this. It's just the opposite.", "title": "" }, { "docid": "3bf1cfcfad220756d3e5d8255f98729a", "text": "I actually did this once. I wrote a large check along with a letter indicating that I would not be around to receive the next bill so I was prepaying. Not only did they credit the entire check, they didn't send that bill and listed the charges on the next month's bill. They must have done that by hand because there's no way the machines would have understood.", "title": "" }, { "docid": "f61ca8c9f06ada8ee5abe94edec796dd", "text": "Credit card, without a doubt. The reason is dispute resolution. If you dispute a charge on debit card - the money has left your account already, and if the dispute was accepted - you'll get it back. If. Eventually. In the mean time your overdraft will be missing $$$. For credit cards, you can catch a fraud action before the money actually leaves your pocket and dispute it then. In this case the charge is set aside, and you will only be required to actually pay if the dispute is rejected. I.e.: The money stays in your pocket, until the business proves that the charge is legit. In both cases, if the dispute is justified (i.e.: there was indeed a fraud) neither you nor the bank will lose money at the bottom line, it's just who's got the money during the dispute resolution process (which may be lengthy) that matters.", "title": "" }, { "docid": "66b35acf56e4b858179a6a2252a75163", "text": "\"I was I a similar position as you, and sometimes credit bureaus might be difficult to deal with, especially when high amounts of money are involved. To make the long story short, someone opened a store credit card under my name and made a charge of around 3k. After reporting this to the bureaus, they did not want to remove the account from my credit report citing that the claim was \"\"frivolous\"\". After filing a police report, the police officer gave me the phone number for the fraud department of this store credit card, and after they investigated, they removed the account from my credit. I would suggest to do the following: Communicating with Creditors and Debt Collectors You have the right to: Stop creditors and debt collectors from reporting fraudulent accounts. After you give them a copy of a valid identity theft report, they may not report fraudulent accounts to the credit reporting companies. Get copies of documents related to the theft of your identity, like transaction records or applications for new accounts. Write to the company that has the documents, and include a copy of your identity theft report. You also can tell the company to give the documents to a specific law enforcement agency. Stop a debt collector from contacting you. In most cases, debt collectors must stop contacting you after you send them a letter telling them to stop. Get written information from a debt collector about a debt, including the name of the creditor and the amount you supposedly owe. If a debt collector contacts you about a debt, request this information in writing. I know that you said that the main problem was that your credit account was combined with another. But there might be a chance that identity theft was involved. If this is the case, and you can prove it, then you might have access to more tools to help you. For example, you can file a report with the FTC, and along with a police report, this can be a powerful tool in stopping these charges. Feel free to go to the identitytheft.gov website for more information.\"", "title": "" }, { "docid": "7be1da953541e9ce40e4598da9a824e4", "text": "\"Debit Cards have a certain processing delay, \"\"lag time\"\", before the transaction from the vendor completes with your bank. In the US it's typically 3 business days but I have seen even a 15 day lag from Panera Bread. I guess in the UK, payment processors have similar processing delays. A business is not obliged to run its payment processing in realtime, as that's very expensive. Whatever be the lag time, your bank is supposed to cover the payment you promised through your card. Now if you don't have agreements in place (for example, overdraft) with your bank, they will likely have to turn down payments that exceed your available balance. Here is the raw deal: In the end, the responsibility to ensure that your available balance is enough is upon you (and whether you have agreements in place to handle such situations) So what happened is very much legal, a business is not obliged to run its payment processing in realtime and no ethics are at stake. To ensure such things do not happen to me, I used to use a sub-account from which my debit card used to get paid. I have since moved to credit cards as the hassle of not overdrawing was too much (and overdraft fees from banks in the US are disastrous, especially for people who actually need such a facility)\"", "title": "" }, { "docid": "c2ee914bc9846404b3f5636804faf62c", "text": "\">What’s more, some experts argue that retailers make up for the swipe fees by quietly raising the cost of their goods. Are the \"\"experts\"\" arguing that saying it's a bad thing? They're implying it is, with that \"\"quietly raising the cost of their goods.\"\" Retailers adjust the cost of their goods to account for the costs of business. Credit card processing is a cost of business, just like labor and electricity. Of course if should be factored into prices.\"", "title": "" }, { "docid": "ad17ea130f0ad0666945179d9c9af8ad", "text": "Right, he wrote that and is busted for price-gouging in multiple states (New York, California), so perhaps he's not really following his own model? I don't associate corporate social responsibility (CSR) with deliberately overcharging customers.", "title": "" }, { "docid": "407821a0287ce42c6eeb29d0cee0f85b", "text": "> Queue the increased prices at the grocery store Nope, we will eat the rise in cost. Grocery stores are in an all war of attrition and the ones who don't keep prices low are going to lose all their customers. Really the only thing going up in cost lately that saw a retail raise was Asparagus, but that was due to rain.", "title": "" }, { "docid": "0fa57073146e6e11461601c5ccd90fba", "text": "I work in the retail software industry, and can confirm this is a major problem right now. There are several very popular point of sale packages that hackers have written RAM scrapers for. Yes, there is (a lot) of credit card fraud traced back to these hacks.", "title": "" }, { "docid": "72e7956362033e58acb25cf54d7622b1", "text": "\"Surprisingly, I got weird looks when I say \"\"I think I need a 2nd grocery bag\"\". I sometimes have to say things like: \"\"This bag looks heavy. I lost $2.50 of blueberries once because I was too cheap to pay $0.10 for a second bag\"\"\"", "title": "" }, { "docid": "0f63f1f37ef625cb1a002d87e4f07fe9", "text": "I was part of a class action against First Tennessee Bank for this same shady shit. Got my check in the mail last week for my portion. $21.12 At one point, they hit me five times for overdraft charges, ($175). No risk for them, charge the fuck out of you on the front end, pay back pennies on the back. It's a win/win for them. I joined a credit union (SkyOne) and love them, will never look back.", "title": "" }, { "docid": "28b642a530778a719613ff6ccb49204f", "text": "\"First of all, this does not sound like a debit situation. Every debit has to be authorized by the entry of a pin code. So, the hotel could not have arbitrarily created a new debit charge. Usually, hotel charges are credit charges. Once they have your credit card number, they can charge anything they want to the credit card. If it is an accidental double charge, you can call the hotel and ask them to refund $100 or whatever the mistake was plus your overdraft fee. In all probability they will refund any double charge, but not agree to refund the fee. You can also contest the charge and do a \"\"chargeback\"\" of the amount which was double charged. You will probably not be able to collect the overdraft fee that you got from the hotel unless you sue them in small claims court, or you luck out and the hotel agrees to refund the fee as well.\"", "title": "" }, { "docid": "eb83ca5442a18d421fab68113cd1df8b", "text": "\"I doubt there is anything you can do to convince them you paid, outside of just talking to them, which it seems you already tried. These are the possibilities I can think of for how this happened: IMHO, the most likely scenario is #4. If 1 or 3 happened you'll never see your money again, but the other 3 possibilities leave open the option of the error being discovered in the future. My suggestion, if the copay is small, is to pay it again, ask for a receipt, and ask them to make a note in the system that you claim you already paid, and ask them to \"\"be on the look-out\"\" for any discrepancies in that amount. This way, (with a good amount of luck), if they find it or discover the error (from another customer asking about the credit, or an accounting cash surplus), they can refund it to you.\"", "title": "" }, { "docid": "c73fa6c7170b8d929709dcd0f3304ece", "text": "Find a way to raise the cash needed to pay the store back, plus penalties. Be humble and apologetic. You have committed fraud. Depending on the amount, it may be a felony. Be an adult, settle the debt. If not, they have grounds to open a complaint with law enforcement. Your county jail probably has a number of residents who are paper hangers.", "title": "" }, { "docid": "fbd6ac6cbda12c87cde19f8666f25358", "text": "Not exactly. From OP's X-post, this appears like textbook tortious interference. If it were me, I'd demonstrate to the customer why they are getting a better deal and at the same time, I'd have my attorney send a C&D to the offending competitor.", "title": "" } ]	fiqa
151ac1d461d6e2fbd0846cc4f8c0c710	Why is auto insurance ridiculously overpriced for those who drive few miles?	[ { "docid": "e693ba7ba545591de418e7572e360c4b", "text": "There are several aspects to this but at a high level it boils down to A lot goes in to insurance rating and risk projecting. You can't adjust a single variable and expect a proportional change in your premium, 7,000 miles per year just won't be 70% of the cost of 10,000 miles per year, because there are a lot of other things in play as well. To further address premium adjustments. Consider this: Even if your liability coverage did scale with perfect correlation to your mileage (using the same 70% from above, 7,000 miles per year versus 10,000 miles per year) then your premium composition is: $200 to $170 is 15%. No change will have a direct linear correlation to your total premium because there are different component pieces of the total premium. Fixed costs may be built in to the amounts for other component pieces of the premium, for example maybe no line of coverage ever has a cost below $X. Obviously these numbers are all made up Additionally, and also less considered is the fact that your liability also scales because of a lot of factors that have nothing to do with you. It might be the other cars that are on the road, it might be that more densely populated areas have more fender benders. For example if you live in Beverly Hills you have a much higher likelihood of accidentally bumping a $70-$80-$90-$100k+ car than you do in say, rural Wisconsin. If your zip code is gentrifying and everyone starts buying Mercedes, your liability coverage increases. You can not adjust one single variable and decide that you are lower risk than all insurers think you are. If you shop this coverage and all insurers are within a nominal margin of pricing for the same coverage levels, there isn't much to argue with; you are simply riskier than you think you are and the variable you are focused on is not as meaningful as you think it is.", "title": "" }, { "docid": "38c51f47de3332a794c3c1ced7280657", "text": "Not all miles carry the same amount of risk. A survey by Progressive indicated that accidents are most likely to occur within 5 miles of home, and 77% of accidents occur within 15 miles of home. Only 1% of accidents occurred 50 or more miles from home. That's from 2002, but it seems unlikely to have changed much. Since the miles closest to your home carry more risk, they cost more, and low-mileage discounts reflect that. There are per-mile insurance options in a few states which could save you money, but they do constant monitoring via that ODB2 telematics device, and other insurers offer discounts if you accept their monitoring either in perpetuity or for a limited period of time. Without monitoring, insurers don't know if that 4,000 miles of driving is spread into a few mid-day trips each week, or maybe you're doing all that driving from midnight to 4am on weekends (fatalities far more likely), or from 5-7pm during weekdays (accidents far more likely). Personally, I save ~10% by being a 'low-mileage' driver, and am currently in the middle of a 90-day monitoring, so might go lower, but given that accidents are far more likely close to home, 10% feels pretty significant and appropriate.", "title": "" }, { "docid": "b321056014fd09e629a859b0d265185f", "text": "4000 miles a year is not a few! European average is about 9000... But nevertheless... But when it comes to risk, then: 1) Nothing stops you from changing circumstances and drive 10 times as much as in previous yers. The insurance remains the same. The only thing the insurance company can do is to charge you more next year (taking the miles you've made this year as a basis for calculations)* 2) Drivers who drive very seldom are a huge risk because of their low experience. I know a few people that drive more than 100 miles only a few times a year, and on average once a year have accident during that drives. It doesn't mean that an average sunday driver have similar risk of accident as daily driver, but it's in no way similar. *) Germany/Switzerland based, the whole EU is likely to be the same", "title": "" }, { "docid": "6831bd88f8115a3ab7f894e2d6816b27", "text": "Many services charge prices that do not scale linearly with usage. This is because the service provider has fixed costs that they must recoup by charging a rate with a fixed component. A 5-mile taxi ride is unlikely to cost half what a 10-mile taxi ride costs. Even a half sandwich at a sandwich place usually costs more than half of what a full sandwich costs. In this respect, insurance is no different from many other items you may purchase.", "title": "" }, { "docid": "bf6049ea982c6dc34eeb8fa8d6e68ac1", "text": "Some proportion of the costs of a policy have little to no relationship to miles driven. Think of costs of underwriting, and more especially sales/marketing/client acquisition costs (auto insurance isn't in the same league as non-term life insurance (where the commissions and other selling expenses typically exceed the first year's worth of premiums), but the funny TV ads and/or agent commissions aren't free), as well as general business overhead. Also, as noted by quid, some proportion of claim risk isn't correlated to distance covered (think theft, flood, fire, etc.). There are also differences in the miles that are likely to be driven by a non-commercial/vehicle-for-hire driver who puts 25k miles a year vs. one who puts 7k per year. The former is generally going to be doing more driving at higher speeds on less-congested freeways while the latter will be doing more of their driving on crowded urban roads. The former pattern generally has a lower expected value of claims both due to having fewer cars per road-mile, fewer intersections and driveways, and also having any given collision be more likely to result in a fatality (paralysis or other lifetime disability claims are generally going to exceed what the insurer would pay out on a fatality).", "title": "" }, { "docid": "54cb10e07c7d5e2f9e9430a07dceecbf", "text": "Other people lie to the companies about how many miles they drive, so they can't take the mileage figures literally. You aren't specifying whether you want liability only, or more-comprehensive insurance. Stuff happens when you aren't driving. Cars get stolen. Other drivers hit parked cars and leave. Trees fall on parked cars. Move to Virginia where insurance is not required. Just pay $500 a year for not having insurance, and be careful.", "title": "" }, { "docid": "511d5d2b4fc64224de9fedfe7b7eb8a8", "text": "First you have to understand that insurance is basically a social system, just with Shareholders. Insurance costs consist of 3 factors: Now, to encourage a low-risk behavior a separating factor is search in the vast amount of statistical data. Drivers experience, miles and type of car being the most common, but also other things like oldtimer-status etc. are possible. If it so happens that the 3-5000 miles driver do only in average have 80% of the damage-costs of a comparable group 5-8000 miles driver, you´ll get the 20% bonus on factor 1. So the answer is, it is not overpriced, there is just no linear relationship to mileage. You can´t divide your insureds in too many groups or you´ll miss the mutual aspect of insurance. If everybody just pays his own risk, he can just do so in his bank and save on overhead and profit.", "title": "" }, { "docid": "989d1eda3fb85d73cf183ef03e5a7213", "text": "There is plenty of over-rationalisation in the majority of these answers, when the simple answer is that it is simply down to statistics. Say an insurer had two pieces of information about two separate drivers: annual mileage, and whether they had had an accident in the last 3 years. Driver A drives 10,000 miles a year and hasn't had an accident in the past 3 years. Driver B drives 500 miles a year and hasn't had an accident in the past 3 years. Which would the insurer think was the safer bet? The answer is A, and this makes his premiums lower. The reason for this is that the insurer has a lot more data about Driver A than Driver B: they know that Driver A has driven 30,000 miles without having an accident. This could, of course, be luck, or a fluke, but it is likely that Driver A is actually a safe driver. The chance that Driver A hasn't had an accident just through sheer luck and that they are actually a terrible driver is quite slim. On the other hand, Driver B has only driven 1,500 miles in the past three years. Whilst this seems like prima facie evidence of them being as safe a driver as Driver A, it is much more likely that Driver B could have driven 1,500 miles and avoided an accident through sheer luck, even though they are a terrible driver. This means drivers who drive low amounts of mileage will be penalised relative to other drivers who have high mileage. It has nothing to do with insurers taking a judgement that 'doing more mileage makes you more experienced' or 'makes you a better driver' as others have suggested here (although, it is probably true - it's not quantifiable from an insurer's perspective).", "title": "" }, { "docid": "28227bfd1d7cbffa4299c2300b4e3950", "text": "because it cost the insurer more, obviously. while this sounds snarky, it's important to realize that actual insurance companies set their insurance rates based on actual historical costs. for some reason people who report low miles have cost the company more dollars per reported mile than people who report high miles. in that sense, insurance is not overpriced. if it were truly overpriced, then an insurer would specialize in such insurance and make a killing on the free market. the more interesting questions is why do drivers who claim to travel very few miles cost the insurance companies so much per mile? that question has a host of possible answers and it's difficult to say which is the largest cost. here are just a few:", "title": "" }, { "docid": "3491f61b38a6415470586610f3170495", "text": "\"One reason is because car insurance is mandated. Mandated insurance means the government is forcing people to purchase it, which also means that everyone must have the opportunity to purchase it at a reasonable cost, even if the insurer would normally not choose to insure them. In mandated industries, risk pools are formed which means that as a whole, lower risk members partially subsidize higher risk members. In mandated industries that have a large risk variance, the insurance system would break down if everyone was charged their \"\"fair share\"\" because high risk members would be unable to afford a policy. (This is even more prominent with health insurance than car insurance because the difference in risk is vastly greater.) On a positive note, perhaps you may get a warm and fuzzy feeling knowing that you are helping out others \"\"in need\"\".\"", "title": "" }, { "docid": "322d5a6f7c2a8f2b67dd39abd2e76531", "text": "Insurance rates are about assessing risk. If the insurer has no way to reliably and easily assess usage, they will not reduce the premiums. Many companies are providing tracking devices that connect to the OBD-II port. This not only tracks actual miles driven, but can typically track aggressive driving, time of day, length of trips, and other information. Unless you are using this kind of device to give the insurer actionable feedback on your driving habits, do not expect any discounts for mileage or usage.", "title": "" }, { "docid": "b8a2ad4952560a7f99244e924ecf5f51", "text": "People who drive long distances tend to do more of their driving on larger, well-built roads (freeways / motorways) that are designed for high-speed driving. Although some people find them intimidating, they are much safer in terms of accidents per kilometre driven for several reasons:", "title": "" } ]	[ { "docid": "0f8d360bbfa515fcd8bcf8cda182b071", "text": "As a recent college grad who switched to his own car insurance, many of the things I did myself are reflected here. The #1 thing I did was find out what coverages I had, what coverages some friends of mine had (car enthusiasts mostly - they're the most informed on this stuff), and then figured out what kind of coverages I wanted. From there, I went around getting quotes from anyone and everyone and eventually built out a sizeable spreadsheet that made it obvious which company was going to offer me the best rate at a given coverage level. Something else to remember - not all insurance companies look at past accidents and violations (speeding, etc) the same. In my search, I found some have a 3-year scope on accidents and violations, while others were as much as 5 years. So, if your driving record isn't a shining example (mine isn't perfect), you could potentially save money by considering insurance through a company that will see fewer violations/incidents than another because of the size of their scope. I ended up saving $25/mo by choosing a company that had a 3-year scope, which was on the cusp of when my last violation/incident occurred. Insurance companies will also give out discounts for younger drivers based on GPA average. If you have kids and they maintain a high GPA, you might be able to get a discount there. Not all companies offer it, so if they do it's worth finding out how much it is", "title": "" }, { "docid": "3b2684744c9a4f150f9725871ea78493", "text": "\"Ok sure, your homeowners insurance now includes all those things. Floods, hurricanes, terrorism... its also now twice the price. You're on /r/finance, not /r/politics. You should understand that you pay a premium for every risk that you off-lay. It is well known that basic homeowners insurance does not cover floods. If you want it, you can get it. Most people in a non flood-prone area will say, \"\"I'm willing to take that risk, I'll save $500/yr and not get it\"\". Would you rather the government just force you to get it? You just complained about Auto Insurance \"\"forcing\"\" you to get uninsured driving insurance. You can't have it both ways.\"", "title": "" }, { "docid": "77f7e72273bf30849e09ae4ec0003759", "text": "Every insurance company has a pricing factor for every car they insure that along with factors about the driver is used to set rates. The story was that AAA was adjusting it's factor for Tesla models. Insurance companies do this all time as they collect more data. This is only news because people like to talk about Tesla.", "title": "" }, { "docid": "3a2d0cb962219105b787335a74806013", "text": "\"Discussions around expected values and risk premiums are very useful, but there's another thing to consider: cash flow. Some individuals have high value assets that are vital to them, such as transportation or housing. The cost of replacing these assets is prohibitive to them: their cashflow means that their rate of saving is too low to accrue a fund large enough to cover the asset's loss. However, their cashflow is such that they can afford insurance. While it may be true that, over time, they would be \"\"better off\"\" saving that money in an asset replacement fund, until that fund reaches a certain level, they are unprotected. Thus, it's not just about being risk averse; there are some very pragmatic reasons why individuals with low disposable income might elect to pay for insurance when they would be financially better off without it.\"", "title": "" }, { "docid": "c73e81e82c0d59a519f5f9f268ff482b", "text": "You're trading a fixed liability for an unknown liability. When I graduated from college, I bought a nice used car. Two days later, a deer came out of nowhere, and I hit it going 70 mph on a highway. The damage? $4,500. If I didn't have comprehensive insurance, that would have been a real hit to me financially. For me, I'd rather just pay the modest cost for the comprehensive.", "title": "" }, { "docid": "ff18c267ef3b0bfdff548a41b142920f", "text": "\"Last week I bought a Toyota RAV4 XLE that comes with Driver Assist (will steer you car if you are not in the lane), stop the car is slower speed if you are about to hit another car or pedestrian, Radar to keep distance and avoid slowing cars in cruise control, automatic high beam, etc. I called my insurance and asked if there are any discounts for all these safety features. They said \"\"No!\"\", but I do get a discount of passive anti-theft which is now standard on almost every car. It will take the insurance industry 10 years to start giving discounts for this new safety devices... because, meanwhile, they don't have to give discounts and keep all the money.\"", "title": "" }, { "docid": "121b78600c056243d50d16e83fcf7327", "text": "\"Personally, I would: a) consider selling the car and replacing it with a 'cheaper' one. If you only drive it once a month, you are probably not getting much 'value' from owning a nice car. b) move the car (either current or replacement) out to your parent's place. The cost of a plane ticket is about the same as the cost of the garage, and your parents would likely hold on to it for free (assuming they live in the suburbs, and parking is not an issue) option b should lower your insurance costs (very low annual mileage) and at least you'll get some frequent flier miles out of your $350 a month. That being said: this is a \"\"quality of life\"\" issue, which means that there isn't going to be a firm answer. If you are 25, have little debt, which you are paying off on time, have an emergency fund, and you are making regular contributions to your 401k, you are certainly NOT \"\"being seriously irresponsible\"\" by owning a nice car. But you may decide that the $1000 a month could be better spent somewhere else.\"", "title": "" }, { "docid": "5dc0a3dea63d8bb1ed57dea1db6825d4", "text": "\"Insurance rates are based on statistics manipulated by experts in actuarial \"\"science\"\". Actuaries look at how many times different makes and models get into accidents or are targeted by thieves, and how expensive it is to repair them. Many auto and finance sites will publish lists of the best and worst insurance risks. Family style cars like minivans and family sedans fair well, while sports cars get more expensive insurance. New models will get the risk of similar models until there is statistical data on them. One other take away from this discussion is that inexpensive insurance usually coincides with cheap repair costs, lowering your total cost of operation for your vehicle.\"", "title": "" }, { "docid": "ddbbf8d6d4092253f402b9c9f87cdc87", "text": "Some countries don't have robust life insurance markets. Some countries have horrible travel fatality statistics. Some countries don't have very good liability law enforcement. Is $2 on top of a train ticket in the US to send your family a $20,000 payment if you die on the train worth it, probably not. The fatality rate is pretty low here, lots of people have their own life insurance, and the US justice system carries a big liability stick. If you're moving around on trains a lot in other countries where the fatality rate is much higher, you can't buy life insurance on your own, and the legal system doesn't punish negligent operators it might be meaningful, especially for frequent travelers who have dependents. Is buying this coverage a reasonable and cost effective way to insure a person's life, no, clearly not. You're buying a policy to insure your life against being mauled by tiger in New York on a Tuesday, when you've never seen a tiger and don't live in New York. Obviously, if you want life insurance you would not buy coverage this narrow. Personally, I think this is really akin to an impulse buy candy bar at a checkout line of a market. They're dangling this in front of you for an amount of money that's insignificant because some people will pick it up without thinking about it. They're tickling your fear of death just enough to get a dollar from you, but not enough to keep you off the train. And obviously the math works out for the insurer or it would not be offered. Separately, regarding probability, it's not about an incident occurring in a train, it's an incident occurring in this particular train on this particular day/time. If there's a 1 in 10,000 chance of dying on a train in a year the chance of dying on a particular train on a particular day is likely to be one in billions or more. This really isn't about whether or not this coverage is valuable given the risk, it's about whether or not they can get you to impulsively spend a dollar.", "title": "" }, { "docid": "0559c1e632f653f0a26df0e3ab9f4c5e", "text": "\"For a car, you're typically compelled to carry insurance, and picking up \"\"comprehensive\"\" coverage (fire, theft, act of god) is normally cheap. If the car was purchased with a loan, the lender will stipulate that you carry comprehensive and collision insurance. People buy insurance because it limits their liability. In the grand scheme of things, pricing in a fixed rate of loss every year (insurance premium + potential deductible) is appealing to many versus having to cover a catastrophic loss when your car is wrecked or stolen.\"", "title": "" }, { "docid": "f88b531c04cf735b69ff3d560e1167c4", "text": "It's definitely broken window fallacy. The entire premise is that vehicle accidents cost money and productivity. If they can be avoided, we will be more productive. If we had technology that made car insurance obsolete, everyone in that industry could do another productive activity. Textbook broken window fallacy.", "title": "" }, { "docid": "2f4bc315f09f7f8e774ac7636da8583a", "text": "\"One way to look at insurance is that it replaces an unpredictable expenses with a predictable fees. That is, you pay a set monthly amount (\"\"premium\"\") instead of the sudden costs associated with a collision or other covered event. Insurance works as a business, which means they intend to make a substantial profit for providing that service. They put a lot of effort in to measuring probabilities, and carefully set the premiums to get make a steady profit. The odds are in their favor. You have to ask yourself: if X happened tomorrow, how would I feel about the financial impact? Also, how much will it cost me to buy insurance to cover X? If you have a lot of savings, plenty of available credit, a bright financial future, and you take the bus to work anyway, then totaling your car may not be a big deal, money wise. Skip the insurance. If you have no savings, plenty of debt, little prospects for that improving, and you depend on your car to get to work just so you can pay what you already owe, then totaling your car would probably be a big problem for you. Stick with insurance. There is a middle ground. You can adjust your deductible. Raise it as high as you can comfortably handle. You cover the small stuff out of pocket, and save the insurance for the big ticket items. Insurance companies also invest the money they take as premiums, until they pay out a claim. That's not relevant to this discussion, though.\"", "title": "" }, { "docid": "f207b1fabaab64de5b09fc60b0203498", "text": "Probably my biggest cost saving is to make my own sandwiches for lunch. I take this one step further by buying joints of meat to roast and slice for the filling. This not only tastes better but is quite a bit cheaper. For example today I roasted a 5 kg ham (about 11 lbs), it cost me £16 to buy (around $25), but I've sliced it, wrapped the slices in foil and frozen them. I've made around 20 packs, each pack has enough ham for sandwiches for me and my wife for a day. I also do this with beef, chicken and turkey and just get a pack of whatever we fancy out of the freezer the night before so it's defrosted enough to make sandwiches in the morning.", "title": "" }, { "docid": "ac145b29c1352292bd93ef0115a4afbb", "text": "The donor might need to pay gift tax if they give money directly to you. Paying the tuition on your behalf (giving the money directly to the school) is exempt from gift tax. But that's not your problem, it is the donor's. There's no tax on receiving gifts, and you're not forbidden to receive gifts by virtue of being on a visa.", "title": "" } ]	fiqa
ca9dfc169e6d9a109ccd04d72c49cc41	Can a bank hold my deposit on a closed account?	[ { "docid": "4726389971e8ff52e63f8ca632c0f16a", "text": "What I'm reading is that they subtracted the $85 you owe them and they're cutting you a cashier's check for the rest. Ethically speaking, you owed them the money, they subtracted it and made you a check for the rest. Once you cash that check, nobody owes anyone anything in this equation. Sounds like they're in the clear. Legally speaking, I have no idea, since I'm not a lawyer, but even if it was not legal, good luck getting the $85 back without spending far more in retaining a lawyer and fighting it in court. Even fighting it in small claims court will take more of your time than $85 is worth. If it's your time that is the problem, 12 days is not horrible in banking terms. Yes, we're spoiled now by ACH transfers and same day deposit availability, but since you're retired, I'm sure if you think back you'll remember when it used to take two business weeks to clear a check... TLDR; cancel future deposits to that bank, find a new bank, then forget this fiasco and get your revenge by enjoying your life.", "title": "" } ]	[ { "docid": "43e11b61c582bfaf936b78eedc373fcc", "text": "When I last asked a certain large bank in the US (in 2011 or 2012), they didn't offer expiring personal checks. (I think they did offer something like that for business customers.) They also told me that, even if the payee cashes the check a year later and the check bounces, even if it's because I have closed the respective account, he will be able to go to the police and file a report against me for non-payment. (This is what the customer service rep told me on the phone after a bit of prodding, but someone else feel free to improve this answer and fix details or disagree; it's hard to believe and quite outrageous if true.)", "title": "" }, { "docid": "65f454d2bf24279f90f4b93333efb81c", "text": "If your counterparty sent money to a correspondent account at another bank, then it is completely up to the other bank what to do with the money. If the wire transfer completed, then the account is not closed. If I were your business partner, I would immediately contact the bank to which the transfer was made and explain the situation and hopefully they will transfer the money back. Whenever a wire transfer is made, the recipients name, address, and account number are included. If that name, address and account do not belong to you, then you have a problem because you have no legal right to the money in a court of law. For this reason, you should be avoid any situation where you are wiring money to anyone except the intended recipient.", "title": "" }, { "docid": "658a0674ac4e1c69099e829c96b361a4", "text": "No money is stolen. They don't show you the hold for whatever reason (not so good a bank?), but the money is still yours. You just cannot use it, but it is still on your account. These holds usually go away after a week. In certain cases (like a security deposit) it may take up to 30 days. You can request from the merchant to cancel the hold if it is no longer necessary. They'll have to be proactive on that, and some merchants wouldn't want the hassle. It is however a known issue. When I was working in the banking industry, we would routinely receive these hold cancellation requests from merchants (hotels and car rentals).", "title": "" }, { "docid": "ec456909c2d1c75c5820e40e811a5ee4", "text": "\"The answers here are all correct. This is 100% scam, beyond any reasonable doubt. Don't fall for it. However, I felt it valuable to explain what would happen were you to fall for this. It's not all that hard to understand, but it involves understanding some of the time delays that exist in modern banking today. The most important thing to understand is that depositing a check does not actually put dollars in your account, even though it appears to. A check is not legal tender for debts public and private. It's a piece of paper known as a \"\"bill of exchange.\"\" It's an authorization for a payee (you), to request that their bank pay you the amount on the check. A transaction made with a check does not actually draw to a close until your bank and their bank communicate and cause the actual transfer of funds to take place. This process is called \"\"clearing\"\" the check. Despite living in the modern times, this process is slow. It can take 7-10 days to clear a check (especially if it is an international bank). This is not good for the banking business. You can imagine how difficult it would be to tell a poor client, who is living paycheck to paycheck, that he can't have his pay until the check clears a week later. Banks have an interest in hiding this annoying feature of the modern banking system, so they do. When you deposit a check, the bank will typically advance you the money (an interest free loan, in effect) while the check \"\"floats\"\" (i.e. until it clears). This creates the illusion that the money is actually in your account for most intents and purposes. (presumably a bank would distinguish between the floating check and a cleared check if you tried to close out your account, but otherwise it looks and feels like the money is in your hands). Of course, if the check is dishonored (because the payer had insufficient funds, or the account simply did not exist), your bank will not get the money. At this moment, they will cancel any advances you received and notify you that the check bounced. Again, this happens 7-10 days later. The general pattern of this scam is that they will pay you by a method which clears slowly, like a check. They will then ask you to withdraw the money using a faster clearing method (like a wire transfer or withdrawing the cash). Typically they will be encouraging you to move quickly (they are on a timetable... when their check bounces, the game is up!) At this time, it will appear as though the account has a positive balance, but in fact it has a negative balance plus an advance on the check. This looks great until 7-10 days later, when the check bounces. At that time, the bank will cancel the advance, and reality will set in. You will now have an open bank account, legally opened by you in your own name, which is deeply in debt. Meanwhile, the scammer walks away with all the money that you sent them (which cleared quickly). There are many variants which can hide the details. Some can play games with check kiting to try to make your first check clear (then try to rope you in for a more painful hit). Some will change the instruments they use (checks are the easy ones, so they're simply most common). Don't try to think \"\"maybe this one is legit.\"\" These scammers literally make a living off of making shady transactions look legit. Things I would recommend looking out for:\"", "title": "" }, { "docid": "4dda835616037c706767369d1efac27a", "text": "\"See \"\"Structuring transactions to evade reporting requirement prohibited.\"\" You absolutely run the risk of the accusation of structuring. One can move money via check, direct transfer, etc, all day long, from account to account, and not have a reporting issue. But, cash deposits have a reporting requirement (by the bank) if $10K or over. Very simple, you deposit $5000 today, and $5000 tomorrow. That's structuring, and illegal. Let me offer a pre-emptive \"\"I don't know what frequency of $10000/X deposits triggers this rule. But, like the Supreme Court's, \"\"We have trouble defining porn, but we know it when we see it. And we're happy to have these cases brought to us,\"\" structuring is similarly not 100% definable, else one would shift a bit right.\"\" You did not ask, but your friend runs the risk of gift tax issues, as he's not filing the forms to acknowledge once he's over $14,000.\"", "title": "" }, { "docid": "ffa2250acc63d88f31a6961a58f380b9", "text": "I've been a landlord and also a tenant. I have been able to deposit money in an account, where I have the account number, and/or a deposit slip. In a foreign bank you can deposit by a machine if in the bank or someone is there for you and knows the account number. With regards to cashing a check in another country, it is up to the bank and the time is at least 14 to 21 business days, with a fee is added. As of a winning check, since its in your name, if you are in another country sign the check, for deposit only with a deposit slip and send it to your out of country bank by FedEx - you will have a tracking number, where as regular mail it might get there in 3 months. I hope by now you came to your solution.", "title": "" }, { "docid": "979a7afcff571abf2bab1590b05a252b", "text": "\"If there was still money in the account when it was closed, the bank would have turned over the cash to the state where they operated. Search Google for \"\"unclaimed property <state name>\"\" for the unclaimed property department of the state. The state's website will show if there is money for you.\"", "title": "" }, { "docid": "538d00b01cd78aa88c96dc839feefdad", "text": "First, make sure you are contacting the bank directly - use an old invoice you have on hand with a phone number direct to the bank and call them. Do not use the provided number, or you may wind up being pulled into a scam (It is entirely possible that the bank is also confused at this point - so you should not rely on the number provided at all). Second, once you can confirm that your account is being closed, find out when it is being closed so you know when you need to act on it - it's possible you still have access to your account, and do not need to launch into a panic just yet. Third, get the bank to explain exactly why they are closing your account - make it clear that if they cannot explain, you will be forced to transfer to a new account and close business with them permanently - this is not a threat, this is a matter of fact because... Finally, if you cannot keep your account open, find a different bank and open up a new account. Frankly, if your current bank is closing your account and only managed to get a letter out to you a month late, you should probably find a new bank. If instead they simply cannot figure out if your bank account is closed or not, this is also a bad sign and you may want a new bank account anyway. But please, go through these steps in order, because you need to verify with your bank what is going on. Keep @Brick 's answer in mind as well, in case you need to get your money out of your account quickly.", "title": "" }, { "docid": "3fdb07dc08015b2b1f9f1c3c89777d96", "text": "\"The simplest answer to why you can't see it in your online statement is a design/business decision that was made, most probably originally to make online statements differ as little as possible from old fashioned monthly printed statements; the old printed statements never showed holds either. Some banks and card services actually do show these transactions online, but in my experience these are the rare exceptions - though with business/commercial accounts I saw this more, but it was still rare. This is also partly due to banks fearing lots of annoying phone calls from customers and problems with merchants, as people react to \"\"hey, renting that car didn't cost $500!\"\" and don't realize that the hold is often higher than the transaction amount and will be justified in a few days (or weeks...), etc - so please don't dispute the charges just yet. Behind the scenes, I've had bankers explain it to me thusly (the practice has bitten me before and it bothered me a lot, so I've talked to quite a few bankers about this): There are two kinds of holds: \"\"soft holds\"\" and \"\"hard holds\"\". In a soft hold, a merchant basically asks the bank, \"\"Hey, is there at least $75 in this account?\"\" The bank responds, and then has it's own individually set policy per account type as to how to treat that hold. Sometimes they reserve no money whatsoever - you are free to spend that money right out and rack up NSF fees to your heart's content. Yet some policies are to treat this identically to a hard hold and keep the money locked down until released. The hard hold is treated very much like an actual expenditure transaction, in that the money is locked and shown as no longer available to you. This varies by bank - some banks use an \"\"Account Balance\"\" and an \"\"Available Balance\"\", and some have done away with these dual terms and leave it up to you to determine what your balance is and what's \"\"available\"\" (or you have to call them). The key difference in the hard hold and a real expenditure is, technically, the money is still in your bank account; your bank has merely \"\"reserved\"\" it, earmarking it for a specific purchase (and gently promising the merchant they can have their money later), but the biggest difference is there is a time-limit. If a merchant does not process a completion to the transaction to claim the money, your bank will lift the hold after a period of time (I've seen 7-30 days as typical in the US, again varying by institution) returning your money to your balance that is available for purchasing and withdrawal. In every case, any vaguely decent banking institution allows you to call them, speak to some bank employee, and they can look up your account and inform you about the different sort of holds that are on your account that are not pending/completed purchase transactions. From a strictly cynical (perhaps rightly jaded) point of view, yes this is also used as a method to extort absurdly high fees especially from customers who keep a low balance in their account. I have had more than one bank charge NSF fees based on available balances that were due to holds made by gas pumps, for instance, even though my actual \"\"money in my account\"\" never went below $0 (the holds were for amounts larger than the actual transaction). And yes, the banks usually would waive those fees if you bothered to get someone on the phone or in person and made yourself a nuisance to the right person for long enough, but they made you work for it. But I digress.... The reality is that there are lots of back and forth and middle-men in transactions like this, and most banks try to hide as much of this from you the client as possible, partly because its a huge confusing hassle and its part of why you are paying a bank to handle this nonsense for you to start with. And, as with all institutions, rules and policies become easily adjusted to maximize revenues, and if you don't keep sizable liquid minimum balances (100% of the time, all year long) they target you for fees. To avoid this without having fat wads of extra cash in those accounts, is use an entirely disconnected credit card for reservations ONLY - especially when you are traveling and will be making rentals and booking hotels. Just tell them you wish to pay with a different card when you are done, and most merchants can do this without hassle. Since it's a credit card with monthly billing you can often end up with no balance, no waiting around for a month for payments to clear, and no bank fees! It isn't 100%, but now I never - if I can possibly avoid it - use my debit/bank card to \"\"reserve\"\" or \"\"rent\"\" anything, ever.\"", "title": "" }, { "docid": "31c281eb2eb9a00f332080b149465ff9", "text": "Years ago, I had a tenant who bounced a check now and then. I started going to the bank where his account was. With my ID they were agreeable to cashing the check against his account. The teller first checked his balance and only cashed when there were enough funds. One time he was $10 short. I wrote a deposit slip and added the $10 it took to clear the check. As they say, your mileage may vary, I hear some banks won't even break a large bill for a non customer.", "title": "" }, { "docid": "4b06b55e7949a1b9fc96d28ee15df6dc", "text": "\"If your son endorses the check or better still, endorses it with \"\"for deposit only\"\" and places the account number in the endorsement, it's likely the bank will accept it for deposit. In this manner, you are not putting it in your account, you are putting it in his. I have a family member perform this action occasionally with zero complications and she does not have an account at the same bank.\"", "title": "" }, { "docid": "cd91ac9a13ba443f8dd0b2a5af1598d9", "text": "You will probably not be able to figure out the bank from the account number. You can check for your name on registries of abandoned bank accounts or unclaimed money, but without more information, you don't have a lot of options.", "title": "" }, { "docid": "63cd33d7c01cb17aa1b8d17a2cd0739d", "text": "If you can provide evidence that you are the person who opened the account (which may be as simple as providing your signature, since this isn't really different from asking for a bank check or inter-bank transfer or ATM-network transfer), there should be no problem. Contact your bank and ask them what information they need to provide.", "title": "" }, { "docid": "371169f1f6b235b30f2e224e413ce662", "text": "Yes, wait. While the bank promises to process the deposit quickly, there is still a window of a number of days. Many people have found themselves with high overdraft fees when the withdraws came before the deposits.", "title": "" }, { "docid": "1d572b9345892ac7846a98e286c53a59", "text": "In addition to @mhoran_psprep answer, and inspired by @wayne's comment. If the bank won't let you block automatic transfers between accounts, drop the bank like a hot potato They've utterly failed basic account security principles, and shouldn't be trusted with anyone's money. It's not the bank's money, and you're the only one that can authorize any kind of transfer out. I limit possible losses through debit and credit cards very simply. I keep only a small amount on each (~$500), and manually transfer more on an as needed basis. Because there is no automatic transfers to these cards, I can't lose everything in the checking account, even temporarily.", "title": "" } ]	fiqa
629a9bb6f758c8ffbbc28d3807e6998c	Should I try to hedge my emergency savings against currency and political concerns?	[ { "docid": "62abbfebf8183ab8e25ec57ff97499ed", "text": "You have to balance several concerns here. The primary problem is that if you go to the effort of saving your money you want to also be sure that your savings will not lose too much of its value to inflation. Ukraine had a terrible inflation spike in 2015 for obvious reasons. Even as inflation has settled down in 2016, it is stabilizing around 12% which is very high Exchange rates are your next concern. If you lose a large percentage of the value of your money just in the process of exchanging it, that also eats away at the value of your money. If you accept the US Federal Reserve target of 2% inflation, then you should only exchange money that you will hold long enough that both exchange fees will outweigh the 10% inflation advantage. Even in cases where you have placed your money in a foreign currency, there's a chance that your government could freeze accounts denominated in foreign currencies, so there's always the political risk that you have to factor in. For that reason keeping foreign currency in cash also has some appeal because it cannot be confiscated as easily. You could still certainly be robbed, so keeping all of your savings in cash isn't a great solution either. All in all, you are diversifying your savings if you use the strategy of balancing all three methods. Splitting it evenly to 5% for each method isn't the most important. I would suggest taking advantage of good exchange rates (as they appear) to time when you buy foreign currency.", "title": "" }, { "docid": "4e6aa2924261e912bdbcdaa2d5fed67f", "text": "\"First thing is that your English is pretty damn good. You should be proud. There are certainly adult native speakers, here in the US, that cannot write as well. I like your ambition, that you are looking to save money and improve yourself. I like that you want to move your funds into a more stable currency. What is really tough with your plan and situation is your salary. Here in the US banks will typically have minimum deposits that are high for you. I imagine the same is true in the EU. You may have to save up before you can deposit into an EU bank. To answer your question: Yes it is very wise to save money in different containers. My wife and I have one household savings account. Yet that is broken down by different categories (using a spreadsheet). A certain amount might be dedicated to vacation, emergency fund, or the purchase of a luxury item. We also have business and accounts and personal accounts. It goes even further. For spending we use the \"\"envelope system\"\". After our pay check is deposited, one of us goes to the bank and withdraws cash. Some goes into the grocery envelope, some in the entertainment envelope, and so on. So yes I think you have a good plan and I would really like to see a plan on how you can increase your income.\"", "title": "" } ]	[ { "docid": "f49d5510429dbbfe5c6ef3a85a18ec30", "text": "I am not preparing for a sudden, major, catastrophic collapse in the US dollar. I am, however, preparing for a significant but gradual erosion of its value through inflation over the space of several years to a decade. To that end, I've invested most of my assets in the stock market (roughly 80%) through major world index funds, and limited my bond exposure (maintaining a small stake in commodity ETFs: gold, silver, platinum and palladium) due to both inflation risk and the inevitability of rising interest rates. I don't think most companies mind overmuch if the dollar falls gradually, as the bulk of their value is in their continuing income stream, not in a dollar-denominated bank account. I also try to keep what I can in tax-deferred accounts: If, after several years, your stocks were up 100% but inflation reduced the dollar's value by 50%, you're still stuck paying taxes on the entire gain, even though it was meaningless. I'm also anticipating tax hikes at some point (though not as a result of the dollar falling). It helps that I'm young and can stand a lot of investment risk.", "title": "" }, { "docid": "23dcb346982a8bdcf2ec460e8c272c4c", "text": "There are many different things that can happen, all or some. Taking Russia and Argentina as precedence - you may not be able to withdraw funds from your bank for some period of time. Not because your accounts will be drained, but because the cash supply will be restricted. Similar thing has also happened recently in Cyprus. However, the fact that the governments of Russia and Argentina limited the use of cash for a period of time doesn't mean that the US government will have to do the same, it my choose some other means of restraint. What's for sure is that nothing good will happen. Nothing will probably happen to your balance in the bank (Although Cyprus has shown that that is not a given either). But I'm not so sure about FDIC maintaining it's insurance if the bank fails (meaning if the bank defaults as a result of the chain effect - you may lose your money). If the government is defaulting, it might not have enough cash to take over the bank deposits. After the default the currency value will probably drop sharply (devaluation) which will lead to inflation. Meaning your same balance will be worth much less than it is now. So there's something to worry about for everyone.", "title": "" }, { "docid": "a3041f3b2f3e082b53a5789066773d5b", "text": "Currency speculation is a very risky investment strategy. But when you are looking for which currency to denote your savings in, looking at the unit value is quite pointless. What is important is how stable the currency is in the long term. You certainly don't want a currency which is prone to inflation, because it means any savings denoted in that currency constantly lose purchasing power. Rather look for a currency which has a very low inflation rate or is even deflating. Another important consideration is how easy it is to exchange between your local currency and the currency you want to own. A fortune in some exotic currency is worth nothing when no local bank will exchange it into your local currency. The big reserve currencies like US Dollar, Euro, Pound Sterling and Japanes yen are usually safe bets, but there are regional differences which can be easily converted and which can't. When the political relations between your country and the countries which manage these currencies is unstable, this might change over night. To avoid these problems, rather invest into a diverse portfolio of commodities and/or stocks. The value of these kinds of investments will automatically adjust to inflation rate, so you won't need to worry about currency fluctuation.", "title": "" }, { "docid": "6c3402dd0d189413abfe4f770d824778", "text": "So far we have a case for yes and no. I believe the correct answer is... maybe. You mention that most of your expenses are in dollars which is definitely correct, but there is an important complication that I will try to simplify greatly here. Many of the goods you buy are priced on the international market (a good example is oil) or are made from combinations of these goods. When the dollar is strong the price of oil is low but when the dollar is weak the price of oil is high. However, when you buy stuff like services (think a back massage) then you pay the person in dollars and the person you are paying just wants dollars so the strength of the dollar doesn't really matter. Most people's expenses are a mix of things that are priced internationally and locally with a bias toward local expenses. If they also have a mix of investments some of which are international and depend on the strength of the dollar and some are domestic and do not, then they don't have to worry much about the strength/weakness of the dollar later when they sell their investments and buy what they want. If the dollar is weak than the international goods will be more expensive, but at the same time international part of their portfolio will be worth more. If you plan on retiring in a different country or have 100% of your investments in emerging market stocks than it is worth thinking about either currency hedging or changing your investment mix. However, for many people a good mix of domestic and international investments covers much of the risk that their currency will weaken while offering the benefits of diversification. The best part is you don't need to guess if the dollar will get stronger or weaker. tl;dr: If you want your portfolio to not depend on currency moves then hedge. If you want your retirement to not depend on currency moves then have a good mix of local and unhedged international investments.", "title": "" }, { "docid": "2c367ceba9490ae54dce5a02b9fc2171", "text": "\"You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in \"\"safe\"\" stocks like P&G/Coca-Cola/etc. Even these safe stocks are at risk of wild price swings in the short- to intermediate-term, especially in the event of international crises such as major European debt defaults and the like. These stocks are suitable for long-term growth objectives, but they are not as a replacement for a savings account. Coca-Cola lost a third of its value between 2007 and 2009. (It's recovered, and is currently doing better than ever.) P&G went from $74/share to $46/share. (It's partially recovered and back at $63). On the other hand, these stocks may indeed be suitable as long-term investments to protect you against local currency inflation. And yes, they even pay dividends. If you're after this investment, a good option is probably a sector-specific exchange-traded fund, such as a consumer-staples ETF. It will likely be more diversified and safer than anything you could come up with using a list of individual stocks. You can also investigate recommendations that show up when you search for a \"\"defensive ETF\"\". If you do not wish to buy the ETF directly, you can also look at listings of the ETF's holdings. Read the prospectus for an idea of the risks associated with these funds. You can buy these funds with any brokerage that gives you access to US stock exchanges.\"", "title": "" }, { "docid": "941015e84438966b1e5c5e4d8195dfc8", "text": "\"For diversification against local currency's inflation, you have fundamentally 3 options: Depending on how sure you are on your prediction, and what amount of money you're willing to bet to \"\"short the country\"\", you might also consider a mix of approaches from the above. Good luck.\"", "title": "" }, { "docid": "2ebd49168456a4ffc4b7f3ccd5ef1f1a", "text": "\"There's not nearly enough information here for anyone to give you good advice. Additionally, /r/personalfinance will probably be a bit more relevant and helpful for what you're asking. Aside from that, if you don't know what you're doing, stay out of currency trading and mutual funds. If you don't care about losing your money, go right ahead and play in some markets, but remember there are people paid millions of dollars/year who don't make consistent profit. What are the chances a novice with no training will perform well? My $.02, pay your debt, make a general theory about the economy a year from now (e.g. \"\"Things will be worse in Europe than they are now\"\") and then invest your money in an index fund that matches that goal (e.g. Some sort of Europe-Short investment vehicle). Reassess a year from now and don't stress about it.\"", "title": "" }, { "docid": "b074c0441aa9b1e1e9f6de0986bc6bde", "text": "I would suggest your local credit union or local bank for security and liquidity. Liquidity is probably the most important issue for a emergency fund.", "title": "" }, { "docid": "45c3cb28491d6b35f3219f442d3100a6", "text": "\"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.\"", "title": "" }, { "docid": "041ce37bd0f111523e88e92d4ce75aaf", "text": "\"Large multinationals who do business in multiple locales hedge even \"\"stable\"\" currencies like the Euro, Yen and Pound - because a 5-10% adverse move in an exchange rate is highly consequential to the bottom line. I doubt any of them are going to be doing significant amounts of business accepting a currency with a 400% annual range. And why should they? It's nothing more than another unit of payment - one with its own problems.\"", "title": "" }, { "docid": "cdacd159176e301372a26a6f8d7cb14d", "text": "\"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.\"", "title": "" }, { "docid": "e034c4331d15e3aef5d73451913e17b2", "text": "If you have significant assets, such as a large deposit, then diversification of risks such as currency risk is good practice - there are many good options, but keeping 100% of it in roubles is definitely not a good idea, nor is keeping 100% of it in a single foreign currency. Of course, it would be much more beneficial to have done it yesterday, and moments of extreme volatility generally are a bad time to make large uninformed trades, but if the deposit is sufficiently large (say, equal to annual expenses) then it would make sense to split it among different currencies and also different types of assets as well (deposit/stocks/precious metals/bonds). The rate of rouble may go up and down, but you also have to keep in mind that future events such as fluctuating oil price may risk a much deeper crisis than now, and you can look to experiences of the 1998 crisis as an example of what may happen if the situation continues to deteriorate.", "title": "" }, { "docid": "e92a5e3cfe7db5a782b9931710ff389d", "text": "\"You might find some of the answers here helpful; the question is different, but has some similar concerns, such as a changing economic environment. What approach should I take to best protect my wealth against currency devaluation & poor growth prospects. I want to avoid selling off any more of my local index funds in a panic as I want to hold long term. Does my portfolio balance make sense? Good question; I can't even get US banks to answer questions like this, such as \"\"What happens if they try to nationalize all bank accounts like in the Soviet Union?\"\" Response: it'll never happen. The question was what if! I think that your portfolio carries a lot of risk, but also offsets what you're worried about. Outside of government confiscation of foreign accounts (if your foreign investments are held through a local brokerage), you should be good. What to do about government confiscation? Even the US government (in 1933) confiscated physical gold (and they made it illegal to own) - so even physical resources can be confiscated during hard times. Quite a large portion of my foreign investments have been bought at an expensive time when our currency is already around historic lows, which does concern me in the event that it strengthens in future. What strategy should I take in the future if/when my local currency starts the strengthen...do I hold my foreign investments through it and just trust in cost averaging long term, or try sell them off to avoid the devaluation? Are these foreign investments a hedge? If so, then you shouldn't worry if your currency does strengthen; they serve the purpose of hedging the local environment. If these investments are not a hedge, then timing will matter and you'll want to sell and buy your currency before it does strengthen. The risk on this latter point is that your timing will be wrong.\"", "title": "" }, { "docid": "28fed650e9e4cc59a4dba20e8648f303", "text": "Typically, the higher interest rates in local currency cover about the potential gain from the currency exchange rate change - if not, people would make money out of it. However, you only know this after the fact, so either way you are taking a risk. Depending on where the local economy goes, it is more secure to go with US$, or more risky. Your guess is as good as anyone. If you see a chance for a serious meltdown of the local economy, with 100+% inflation ratios and possibly new money, you are probably better off with US$. On the other hand, if the economy develops better than expected, you might have lost some percentage of gain. Generally, investing in a more stable currency gets you slightly less, but for less risk.", "title": "" }, { "docid": "bce16a459992b5cfe97275296a8ea3e4", "text": "I don't think that it's a good idea to have cash savings in different currencies, unless you know which will be the direction of the wind for that currency. You can suffer a lot of volatility and losses if you just convert your savings to another currency without knowing anything about which direction that pair will take. Today we can see Brexit, but this is a fact that has been discounted by the market, so the currencies are already adjusted to that fact, but we don't know what will happen in the future, maybe Trump will collapse the US economy, or some other economies in Asia will raise to gain more leadership. If you want to invest in an economy, I think that it's a best idea to invest on companies that are working in that country. This is a way of moving your money to other currencies, and at least you can see how is the company performing.", "title": "" } ]	fiqa
6c7bee307656c8a8ab8cda891fd38d2e	Why are interest rates on saving accounts so low in USA and Europe?	[ { "docid": "48f0b8daf92c94325fe3993451500c40", "text": "The United States Federal Reserve has decided that interest rates should be low. (They think it may help the economy. The details matter little here though.) It will enforce this low rate by buying Treasury bonds at this very low interest rate. (Bonds are future money, so this means they pay a lot of money up front, for very little interest in the future. The Fed will pay more than anyone who offers less money up front, so they can set the price as long as they're willing to buy.) At the end of the day, Treasury bonds pay nearly no interest. Since there's little money to be made with Treasuries, people who want better-than-zero returns will bid up the current-price of any other bonds or similar loan-like instruments to get what whatever rate of return that they can. There's really no more than one price for money; you can think of the price of those bonds as basically (Treasury rate + some modifier based on the risk) percent. I realize thinking about bond prices is weird and different than other prices (you're measuring future-money using present-money and it's easy to be confused) and assure you it ultimately makes sense :) Anyway. Your savings account money has to compete with everyone else willing to lend money to banks. Everyone-else lends money for peanuts, so you get peanuts on your savings account too. Your banking is probably worth more to your bank on account of your check-card payment processing fees (collected from the merchant) than from the money they make lending out your savings (notice how many places have promotional rates if you make your direct deposits or use your check card to make a purchase N times a month). In Europe, it's similar, except you've got a different central bank. If Europe's bank operated radically differently for an extended period of time, you'd expect to see a difference in the exchange rates which would ultimately make the returns from investing in those currencies pretty similar as well. Such a change may show up domestically as inflation in the country with the loose-money policy, and internationally as weakness against other currencies. There's really only one price for money around the entire world. Any difference boils down to a difference in (perceived) risk.", "title": "" }, { "docid": "8d9470ab93cde0cf665a8ad848cc123a", "text": "\"The short answer is that banking is complicated, but the bank really doesn't need your money because it can get it from the Fed almost free, it can only use 90% of the money you give the bank, it can only make money on that 90% from very low-risk and thus low-return investments, and as it has to show a profit to its shareholders it will take whatever cut it needs to off the top of the returns. All of these things combine to make savings account interest roughly .05% in the US right now. The longer answer: All FDIC-insured banks (which the US requires all \"\"depositor\"\" banks to be) are subject to regulation by the Federal Reserve. The very first rule that all banks must comply with is that depositor money cannot be invested in things the Fed terms \"\"risky\"\". This limits banks from investing your money in things that have high returns, like stocks, commodities and hedges, because along with the high possible returns come high risk. Banks typically can only invest your savings in T-debt and in certain Fed-approved AAA bonds, which have very low risk and so very little return. The investment of bank assets into risky market funds was a major contributor to the financial crisis; with the repeal of the Glass-Steagall Act, banks had been allowed to integrate their FDIC-insured depositor business with their \"\"investment banking\"\" business (not FDIC insured). While still not allowed to bet on \"\"risky\"\" investments with deposits, banks were using their own money (retained profits, corporate equity/bond money) to bet heavily in the markets, and were investing depositor funds in faulty AAA-rated investment objects like CDOs. When the housing market crashed, banks had to pull out of the investment market and cash in hedges like credit-default swaps to cover the depositor losses, which sent a tidal wave through the rest of the market. Banks really can't even loan your money out to people who walk in, like you'd think they would and which they traditionally used to do; that's how the savings and loan crisis happened, when speculators took out huge loans to invest, lost the cash, declared bankruptcy and left the S&Ls (and ultimately the FDIC) on the hook for depositors' money. So, the upshot of all this is that the bank simply won't give you more on your money than it is allowed to make on it. In addition, there are several tools that the Fed has to regulate economic activity, and three big ones play a part. First is the \"\"Federal Funds Rate\"\"; this is the interest rate that the Fed charges on loans made to other banks (which is a primary source of day-to-day liquidity for these banks). Money paid as interest to the Fed is effectively removed from the economy and is a way to reduce the money supply. Right now the FFR is .25% (that's one quarter of one percent) which is effectively zero; borrow a billion dollars ($1,000,000,000) from the Fed for one month and you'll pay them a scant $208,333. Banks lend to other banks at a rate based on the FFR, called the Interbank Rate (usually adding some fraction of a percent so the lending bank makes money on the loan). This means that the banks can get money from the Fed and from other banks very cheaply, which means they don't have to offer high interest rates on savings to entice individual depositors to save their money with the bank. Second is \"\"quantitative easing\"\", which just means the Fed buys government bonds and pays for them with \"\"new\"\" money. This happens all the time; remember those interest charges on bank loans? To keep the money supply stable, the Fed must buy T-debt at least in the amount of the interest being charged, otherwise the money leaves the economy and is not available to circulate. The Fed usually buys a little more than it collects in order to gradually increase the money supply, which allows the economy to grow while controlling inflation (having \"\"too much money\"\" and so making money worth less than what it can buy). What's new is that the Fed is increasing the money supply by a very large amount, by buying bonds far in excess of the (low) rates it's charging, and at fixed prices determined by the yield the Fed wants to induce in the markets. In the first place, with the Fed buying so many, there are fewer for institutions and other investors to buy. This increases the demand, driving down yields as investors besides the Fed are willing to pay a similar price, and remember that T-debt is one of the main things banks are allowed to invest your deposits in. Inflation isn't a concern right now despite the large amount of new money being injected, because the current economy is so lackluster right now that the new cash is just being sat upon by corporations and being used by consumers to pay down debt, instead of what the Fed and Government want us to do (hire, update equipment, buy houses and American cars, etc). In addition, the \"\"spot market price\"\" for a T-bond, or any investment security, is generally what the last guy paid. By buying Treasury debt gradually at a fixed price, the Fed can smooth out \"\"jitters\"\" in the spot price that speculators may try to induce by making low \"\"buy offers\"\" on T-debt to increase yields. Lastly, the Fed can tell banks that they must keep a certain amount of their deposits in \"\"reserve\"\", basically by keeping them in a combination of cash in the vault, and in accounts with the Fed itself. This has a dual purpose; higher reserve rates allow a bank to weather a \"\"run\"\" (more people than usual wanting their money) and thus reduces risk of failure. An increased reserves amount also reduces the amount of money circulating in the economy, because obviously if the banks have to keep a percentage of assets in cash, they can't invest that cash. Banks are currently required to keep 10% of \"\"deposited assets\"\" (the sum of all checking and savings accounts, but not CDs) in cash. This compounds the other problems with banks' investing; not only are they not getting a great return on your savings, they can only use 90% of your savings to get it.\"", "title": "" }, { "docid": "980d020cae85bd5eb02613892ba3ba13", "text": "There is really much simpler explanation for the interest rate differences in different countries. It is the interest rate arbitrage. It is a very well explored economic concept, so you can look it up on the Internet, in case you want to know more. 1) Interest rates for the same currency in different countries Basically, as one smart person here pointed out, there is only one price of money in free market economy. It happens, because investors can move their money unrestrictedly anywhere in the World to capitalize on the local interest rates advantage. For instance, if I can take a loan in the USA at 3-4% annual interest and receive 5-6% annual income on my dollar deposit in Russia, I would take a loan in the US and open a deposit in Russia to enjoy a risk free interest rate differential income of 2% (5-6% - 3-4% ~ 2%). So, would any reasonable person. However, in real World very few banks in Russia or anywhere would pay you an an interest rate higher than it can borrow money at. It'd probably lose money if it'd do so. Anyways, the difference between the risk free rate and interest rate on the dollar deposit can be attributed to the risk premium of this particular bank. The higher expected return, the greater risk premium. If there is a positive difference in the interest rates on the dollar deposits in different countries, it will almost entirely accounted for the risk premium. It is generally much riskier to keep money in, say Russian bank, than American. That's why investors want greater return on their dollar deposits in Russian banks than in American. Of course, if you'd want to park your USD in Russian bank you'd also have to consider transaction costs. So, as you may have already guessed, there is no free lunch. 2) Interest rates in different currencies for different countries If we are talking about the interest rates in different sovereign currencies, it is a somewhat similar concept, only there is more risk if you keep money in local currency (risk premium is much higher). Probably, the biggest component of this risk is inflation (that is only attributed to the prices in local currency). For that reason, current interest rates on deposits in Russian Rubles are at 10-12%, but only 1-3% in the US Dollars. An economic concept that discusses this phenomenon in great detail is Interest Rate Parity. Hope this was helpful. P.S. It doesn't look quite realistic that you can get an 8% annual income for USD deposit in Russia with the interest rates in the U.S. being at 1-2%. At present moment, a 30-year mortgage annual interest rate in the US is at ~2-3% and an annual interest rates for dollar deposits in Sberbank (one of the safest Russian banks = very little risk premium) is at 1-3%. So, arbitrage is impossible.", "title": "" }, { "docid": "76188a98f807d3db4916876259ef74a0", "text": "Typically developing economics are marked by moderate to high inflation [as they are growing at a faster pace], higher in savings rate and higher lending rates. If you reduce the lending rate, more business / start-up will borrow at cheaper rate, this in turn means lowers savings rate and leads to higher inflation. To combat this Central Banks make borrowing expensive, which lowers inflation and increases the saving rate. Essentially all these 3 are tied up. As to why these countries offer higher interest on USD is because most of the developing countries have trade [current account] deficit. They need to bring in more USD in the country. One of the ways is to encourage Non Resident Citizens to park their foreign earning back home, ensuring more funds USD inflow. The rate differential also acts as a guide as to how the currency would be valued against USD. For example if you get 8% on USD, less than 12% had you converted same to Rouble, at the end of say 3 years, the exchange rate between USD and Rouble would factor that 4%, ie rouble will go down. Developed countries on the other hand are marked by low inflation [they have already achieved everything] as there is no spurt in growth, it more BAU. They are also characterized by low savings and lending rates.", "title": "" }, { "docid": "3d8a4996f5fc9b09d890ff30b2088fc5", "text": "\"The 8% rate offered by Russian banks on US Dollar accounts reflects the financial problems they have. They would prefer to lend US Dollars on the international financial markets at the same rate as US banks, but loans to Russian banks are considered to be more risky. In fact, the estimated \"\"default\"\" risk is ~6%. Your ruble deposits at Russian banks are most likely backed by state guarantees, which reduces the risk and therefore the effective interest rate.\"", "title": "" }, { "docid": "53a3c9a63c8da65415a683dcd909b747", "text": "Banks in general will keep saving rates as low as possible especially if there is a surplus of funds or alternative access for funding as in the case of the Fed in the USA. Generally speaking, why would bank pay you a high interest rate when they cannot generate any income from your money? Usually we will expect to see a drop in the loan interest rate when their is a surplus of funds so as to encourage investment. But if the market is volatile then no banks will allow easy access to money through loans. The old traditional policy of lending money without proper security and no control from the central bank has created serious problems for savings account holders when some of these banks went into bankruptcy. It is for this reason most countries has modified their Financial Act to offer more protection to account holders. At the moment banks must follow rigid guidelines before a loan can be approved to a customer. In my country (Guyana) we have seen the collapse of a few banks which sent a shock wave across the county for those that have savings held at those bank. We have also seen unsecured loans having to be written off thus putting serious pressure of those banks. So government stepped in a few years ago and amended the act to make it mandatory to have commercial banks follow certain strict guidelines before approving a loan.", "title": "" }, { "docid": "6b183651f1a0a7f534883338f1b88285", "text": "Some comments above are inaccurate. Advertised interest rates for deposits and savings in Russia (from Russian banks) are generally for Ruble (RUB) denominated accounts; however, USD and EUR denominated accounts still offer favorable interest rates when compared to Western counterparts. For example, Sberbank advertises these Annual Interest Rates: RUB — 8.79–11.52% USD — 2.05–5.31% EUR — 2.05–5.21%", "title": "" } ]	[ { "docid": "735a302c22d48444116baf1755b339fc", "text": "Fees mostly. BOA, for example, just announced $5/month for for all debit cards. Chase has foreign transaction fees, mostly hidden. BOA once famously raised interest rates on credit card holders to 28%, legally. Also, some people do not like patronizing a bank with CEOs that bankrupt the company and then get multi-million dollar golden parachutes. Finally some people have a problem with banks or institutions that suspend accounts based on political or unproven legal proceedings (ala Wikileaks and BOA). Credit unions are less like to be involved in this sort of activity since they are not privately traded, and as such they are not ruled by shareholders who demand bottom line results at all costs.", "title": "" }, { "docid": "499cbb262d13898effa9df7e596acf0a", "text": "Interest rates can't remain this low. It's like having extremely low blood pressure. When you raise the rates, banks are incented to loan money and that movement of capital is good for the economy. It forces us to become savers instead of spenders, and our pensions, 401ks, social security are all getting killed by not being able to use debt to get safer stable returns. Interest rates have to come back up.", "title": "" }, { "docid": "39a433a84ddadd612b78e80c78d4808f", "text": "\"The UK has Islamic banks. I don't know whether Germany has the same or not (with a quick search I can find articles stating intentions to establish one, but not the results). Even if there's none in Germany, I assume that with some difficulty you could use banks elsewhere in the EU and even non-Euro-denominated. I can't recommend a specific provider or product (never used them and probably wouldn't offer recommendations on this site anyway), but they advertise savings accounts. I've found one using a web search that offers an \"\"expected profit rate\"\" of 1.9% for a 12 month fix, which is roughly comparable with \"\"typical\"\" cash savings products in pounds sterling. Typical to me I mean, not to you ;-) Naturally you'd want to look into the risk as well. Their definition of Halal might not precisely match yours, but I'm sure you can satisfy yourself by looking into the details. I've noticed for example a statement that the bank doesn't invest your money in tobacco or alcohol, which you don't give as a requirement but I'm going to guess wouldn't object to!\"", "title": "" }, { "docid": "d4f920eeed065e3487923081fa2b6101", "text": "There is some sense that negative interest rates make no sense, because then two things appear to happen Neither of these are true in reality. But then we are edging towards a deflationary time, during which the common understanding of money and what to do with money reverses. During deflation, spending is better (to an extent) because the buying power of money is less as time passes, so also saving is less worthwhile. But for the bond market (and your question), the reason why people are still investing in negative interest bonds, is that they are going to be looking to capital gain to make their money. Over time the bond price fluctuates and as the bond approaches maturity, the bond price equates to the face value minus whatever interest will be received, or in this plus whatever interest will need to be payed.", "title": "" }, { "docid": "0848988ee6bf5d902b7090dcbc46de00", "text": "The location does matter in the case where you introduce currency risk; by leaving you US savings in USD, you're basically working on the assumption that the USD will not lose value against the EUR - if it does and you live in the EUR-zone, you've just misplaced some of your capital. Of course that also works the other way around if the USD appreciates against the EUR, you gained some money.", "title": "" }, { "docid": "4b7f04d94c8e7840ef8cb467b3b6f302", "text": "\"When \"\"people say\"\", each person is referring to whatever he/she is looking at. Interest rates tend to move roughly the same, but often there is a bias regarding long vs. short term. In the US right now, short term interest rates are very low but there is a lot of chatter saying they will rise in the future. The differential between long term rates and short term rates is high compared to historical norms, suggesting that the market believes this chatter. You can also look at the differences in rates between different quality levels. If the economy is improving, the difference in rate for lower rated debt vs. higher rated debt decreases as people think the chance of businesses failing is decreasing. Right now, any interest rate you look at is well below long term historical averages, so asserting that interest rates are low is quite safe.\"", "title": "" }, { "docid": "b2df7330af4b3b2e7c527eca5d177db4", "text": "\"As to where the interest comes from: The same place it comes from in other kinds of savings accounts. The bank takes the money you deposit and invests it elsewhere, traditionally by lending it out to others (hence the concept of a \"\"savings and loan\"\" bank). They make a profit as long as the interest they give for \"\"borrowing\"\" from you, plus the cost of administering the savings accounts and loans, is less than the interest they charge for lending to others. No, they don't have to pay you interest -- but if they didn't, you'd be likely to deposit your funds at another bank which did. Their ideal goal is to pay as little as possible without losing depositors, while charging as much as possible without losing borrowers. (yeah, I know, typo corrected) Why do they get higher interest rate than they pay you? Mostly because your deposits and interest are essentially guaranteed, whereas the folks they're lending to may be late paying or default on those loans. As with any kind of investment, higher return requires more work and/or higher risk, plus (ususally) larger reserves so you can afford to ride out any losses that do occur.\"", "title": "" }, { "docid": "16aafea1672aa9af5d4a70a0f304d5fc", "text": "In the United States there are some specific savings accounts, some of which have rules from the federal government (education) and some that are setup by the bank/credit Union. Some institutions have a Christmas club, where money is set aside each week or each month and then you are given access at the end of the time period. Some institutions have accounts that pay CD rates but allow you to add funds during the period. They will have some flexibility in setting the time period. I have seen accounts that are designed to save up for a big purchase, or for a specific time period (summer vacation) Ask your bank. Or better yet look at a variety of banks websites for their rate sheet. That will explain all the different account types, rates, and rules. My credit Union allows a large number of sub accounts so that you don't have to commingle the funds.", "title": "" }, { "docid": "8bee78018b81af59a0e3e08da5d804a6", "text": "The article is talking about relative cost. You could use the cash Schiller P/E ratio as a proxy. That's unit of price per unit of earning. The answer to your question is one time in history, during the 2000 dot com bubble. It's higher than 2008 before the downturn. You are paying more for the same earnings. That has nothing to do with the size of the economy and everything to do with interest rates being too low for too long", "title": "" }, { "docid": "77c2fae1bcc61cc4125f07a6008c68bd", "text": "Monetizing loan is akin to loan money the banks don't have so they can lend money to people/state that don't have money. The ECB and the FED are theorically independant from the political power, and in pratique they more often than naught proove it (at least for the ECB), after that being independent from the financial sector they lend to... that's another question. Rates are low not because they monetize but because they want to do so without inducing inflation.", "title": "" }, { "docid": "90e6f21f589db948c8ece7bcab290e55", "text": "\"(Real) interest rates are so low because governments want people to use their money to improve the economy by spending or investing rather than saving. Their idea is that by consuming or investing you will help to create jobs that will employ people who will spend or invest their pay, and so on. If you want to keep this money for the future you don't want to spend it and interest rates make saving unrewarding therefore you ought to invest. That was the why, now the how. Inflation protected securities, mentioned in another answer, are the least risk way to do this. These are government guaranteed and very unlikely to default. On the other hand deflation will cause bigger problems for you and the returns will be pitiful compared with historical interest rates. So what else can be done? Investing in companies is one way of improving returns but risk starts to increase so you need to decide what risk profile is right for you. Investing in companies does not mean having to put money into the stock market either directly or indirectly (through funds) although index tracker funds have good returns and low risk. The corporate bond market is lower risk for a lesser reward than the stock market but with better returns than current interest rates. Investment grade bonds are very low risk, especially in the current economic climate and there are exchange traded funds (ETFs) to diversify more risk away. Since you don't mention willingness to take risk or the kind of amounts that you have to save I've tried to give some low risk options beyond \"\"buy something inflation linked\"\" but you need to take care to understand the risks of any product you buy or use, be they a bank account, TIPS, bond investments or whatever. Avoid anything that you don't fully understand.\"", "title": "" }, { "docid": "fbca77f91a3bfecbbbdc58c5647c8e10", "text": "My local credit Union has insured IRA accounts or IRA certificates that get the same low interest rates that non-IRA accounts receive. They get NCUA insurance, which is the equivalence of FDIC insurance.", "title": "" }, { "docid": "d43a765c37b5c6be67a1a8905054dabd", "text": "That is kind of the point, one of the hopes is that it incentivizes banks to stop storing money and start injecting it into the economy themselves. Compared to the European Central Bank investing directly into the economy the way the US central bank has been doing. (The Federal Reserve buying mortgage backed securities) On a country level, individual European countries have tried this before in recent times with no noticeable effect.", "title": "" }, { "docid": "f27db9be9f670568435ea70473cb7ef7", "text": "Well, people have been saying interest rates have to go up for years now and have been wrong so far. Also there is an opportunity cost in waiting to buy - if another five years passes with nothing happen, you earn 0% on checking accounts, but at least earn 1.65% per year or so on your 10y bond.", "title": "" }, { "docid": "f80e0f2e047fe9bbcdf8b5f25628172f", "text": "Companies with existing borrowings (where borrowings are on variable interest rates) or in the case with fixed interest rates - companies that get new borrowings - would pay less interest on these borrowings, so their cost will go down and profits up, making them more attractive to investors. So, in general lower interest rates will make the share market a more attractive investment (than some alternatives) as investors are willing to take on more risk for potentially higher returns. This will usually result in the stock market rising as it is currently in the US. EDIT: The case for rising interest rates A central bank's purpose when raising interest rates is to slow down an economy that is booming. As interest rates rise consumers will tighten up their spending and companies will thus have less revenue on top of higher costs for maintaining existing borrowing (with variable rates) or new borrowing (with fixed rates). If rates are higher companies may also defer new borrowings to expand their business. This will eventually lead to lower profits and lower valuation for these companies. Another thing that happens is that as banks start increasing interest for saving accounts investors will look for safety where they can get a higher return (than before) without the risk of the stock market. With lowering profits and valuations, and investor's money flowing out of shares and into the money market, so will company share prices drop (although this may lag a bit with the share market still booming due to greed. But once the boom stops watchout for the crash).", "title": "" } ]	fiqa
b0b3542120333010469ba9db347a543d	UK Contractor with Limited Company	[ { "docid": "f0c44cde230f2b8dc0dd8767c3b5635c", "text": "I know a guy on a much higher rate than me, about £500 per day, and he claims to pay around 18% tax which has me bewildered He will be showing expenses, which are deductible. Check with your accountant about expenses, which can be legally claimed as expenses. This is the main benefit of operating through a limited company. Legtimate business expenses can be claimed, which you cannot do if you are a permanent employee. Your friend might also be claiming false expenses, with a shady accountant. If HMRC does decide to give a call, he might have to pay n times the money he has saved till now. And my suggestion is always ask your accountant first. He(she) knows the legal stuff, so he(she) would give you the legally correct options. If you aren't comfortable with him(her), you can always change accountants. holiday pay, sick pay and job security You miss those that is why you are paid at a rate much higher than an employee. benefit of a limited company You can arrange your salary to pay no PAYE and take the rest as dividends. You willn't have to pay PAYE on that. Secondly if you have a partner(s), all of you can be paid dividends without paying PAYE(if you don't cross the threshold).", "title": "" }, { "docid": "8c4782a441097f0e6d83a85dec2c7387", "text": "\"I know a guy on a much higher rate than me, about £500 per day, and he claims to pay around 18% tax which has me bewildered Your acquaintance may be using a tax efficient, or \"\"marketed avoidance\"\" product identical or similar to those required to be registered or declared under DOTAS legislation in the UK. If this is the case then no, your accountant is not doing anything wrong - the 18% \"\"tax\"\" probably involves a radially different remuneration mechanism to the one you are using.\"", "title": "" } ]	[ { "docid": "2dbf368768764be2d269986232ac2534", "text": "Sorry, I was thinking of PCs. which are professional corporations. LLPs are limited partnerships. If he has partners, an LLP might be suitable. Again, talk to a lawyer and accountant to see what is best for your friend.", "title": "" }, { "docid": "808cf030522c858d1c6b8726005522fc", "text": "You would need to pay taxes in India on your salary. It is not relevant whether the funds are received as INR or GBP. The taxes would be as per normal tax brackets. Note that if your company is not deducting any taxes, you would need to keep paying Advance Taxes as per schedule, else there would be penalty. Depending on your contract with the UK Company, there are certain expenses you can claim. For example laptop / net connection / etc if these are not already reimbursed. Consult a CA and he would advise you more on any tax saving opportunity.", "title": "" }, { "docid": "a49fc3ec7da74e005fa6637578970f66", "text": "In general the other party will expect you to keep your promises. If you promise to do something for a fixed amount of money, you take on a risk and it is no longer their problem if you work slower than you planned. In principle it could even be the case that you take on a project and fail, after which the company may not have to pay at all. So regardless of how things should be written in your books (For example a theoretical pay above minimum wage but a loss for your private company): An important thing to note is that if you are worried about ending up below minimum wage, you are definitely asking a fee that is too low. You should keep in mind that your fee should include a fair compensation for the expected work, and a fair compensation for the risk that you have taken on.", "title": "" }, { "docid": "85e8f159933518a5a1796e99a84b2ce8", "text": "Ugh. Really? I thought this subreddit was smarter than this. 1) You pay taxes on net income, not sales. Expenses are tax deductible. 2) This took place in the UK, which operates on a different set of tax rules than many of us are familiar with. 3) The company still pays other taxes even if they don't pay income tax. In the US, examples would be payroll taxes including the employer portion of things like SS and Medicare, but I'm sure the UK has similar programs funded in a similar manner. To the extent that they own their buildings, they also pay property taxes. They globally source their supplies, which means they also pay import taxes. There are a ton of other taxes that a company pays. 4) Tax laws are complex because business is complex. Inflammatory headlines like this serve no purpose whatsoever.", "title": "" }, { "docid": "14473f2ac55ef0a59cf823be7856e1de", "text": "You will need to register as self-employed aka sole trader (that's the whole point: pay taxes on income that you're not getting as wages from an employer, who would arrange PAYE/NI contributions), or set up a limited company (in the last case you would have the option of either getting paid as wages or as dividends — which one is better is a complex issue which varies from year to year). You'll find lots of advice on the HMRC website.", "title": "" }, { "docid": "fb0647f840b95233af703f5eabf08a32", "text": "\"1. What forms do I need to file to receive money from Europe None. Your client can pay you via wire transfer. They need to know your name, address, account number, and the name of your bank, its SWIFT number and its associated address. The addresses and names are required to make sure there are no typos in the numbers. 2. What forms do I need to file to pay people in Latin America (or any country outside the US) None. 1099s only need to be filled out when the contractor has a US tax ID. Make sure they are contractors. If they work for you for more than 2 years, that can create a problem unless they incorporate because they might look like \"\"employees\"\" to the IRS in which case you need to be reporting their identitites to the IRS via a W-8BEN form. Generally speaking any foreign contractor you have for more than 2 years should incorporate in their own country and you bill that corporation to prevent employee status from occurring. 3. Can I deduct payments I made to contractors from other countries as company expense Of course.\"", "title": "" }, { "docid": "2b5c0f3ab5a837e85d550225adbb03c7", "text": "I would say you can file your taxes on your own, but you will probably want the advice of an accountant if you need any supplies or tools for the side business that might be tax deductible. IIRC you don't have to tell your current employer for tax reasons (just check that your contract doesn't state you can't have a side job or business), but I believe you'll have to tell HMRC. At the end of the year you'll have to file a tax return and at that point in time you'll have to pay the tax on the additional earnings. These will be taxed at your highest tax rate and you might end up in a higher tax bracket, too. I'd put about 40% away for tax, that will put you on the safe side in case you end up in the high tax bracket; if not, you'll have a bit of money going spare after paying your taxes.", "title": "" }, { "docid": "49990a7e860467611cb053acc25c42ac", "text": "\"I just edited an employment agreement last week that had a fairly standard noncompete for the industry (\"\"You won't go to work for my clients\"\") , but the last sentence was \"\"You will not work as a contractor or consultant within 150 miles for 18 months.\"\" WTF. Granting the employer the benefit of the doubt, it was intended to mean \"\"for any of my clients\"\" but that's not what it said, and as written it basically meant if I leave this job I can't work for 18 months.\"", "title": "" }, { "docid": "be8d414a0fd1c029f1c9ad663a449c4d", "text": "I do NOT know the full answer but I know here are some important factors that you need to consider : Do you have a physical location in the United States? Are you working directly from Canada? With a office/business location in the United States your tax obligation to the US is much higher. Most likely you will owe some to the state in which your business is located in Payroll Tax : your employer will likely want to look into Payroll tax, because in most states the payroll tax threshold is very low, they will need to file payroll tax on their full-time, part-time employees, as well as contractor soon as the total amount in a fiscal year exceeds the threshold Related to No.1 do you have a social security number and are you legally entitled to working in the States as an individual. You will be receiving the appropriate forms and tax withholding info Related to No.3 if you don't have that already, you may want to look into how to obtain permissions to conduct business within the United States. Technically, you are a one person consulting service provider. You may need to register with a particular state to obtain the permit. The agency will also be able to provide you with ample tax documentations. Chances are you will really need to piece together multiple information from various sources to resolve this one as the situation is specific. To start, look into consulting service / contractor work permit and tax info for the state your client is located in. Work from state level up to kick start your research then research federal level, which can be more complex as it is technically international business service for Canada-US", "title": "" }, { "docid": "00bc89ab3a0057676da35438e13822f5", "text": "I have just established a limited company (three directors spread around the UK) and I am in the process of setting up a business account. We will be able to arrange everything over the phone and each of us will have to appear in one of the branches with original documents: passport, bank statement. We are EU citizens and have UK bank accounts for over 5 years. That would probably be a problem for you. But still, you can try to call around and see if you can find a company to help you. You can also setup an account on one of the online currency exchange websites and then provide your customers with the website's bank account details with appropriate reference. You would have to check the legal side of this solution.", "title": "" }, { "docid": "96e87efceb5a4215d1e7cea3f5e0e75a", "text": "As the offshore planning world turns, the limited liability company (“LLC”) is starting to appear with greater frequency as an alternative to the conventional offshore asset protection trust. It is desirable because unlike the offshore trust, which requires an independent trustee, the LLC permits the client to remain in full control as the Manager of the entity. While the typical offshore trust provides the highest form of asset protection, the asset protection afforded by the LLC is significant, and with retained control, provides a powerful combination. Recently, St. Vincent and the Grenadines as well as Nevis, have sought to improve their legislation by offering superior LLC statutes. Each is progressive and will be desirable for planners and clients alike.", "title": "" }, { "docid": "3ac188863937de2106c8c20b17e1bbb7", "text": "As I understand it (please correct me if i'm wrong, i've looked at this before and i've been a sole trader briefly but I've never formed a LTD company) there are pros and cons to forming a limited company. Pros Cons", "title": "" }, { "docid": "3ea09bc062adfab744eeed0e795442c3", "text": "According to HMRC's manual BIM42105, you can't deduct expenses of this kind when calculating your profits for corporation tax: No deduction is allowed for expenditure not incurred wholly and exclusively for trade purposes So at the least, the company will have to pay corporation tax on this donation at some point, assuming it ever makes any profits. There's also the risk that HMRC would say that what is really happening is that you are making a personal donation to this person and the company is giving you income to allow you to do it. In that case, you'd be liable to income tax and employees national insurance, and the company liable to employers national insurance. It should then be deductible from corporation tax, though.", "title": "" }, { "docid": "ac5f6d63f5ddfbe95132e9cb560a5580", "text": "Get involved a lawyer and Accountant. Without it you may not be sure what you are getting. What exactly will 30% mean for me? It will mean exactly what gets written in contract. It can mean you are owner of 30% of the company. If this is structured as partnership, it would also mean you are party to 30% loss. It can mean by current valuation, you get x fixed shares. In future if the directors creates more shares, your % ownership can get diluted. Or anything else. It all depends on what is written in contract and how the contract is structured. Is there anything I should I be aware of before agreeing? Get a draft and talk to a Lawyer and Accountant, they should be able to tell you exactly what it means and you can then decide if you agree to it or not; or need this contract worded differently.", "title": "" }, { "docid": "83f92b50ccebdd89ecdfa9794d4be2f5", "text": "I'm hearing that I should maybe wait and see how things go at first as it is only a very small operation. But if I moved into a side of the trade where I require staff, vehicles, and the likes then I would need to registed as a limited company.", "title": "" } ]	fiqa
305766c02ad8cb2ba33f5484f35ed80d	How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score?	[ { "docid": "5c0b10f243edf7eaa3edee1bd9185474", "text": "I wrote an article about FICO scoring which shows that 30% of your score is based on utilization or amount owed. I can't say exactly how much your score will rise, or how long it will take, but your score will improve dramatically from what you propose. This chart is from Credit Karma, and it shows how zero utilization is actually bad when it comes to your score. I wrote an article on my blog titled Too Little Debt in which I discuss further. Under 20% is ideal, just not zero.", "title": "" }, { "docid": "fc33fc6324da01017d6a9ea463b94926", "text": "\"You really don't know how credit scoring works. Let's think about the purpose of a credit score: to assess whether you're a high default risk. A lender wants to know, in this order: Utilization factors into the solvency assessment. If you are at 100% utilization of your unsecured credit, you're insolvent -- you can't pay your bills. If you are at 0%, you're as solvent as you can be. Most people who use credit cards are somewhere in the middle. When a bank underwrites a large loan like a mortgage or car loan, they use your credit score an application information like income and employment history to figure out what kind of loan you qualify for. Credit cards are called \"\"revolving\"\" accounts for a reason -- you're supposed to use them to buy crap and pay your bill in full at the end of the month. My advice to you:\"", "title": "" } ]	[ { "docid": "0f582e0ac48d6814598329f1322f4530", "text": "I'm going to be buying a house / car / home theater system in the next few months, and this loan would show up on my credit report and negatively impact my score, making me unable to get the financing that I'll need.", "title": "" }, { "docid": "db25039b91daf5ce2a415557ae7325dc", "text": "\"Having no utilization makes you an outlier, it's an unusual circumstance for most people, and the scoring model cannot make any predictions based on it. If you think of it from the underwriter's perspective, zero utilization could mean all sorts of things... are you dead? indigent? unable to work? When you buying a product (like money or insurance) whose pricing is based on risk, being \"\"weird\"\" will usually make you a higher risk. That said, it isn't the end of the world. If you are in this situation, I wouldn't lose sleep over it.\"", "title": "" }, { "docid": "d878b407e2951ae82995e866c073014a", "text": "One of your credit reports said this was negatively impacting your credit. You are entitled to a free copy of your credit report once per year from each of the three major credit reporting companies in the U.S. (TRW, Equifax and one other). It is a good idea to check on these anyway, if you have credit accounts. Get copies from the other two credit reporting companies. See if they also say that your credit is negatively impacted by so many loans, even though the balances are small. If all three credit reporting companies are in consensus about negative effecting your credit, then it is true. If that IS the case, check with your subsidized loan lender about consolidation. If the unsubsidized loans are from the same lender, ask them too. If they're from different lenders, you might want to ask at your bank about getting a debt consolidation loan. You might be able to save money by refinancing (consolidating) the unsubsidized student loans as one loan, maybe even ALL the loans as one loan, particularly if you bank at a credit union.", "title": "" }, { "docid": "06778210831f372d53d90de5ea017bc6", "text": "\"If you find a credit card with 0% interest, let us know! I guess I'll just be the one to tell you that this belongs in /r/personalfinance No, a new credit card balance won't affect your existing mortgage. However opening that mortgage so recently definitely dinged your credit substantially and it almost definitely hasn't recovered yet so your credit score isn't as good as you think it is from the home purchase. If you can magically finance $4k for 0% APR then obviously you should do that since you're house poor but be absolutely sure you're right about the terms of financing. I normally make purchases like that on a rewards credit card (airline miles) then pay it off immediately but that's just me. Using the word \"\"adulting\"\" answers that question immediately.\"", "title": "" }, { "docid": "074ce24b4b91ea5b5e687d5911d8da83", "text": "5% cashback? Wow. No, this would not generally affect your credit rating. You aren't altering anything that is generally tracked by the credit rating agencies. You put a purchase on your credit card which temporarily increases your utilisation, but then immediately pay it off, leaving your utilisation practically unchanged.", "title": "" }, { "docid": "1a495a945460a40e2af146c24b9cb52f", "text": "Credit scoring has changed since the time of this question (July 2017) and it is now possible that having a high available credit balance can negatively affect your credit score. ... VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly. Those who have prime credit scores may be hurt the most, since they are most likely to have multiple cards open. But those who like to play the credit card rewards program points game could be affected as well. source", "title": "" }, { "docid": "780edea3fbd8c3ad6dabd4000b4d607a", "text": "The only time the utilization percentage makes a difference is when the data is being pulled for a credit check. During the months leading up to the loan application through the settlement date of the loan keeping this percentage low makes sense. The number reported is the current value of the ratio not an average. You can pre-fund the credit card but don't go overboard. If you keep a negative balance (lets say they owe you $100) for a few months they may decide to send you a check for the balance they owe you.", "title": "" }, { "docid": "ada9b365d608336a462040cce275f6ab", "text": "The old underwriting standards were 28% home debt to income ratio and 33% consumer debt to income ratio. Consumer debt is calculated based on minimum payments. Now, most models are revised upwards... I believe 33/38 is more common today. As long as you are current on the accounts, closing credit or store revolving accounts will have little or no bearing. Just leave them dormant... there is no positive result from closing accounts that have no balance. Having low or no balances has NO negative impact on your credit score. Low balances are NOT red flags to lenders. Period. Here's a quote from Fair Issac: It's just not true that you can have too much available credit. That by itself is never a negative with the score. Sometimes the things you do to get too much can be a problem, such as opening a bunch of new accounts, but for the most part, that's just kind of an old wives' tale. The major drivers of credit scoring are: To improve your prospects for getting a mortgage, you should be reducing your spending and focusing 60/40 on saving for a down payment and paying down that $15k credit card, respectively. Having cash for a down payment is critical to your buying power, as zero-down loans aren't widely available in 2011, and a large downpayment will allow you to eliminate or reduce the time you are paying PMI. PMI reduces your buying power, and is a big waste of money.", "title": "" }, { "docid": "c04766bd3dd7726caf75ff1eeab53a63", "text": "\"Your use of the term \"\"loan\"\" is confusing, what you're proposing is to open a new card and take advantage of the 0% APR by carrying a balance. The effects to your credit history / score will be the following:\"", "title": "" }, { "docid": "71d7c84f33ce6f9b843b95061714b159", "text": "\"Curious, why are you interested in building/improving your credit score? Is it better to use your card and pay off the bill completely every month? Yes. How is credit utiltization calculated? Is it average utilization over the month, or total amount owed/credit_limit per month? It depends on how often your bank reports your balances to the reporting agencies. It can be daily, when your statement cycle closes, or some other interval. How does credit utilization affect your score? Closest to zero without actually being zero is best. This translates to making some charges, even $1 so your statement shows a balance each statement that you pay off. This shows as active use. If you pay off your balance before the statement closes, then it can sometimes be reported as inactive/unused. Is too much a bad thing? Yes. Is too little a bad thing? Depends. Being debt free has its advantages... but if your goal is to raise your credit score, then having a low utilization rate is a good metric. Less than 7% utilization seems to be the optimal level. \"\"Last year we started using a number, not as a recommendation, but as a fact that most of the people with really high FICO scores have credit utilization rates that are 7 percent or lower,\"\" Watts said. Read more: http://www.bankrate.com/finance/credit-cards/how-to-bump-up-your-credit-score.aspx Remember that on-time payment is the most important factor. Second is how much you owe. Third is length of credit history. Maintain these factors in good standing and you will improve your score: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx\"", "title": "" }, { "docid": "bfced950704f4900a5c9c7de9bbf87f5", "text": "I struggle with 0% interest things in my personal life. A responsible me that thinks logically says continue to pay it on time and take advantage of the benefit of the interest free loan you got. It will keep your funds liquid in the case of an emergency, build your credit and teach you self control. Paying it off now has little to no benefit. It does however tie up $3,000 worth of capital you could be using for building interest or leveraging against other purchases.", "title": "" }, { "docid": "a5077894aaa3a2ea67000dba261b4cf5", "text": "\"One of the things that you have to be aware of is a little gotcha in the credit utilization rate. They, or at least the credit company I worked for, used the \"\"high balance\"\" in figuring the credit utilization, not the ending balance. For example, say you had a single card with a $2000 credit limit and used it to charge everything during the month. Say that the high balance was $1900 and you paid it down to zero at the end of the month. The company would calculate your credit utilization at 95%. This is not good and not really fair, but that was the way it was done. Increasing the credit limit helps, but you can also usually make interim payments, say as a paycheck comes in, during the month, if you have an online account.\"", "title": "" }, { "docid": "487342b59ecd1739ead28cebd4f8eefb", "text": "Credit scores are designed to reflect your ability to make payments on time. As long as you're not closing your old credit card account, you will only see a minimal impact on your score. See estimated credit score breakdowns below:", "title": "" }, { "docid": "d8a0ea3b3dde6eb528f6510f15113ddb", "text": "\"There are two factors in your credit score that may be affected. The first is payment history. Lenders like to see that you pay your bills, which is the most straightforward part of credit scores IMO. If you've actually been paying your bills on time, though, then this should still be fine. The second factor is the average age of your open accounts. Longer is considered better here because it means you have a history of paying your bills, and you aren't applying for a bunch of credit recently (in which case you may be taking on too much and will have difficulties paying them). If this card is closed, then it will no longer count for this calculation. If you don't have any other open credit accounts, then that means as soon as you open another one, your average age will be one day, and it will take a long time to get it to \"\"good\"\" levels; if you have other matured accounts, then those will balance out any new accounts so you don't get hit as much. Incidentally, this is one of the reasons why it's good to get cards without yearly fees, because you can keep them open for a long time even if you switch to using a different card primarily.\"", "title": "" }, { "docid": "e7baa086fac795c43103f9468d266822", "text": "\"1 - yes, it's fine to pay in full and it helps your score. 2 - see chart above, it's calculated based on what the bill shows each month. 3 - answered by chart. 1-19% utilization is ideal. 0% is actually worse than 41-60% Note: The above image was from Credit Karma. A slightly different image appears at the article The Relationship Between Your Credit Score and Credit Card Utilization Rate. I don't know how true this really is. Since writing this answer, I've seen offers of a true \"\"FICO score\"\" from multiple credit cards, and have tinkered with my utilization. I paid my active cards before the reporting date, and saw 845-850 once my utilization hit 0. Credit Karma still has me at 800.\"", "title": "" } ]	fiqa
56706019300b3920a0915124fd844fba	Better rate for investment between CD or savings	[ { "docid": "4c6173e36e91ce2ed6f98bae7ce06752", "text": "Excel has two functions you can use: Your question has the CD with a APR and the savings account that mentions both APR and APY. So convert them both to APY to compare them. The savings account (2.27 APY) will return more money based on the numbers in your question (2.27% vs 1.56%) The previous part was the math part of the answer. The following takes into other considerations. For this case the Savings account will return a larger amount of money if the conditions don't change. The CD rate is guaranteed, but the savings account could change every business day. The savings rate could go up, or down. If you expect the savings account rate to rain higher than the CD you might not want to lock into the CD. If you expect the savings rate will drop then get the CD. Of course there are penalties if you cash in the CD early.", "title": "" } ]	[ { "docid": "71146df668f12b055a8d5912ca96a59b", "text": "It depends on the relative rates and relative risk. Ignore the deduction. You want to compare the rates of the investment and the mortgage, either both after-tax or both before-tax. Your mortgage costs you 5% (a bit less after-tax), and prepayments effectively yield a guaranteed 5% return. If you can earn more than that in your IRA with a risk-free investment, invest. If you can earn more than that in your IRA while taking on a degree of risk that you are comfortable with, invest. If not, pay down your mortgage. See this article: Mortgage Prepayment as Investment: For example, the borrower with a 6% mortgage who has excess cash flow would do well to use it to pay down the mortgage balance if the alternative is investment in assets that yield 2%. But if two years down the road the same assets yield 7%, the borrower can stop allocating excess cash flow to the mortgage and start accumulating financial assets. Note that he's not comparing the relative risk of the investments. Paying down your mortgage has a guaranteed return. You're talking about CDs, which are low risk, so your comparison is simple. If your alternative investment is stocks, then there's an element of risk that it won't earn enough to outpace the mortgage cost. Update: hopefully this example makes it clearer: For example, lets compare investing $100,000 in repayment of a 6% mortgage with investing it in a fund that pays 5% before-tax, and taxes are deferred for 10 years. For the mortgage, we enter 10 years for the period, 3.6% (if that is the applicable rate) for the after tax return, $100,000 as the present value, and we obtain a future value of $142,429. For the alternative investment, we do the same except we enter 5% as the return, and we get a future value of $162,889. However, taxes are now due on the $62,889 of interest, which reduces the future value to $137,734. The mortgage repayment does a little better. So if your marginal tax rate is 30%, you have $10k extra cash to do something with right now, mortgage rate is 5%, IRA CD APY is 1%, and assuming retirement in 30 years: If you want to plug it into a spreadsheet, the formula to use is (substitute your own values): (Note the minus sign before the cash amount.) Make sure you use after tax rates for both so that you're comparing apples to apples. Then multiply your IRA amount by (1-taxrate) to get the value after you pay future taxes on IRA withdrawals.", "title": "" }, { "docid": "d76c232eae67ce53df0a866d6dfaec66", "text": "I would put about a month's worth of expenses in the highest-paying savings account that you find convenient to access. For the rest, I recommend Ally's High-Yield CDs — specifically, the 5-year option. Normally 5 years would be way too long to commit short-term savings to a CD. However, the Ally CDs allow you to break them for a penalty of only two months worth of interest. If you look at the graph below (from when the rates were 3.09% APY), you can see the effective interest rate at every possible time you break the CD early. Doing the math, if you can keep your savings in the account for at least four months, it will outperform any other current FDIC-backed investment that I am aware of, for the length of time the money was invested. (credit: MyMoneyBlog)", "title": "" }, { "docid": "1e4c446b7f403ed97c8398ceb13ce54f", "text": "I'm going to make an educated guess on #1. Money markets invest in bonds with a very short time to maturity. An MMA at a bank will be invested in government bonds. Yields on these bonds are really low right now. Thus the yield on that MMA is going to be pretty low. When you make a deposit in a savings account, the bank uses some of that money to lend back out to its customers in the form of car loans, mortgages, etc. These rates are higher, so the bank is willing to pay you a bit more than the yield MMA so they can use your money for these loans. For #2, your time window is short, so there aren't really a lot of options for you. Keeping your money where it is will actually cost you money in fees. You can do as I suggested in my comment above: close the current savings account that's hitting you with fees and open a (free) high yield savings account. You might get 1.1%. If you average $60k in the account over the next 6 months you'll earn $200-250 after taxes. You didn't ask about CDs, but lately shorter term CDs are paying less than savings accounts. Going out to a year will get you just above the rate on a high yield savings account; two years just a little more. These are outside your goal window, so they aren't an option for you.", "title": "" }, { "docid": "c7579afbd4c865d46d443a4bec45661a", "text": "While I don't disagree with the other answers as far as CD laddering goes (at least in principle), three months CDs are currently getting much lower rates than money market accounts, at least according to http://www.bankrate.com. A savings account is also more liquid than CDs. Bonds are another option, and they can generally be liquidated quickly on the secondary market. However, they can go down in value if interest rates rise (actually this is true of CDs as well--there is a secondary market, though I believe only for brokerage CDs?). Bottom line, A high yield savings account is likely your best best. As others noted, you should think of your emergency fund as savings, not investment.", "title": "" }, { "docid": "d9a7942f2e0dc890c354770e4d5e4628", "text": "\"Shem - I recommend looking into online banks or credit unions. I know ally has around ~0.8% rate on their savings accounts NOT MMS. Meaning you don't need a ~$2,500 minimum balance so your money is COMPLETELY liquid. CD's and MMC/S are worth next to nothing, and if you ask me are pointless with the minimum balances they require. Ally also reimburses you for all ATM withdrawal fees, meaning you have complete access to all your money, with next to no minimum, with at least some % back that is comparable to CD rates currently offered. CD's are around ~1.8-2% with tens of thousands of dollars (50-75k+) which isn't worth keeping \"\"liquid\"\",if you would consider CD's liquid (because you can withdraw on a penalty or have laddered CD's), unless you're rich and that's your emergency fund. If I were you I would look into a retirement account, and saving what you need to in an Emergency Fund. Check out a 401(k), Traditional IRA or Roth IRA. They each have their benefits and you need to assess your financial situation before picking one. I would recommend spending a great deal of time researching this before making your decision, because switching from one to another could cost you, depending on your choice. This is, of course, if you live in the U.S.\"", "title": "" }, { "docid": "ccdfb95bba9a39dd154f1bfddbefe85b", "text": "How much money do you have in your money market fund and what in your mind is the purpose of this money? If it is your six-months-of-living-expenses emergency fund, then you might want to consider bank CDs in addition to bond funds as an alternative to your money-market fund investment. Most (though not necessarily all, so be sure to check) bank CDs can be cashed in at any time with a penalty of three months of interest, and so unless you anticipate being laid off very soon, you might get a slightly better rate of interest, FDIC insurance (which mutual funds do not have), and with any luck you may never have to break a CD and lose the interest. Building a ladder of CDs with one maturing each month might be another way to reduce the risk of loss. On the other hand, bond mutual funds are a risky bet now because your investment will lose value if interest rate go up, and as JohnFx points out, interest rates have nowhere to go but up. Finally, the amount of the investment is something that you might want to consider before making changes. If you have $50K put away as your six-month fund, you are talking of $500 versus $350 per annum in changing to a riskier investment with a 1% yield from a safer investment with a 0.7% yield. Whether bragging rights at neighborhood parties are worth the trouble is something for you to decide.", "title": "" }, { "docid": "aad7d81d0864ae51527e037701783ac4", "text": "\"Your objectives are contradictory and/or not possible. Eliminating the non-taxable objective: You could divide the $100K in 5 increments, making a \"\"CD ladder\"\" $25K in 3mo CD (or savings a/c) $25K in 6 mo CD $25K in 9mo CD $25K in 1 yr CD or similar structure (6mo also works well) Every maturing CD you are able to access cash and/or invest in another longest maturity CD, and earn a higher rate of interest. This plan also works well to plan for future interest rates hikes. If you are forced to access (sell CD's) ALL the $$$ at any time, you will only lose accrued interest, none of the principal. All FDIC guaranteed. If non-taxable is the highest priority, \"\"invest\"\" in a tax-free money market fund....see Vanguard Funds. You will not have FDIC guarantee.\"", "title": "" }, { "docid": "a4b32ca9426daa77485dce6bc0707b11", "text": "\"This answer is to supplement the answers about what CD laddering is and what its benefits are. I'm going to talk about its risks. CD ladders are subject to risk. They are not subject to very much credit risk and investment risk (they're federally insured! Barring the dissolution of the United States government as we know it, you will get all your money back!). However, they are subject to inflation risk and a little bit of interest rate risk. A CD is basically a promise for a certain amount of money after a certain amount of time. Inflation risk happens when there's inflation and the money that you've been promised isn't worth as much anymore, because everything's gotten more expensive. Interest rate risk happens when you buy a CD in a very low interest rate environment (like, oh, the year 2010) and rates subsequently rise. You might have been somewhat better off waiting for rates to rise before buying the CD. (Also, if you were to try and re-sell it, you would get an inferior price - enough to make up for the interest rate difference.) Note that interest rates tend to rise if there is a significant amount of inflation, so these two risks go together. Interest rate risk and inflation risk are higher for longer-term CDs (at least right now) because there's more opportunity for inflation and interest rates to rise. 2010 has been marked by the extraordinarily low interest rate environment which prevails, and the Federal Reserve has announced that it is trying to bring about a higher rate of inflation (you may have heard something about a \"\"second round of quantitative easing\"\"). A quick look at interest rates show that 2-5 year CDs yield about 1.50% these days. You could, alternatively, get a savings account that yields 1.4%, preserves your liquidity, and will raise the rate it pays you on savings in the event that inflation and interest rates rise (or, if they don't raise it, you can move the account, unlike a CD). In summary, as of right now (October 2010), fixed-income investments like CDs don't pay you very much and have elevated levels of risk, especially for long-term investment. This is one of the worst times possible to invest in a CD ladder.\"", "title": "" }, { "docid": "a1616d1f5569a880bdef9bac00d70f44", "text": "CD laddering is funding a few CDs in succession. For instance: for 6 months, each month you open up a 6 month CD (rather than opening up one big one). Doing this will give you monthly interest payments as each month a CD will reach maturity (after 6 months). At that time you can choose to roll over the principal in a new CD and keep the interest, reinvest all, etc etc etc. You still get the benefits (higher rates) that CDs offer, but with greater flexibility and more frequent interest payouts. The only downside that I'm aware off is that you may end up with a slightly lower overall interest rate.", "title": "" }, { "docid": "e6871d8efa74a9cf17f99e55876c1270", "text": "There are some high-yield savings accounts out there that might get you close to 1 percent. Shorter term CDs might also serve you well here- rates are above 1 percent, even with 1-2 year terms: http://www.nerdwallet.com/rates/cds/best-cd-rates/", "title": "" }, { "docid": "ed0f6b8a67ef30833bad0c79d53fdb95", "text": "If you need the money in the short-term, you want to invest in something fairly safe. These include saving accounts, CDs, and money market funds from someplace like Vanguard. The last two might give you a slightly better return than the local branch of a national bank.", "title": "" }, { "docid": "4cef894cebded926516253134c852d03", "text": "For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Source. Currently inflation is around 2%. So your 2% APY is a 0% real return where the stock market return is 7%. I.e. on average, stocks have a return that is higher by 7. If you mix in bonds, 70% stocks to 30% bonds, your real returns will drop to around 5.5%, but you are safer in individual years (bonds often have good years when stocks have bad years). We're making a bit of a false dichotomy here. We're talking about returns on stocks in retirement accounts versus returns on CDs in regular accounts. You can buy stocks in regular accounts and it is legally possible to have a CD in a retirement account. So you can get bankruptcy protection and tax advantages with a CD.", "title": "" }, { "docid": "dd39fe5e754a1e54f44a5bb1eef659f8", "text": "If the savings rate is the same as the loan rate, mathematically it doesn't make any difference whether you pay down the loan more and save less or vice versa. However, if the loan rate is higher than the savings rate it's better to pay it down as fast as possible. The chart below compares paying down the loan and saving equally (the gradual scenario), versus paying down the loan quickly at 2 x $193 and then saving 2 x $193. The savings rate, for illustration, is 2%. Paying quickly pays down the loan completely by month 51. On the other hand, in the gradual scheme the loan can't be paid down (with the savings) until month 54, which then leaves 3 months less for saving. In conclusion, it's better to pay down the higher rate loan first. Practically speaking, it may be useful to have some savings available.", "title": "" }, { "docid": "1cccac97e25661617c9556596aa59e69", "text": "\"With a \"\"normal\"\" CD you can't, but some banks do seem to offer CDs where you can. For instance the \"\"variable-rate CD\"\" at USAA allows ongoing deposits. I also found a United Bank \"\"saver CD\"\" which requires you to set up automatic monthly deposits. You would have to check each individual bank's CD offerings to see if they have such a product. However, if you make ongoing deposits to it, a CD becomes less distinguishable from a savings account. Even if a given bank does offer a \"\"depositable\"\" CD, you might conceivably be able to find a higher rate on a plain savings account at another bank (especially an online bank offering high savings account rates). For instance, the USAA CD I mentioned above has an APY of 0.46%, but the high yield savings accounts on this NerdWallet list have higher APYs than that. So even if you can find the kind of CD you describe, it might be better to just use a savings account anyway.\"", "title": "" }, { "docid": "a90b7d3e183d6d7ef73cd23975580513", "text": "One reason why you can get a better rate with a CD compared to a regular savings account is that they lock you into that account for the period of the CD. You can get out of the CD early, but you will forfeit some of the interest. You also generally can't move a portion of the money out of the CD, you have to pull it all out, and then start a new CD with the portion you don't spend. You have to check the terms and conditions for that particular CD. Some people use them to hold their emergency fund. This is the 3-6 months of expenses you set aside in case of a major problem such as a medical emergency or a job loss. The rate is better than the regular savings account, so it can come closer to inflation. The goal is preservation of capital, not investing for the future. So if you understand the risks, and the CD is backed with the same guarantees as the savings account, then it is a viable way to store some or all of the emergency fund.", "title": "" } ]	fiqa
bf7605a1d83f4f37f722eb4ac93afb7f	At what interest rate should debt be used as a tool?	[ { "docid": "53c83272f5ce291e0211a7618ac881f6", "text": "\"I've been taking all the cheap fixed-rate debt banks would like to give me lately. What Rate? In practice I find the only way I get a low-enough rate on a longish-term fixed-rate loan is to use collateral. That is, auto loans and home loans. I haven't seen any personal loans with a low enough fixed rate. (Student loans may be cheap enough if they're subsidized, I guess.) Here's how I think of the rate: If you look at https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations , the average annual return on 80% bonds / 20% stocks is 6.7%, with worst year -10.3%. That's a nominal return not a real return. If you subtract taxes, say your marginal rate (the rate you pay on your last dollar of income) is 28% federal plus 5% state, then if you have no tax deferral the 6.7% becomes about a 4.5% average, with reasonably wide variation year-by-year. (You can mess with this, e.g. using tax-exempt bonds and tax-efficient stock funds, etc. which would be wise, but for deciding whether to take out debt, getting too detailed is false precision. The 6.7% number is only an average to begin with, not a guarantee.) Say you pay 4.5% on a loan, and you keep your money in very conservative investments, that's probably at least going to break even if you give it some years. It certainly can and sometimes will fail to break even over some time periods, but the risk of outright catastrophe is low. If your annual loss is 10%, that sucks, but it should not ruin your life. In practice, I got a home loan for close to 4.5% which is tax-deductible so a lower effective rate, and got an auto loan subsidized by the manufacturer for under 3%. Both are long-term fixed-rate loans with collateral. So I was happy to borrow this money paying about a 3% effective rate in both cases, well below my rough threshold of 4.5%. I do not, however, run a credit card balance; even though one of my cards is only 7% right now, 7% is too high, and it's a floating rate that could rise. The personal loans I've seen have too-high rates also. Thoughts Overall I think using debt as a tool requires that you're already financially stable, such that the debt isn't creating a risky situation. The debt should be used to increase liquidity and flexibility and perhaps boost investment returns a bit. Where you're likely to get into trouble is using debt to increase your purchasing power, especially if you use debt to buy things that aren't necessary. For me the primary reason to use debt is flexibility and liquidity, and the secondary \"\"bonus\"\" reason is a possible spread between the debt rate and investment returns.\"", "title": "" }, { "docid": "48aa672e093bd4157e9f60534b991453", "text": "\"Money is a commodity like any other, and loans are a way to \"\"buy\"\" money. Like any other financial decision, you need to weigh the costs against the benefits. To me, I'm happy to take advantage of a 0% for six months or a modest 5-6% rate to make \"\"capital\"\" purchases of stuff, especially for major purchases. For example, I took out a 5.5% loan to put a roof on my home a few years ago, although I had the money to make the purchase. Why did I borrow? Selling assets to buy the roof would require me to sell investments, pay taxes and spend a bunch of time computing them. I don't believe in borrowing money to invest, as I don't have enough borrowing capacity for it to me worth the risk. Feels too much like gambling vs. investing from my point of view.\"", "title": "" }, { "docid": "6fa8022f1a94860b18f850167f8bedd5", "text": "\"Average return on the S&P500 over the last 10 years has been 1.6 %; so if you'd invested in that with money borrowed at 3 % you would have lost (so far). Investing with borrowed money implies you think you can beat the market: that you're a cleverer investor than whoever decided to lend you the money. Whoever decided to lend you the money decided that you are the best (return/risk ratio) investment for their money. It might make sense to invest borrowed money if you don't need to pay it back if things go wrong: if you're an investment professional whose bonus depends on the profit you make, but who won't need to repay any loss. It might also makes sense to borrow money if you're going to 'add value', e.g. sweat equity: for example if you use it to renovate a house or (if you're a business) to hire more staff. But the question was \"\"What guidelines do you use\"\" and the answer is, \"\"I don't make passive investments with borrowed money.\"\" My Dad did it, i.e. didn't repay his mortgage as soon as he could have: but that was because (back in the '70s) he had a long-term (government-sponsored) mortgage for about 1.5 % (designed to help first-time buyers or something like that), at a time when banks were paying higher interest rates on (ultra-safe) deposits.\"", "title": "" }, { "docid": "4e12ed80eefb5bca7e5891e488a49432", "text": "This is a very interesting question. I'm going to attempt to answer it. Use debt to leverage investment. Historically, stock markets have returned 10% p.a., so today when interest rates are very low, and depending on which country you live in, you could theoretically borrow money at a very low interest rate and earn 10% p.a., pocketing the difference. This can be done through an ETF, mutual funds and other investment instruments. Make sure you have enough cash flow to cover the interest payments! Similar to the concept of acid ratio for companies, you should have slightly more than enough liquid funds to meet the monthly payments. Naturally, this strategy only works when interest rates are low. After that, you'll have to think of other ideas. However, IMO the Fed seems to be heading towards QE3 so we might be seeing a prolonged period of low interest rates, so borrowing seems like a sensible option now. Since the movements of interest rates are political in nature, monitoring this should be quite simple. It depends on you. Since interest rates are the opportunity cost of spending money, the lower the interest rates, the lower the opportunity costs of using money now and repaying it later. Interest rates are a market mechanism so that people who prefer to spend later can lend to people who prefer to spend now for the price of interest. *Disclaimer: Historically stocks have returned 10% p.a., but that doesn't mean this trend will continue indefinitely as we have seen fixed income outperform stocks in the recent past.", "title": "" }, { "docid": "0f7fb9f27fd361d353b5bd638c39a839", "text": "It's not so much the rate of the debt as it is the total cost of the debt relative to the gain you expect to see from using it to purchase something of value. I've known people who were quite happy to pay 12% on personal loans used to buy investment properties for flipping. They're happy to pay that because conventional loans from banks require too much documentation and out-of-pocket expense. For some investors, 12% without all of the documentation burden is money well spent. So if I'm the investor, and the interest on this 12% loan is $5,000 and I can flip a property for $20,000 after all of the other expenses, then the 12% loan was an enabler to netting $15,000 profit.", "title": "" }, { "docid": "65a0831137a40aafa0b8c42f7ca34c1f", "text": "This post has a great discussion on the topic. Basically, there is no single interest rate above which you should pay off and below which you should keep. You have to keep in mind factors such as", "title": "" }, { "docid": "655caf02c7a72345927269b3ff4e2b1a", "text": "It's tough to borrow fixed and invest risk free. That said, there are still some interesting investment opportunities. A 4% loan will cost you 3% or less after tax, and the DVY (Dow high yielders) is at 3.36% but at a 15% favored rate, you net 2.76% if my math is right. So for .5%, you get the fruits of the potential rise in dividends as well as any cap gains. Is this failsafe? No. But I believe that long term, say 10 years or more, the risk is minimal.", "title": "" }, { "docid": "9da064e026887b8c64015113ba765dc0", "text": "I don't really see it as worth it at any level because of the risk. If you take $10,000,000 using the ratios you gave making 2% return. That is a profit of $200,000. Definitely not worth it, but lets go to 20% profit that is $2,000,000. To me the risk involved at beint 10 million in debt isn't worth it to make $2,000,000 quickly it would be pretty easy doing something wrong to wipe out everything.", "title": "" } ]	[ { "docid": "4247fc4bd8436e1a1c0b69754b86c1ff", "text": "One big factor that no one has mentioned yet is whether you believe in a deflationary or inflationary future. Right now, we are leaning towards a deflationary environment so it makes sense to pay off more of the debt. (If you make just one extra payment a year, you will have paid off your house 7 years early). However, should this change (depending on government and central bank policy) you may be better off putting down the very minimum. In a year or three from now, you should have a clearer picture. In the meanwhile, here is a recent Business Week article discussing both sides of the argument. http://www.businessweek.com/magazine/content/10_28/b4186004424615.htm", "title": "" }, { "docid": "bab7bb817344b8591a92849a473ed6a7", "text": "I beg to differ: Israel has an incredibly well managed central bank, and the usury market is wonderfully competitive. It's a shame Stanley Fischer has retired. His management is the case study in central bank management. Rates are low because inflation is low. The nominal rate is irrelevant to return because a 2% nominal return with 1% inflation is superior to a 5% nominal return with 9% inflation. A well-funded budget is the best first step, so now a tweak is necessary: excess capital beyond budgeting should be moved quickly to internationally diversified equities after funding, discounted and adjusted, longer term budgets. Credit will not pay the rate necessary for long term investment. Higher variance is the price to pay for higher returns.", "title": "" }, { "docid": "fbb266c63910a7158d5318a7475546f1", "text": "There's no standard formula. You can compare the going rates on the market for unsecured LOCs and take that as the starting anchor. Unsecured lines of credit run in the US at about 8-18%. Your risk should be reflected in the rate, and I see no reason why the rate would change throughout the loan. As to the amount of principal changing? Just chose one of the standard compounding options - daily (most precise, but most tedious to calculate), monthly average balance, etc.", "title": "" }, { "docid": "8389f755320da15a711c925902a2d0fd", "text": "Not applicable. Or, at least totally unrealistic. Lots of assumptions about returns, no discussion of time frames, and no discussion of volatility. If it's a personal choice you wouldn't do it this way, plus there are other factors to consider. As far as the math of the question, you use a discount rate that allows you to account for alternatives, typically a RFR, but again, that doesn't apply to an individual quite in the same way since it's not a debt vs equity question.", "title": "" }, { "docid": "1cbe110725fdde7f52a84a07676d1a3e", "text": "I assume you're looking for advice, not an actual guaranteed-to-appreciate answer, yes? If you believe Treasury bonds will increase as fast as inflation, that may be the way to go.", "title": "" }, { "docid": "801ad5fe07f19b803c3f99ddc946f030", "text": "It's all about the question's wording. Here they are saying interest is 1.25% per month - not per year. This is why in your earlier post, I encouraged you to internalize what P/Y and C/Y mean in the solver. It's best to think of things in terms of per period of time. I hope this helps, but more practice certainly will.", "title": "" }, { "docid": "e33a9c21f43ea9c539edeef6e961001f", "text": "\"I was amazed to find out that many people think that credit ratings are equivalent across asset classes. Rating agencies DO NOT and CAN NOT rate assets based on market exposure. There ratings represent the assets idiosyncratic risk, obviously assets that are more exposed to the market have higher risk in a market downturn but higher reward in a boom. This is pretty well known and documented. The agencies that are paid by debt issuers are there to establish that the asset meets certain established criteria, often this involves the interest rate. Thus, as most people that are familiar with financial markets know, the major CRA's tend to be reactionary, and a much better gauge of actual credit worthiness is the market interest rate. However these ratings do have a purpose for creating standardized practices for governments and other public organizations. Subscriber based CRAs will almost always give much more accurate and detailed information, just as with everything else, if you want something done right, your gonna have to do it yourself. That said it will be interesting to see how the agencies adapt to Dodd Frank which mandates that their ratings translate across asset classes. Especially since gov debt is in a whole different tax category and thus intrinsically has lower interest rates and thus lower default rates. In the end the rating agencies are just going to have to say... \"\"well since the interest rate is under inflation we know that it is Aaa...\"\" lol Thus they are useless. In addition the rating of government debt has less to do with ability to pay back obligations and more to do with (at least in a democracy) political will. How is this supposed to be quantified?\"", "title": "" }, { "docid": "b605a216befe7244a88edea45dbd0315", "text": "\"Let's talk interest rates on your junk bonds. Even after all that the US has been through (and is still going through), the United States dollar is widely regarded as one of the safest safe havens for your money. As such it serves as a de facto baseline against which all other investments can be measured, the bar everyone has to pass: if you could earn 4% on a 5-year US Treasury bond, or earn 4% on anything else over the next 5 years, you pick the Treasury bond. In many ways this means that the interest rate on a Treasury bond is the closest single measure we have to the price of money all by itself. If someone is loaning you money, they could be loaning it to the Treasury instead; they are losing out by making this loan to you, and must charge you at least this rate just to break even. But most people/governments/countries aren't as credit-worthy as the US Treasury. A few are (the US treasury isn't magical, after all, just really good at what it does), but generally they are not. There is a possibility when loaning money to these entities that you will not get your money back. That is risk. All entities have some risk (even the US treasury!), and some have more than others; \"\"junk bonds\"\" have a somewhat elevated level of this risk. Now, you don't just take a risk on for free (unless you're being charitable or something, but I hope you can find better beneficiaries of charity than the average junk bond). You need to be compensated for that risk. Lenders will demand compensation commensurate with that risk - or they will just walk away without making any loans or buying any bonds because it's not worth it. The difference between the interest rate on a US Treasury bond and the interest rate on another bond, such as a junk bond, is the risk premium - the cost of carrying that risk. Therefore you can see that the interest rate on a junk bond is the price of money plus the risk premium. Now, the Federal Reserve adjusts the price of money from time to time, by buying and selling US Treasury bonds until the price is something they like. This means that one component of interest rate on a junk bond is the interest rate on the US Treasury bond, and it is effectively controlled by the Federal Reserve (through that layer of indirection). The other component of the interest rate on a junk bond is the risk premium. It's not generally possible to know in advance whether or not some company will actually default. People have to guess, and decide how comfortable they are taking that risk. This means that risk is more expensive (and interest rates are higher) when they think the companies in question are going through some hard times, and risk will also be more expensive when people decide that they can't take as many risks (perhaps they've already lost some money and need to take additional steps to protect the rest). It's definitely very hard for an individual to decide what the risk on a particular bond is. The good news is that you generally don't have to. There are a bunch of rich jerks, hedge funds, retirement funds, insurance companies, and other investment entities out there who spend all day looking at things like bonds, trying to estimate the risk. Their willingness to exploit minuscule differences between the interest rate on a bond and the real risk means that the average bond on the market will be fairly priced, according to what all those people think. Plenty of them can still be wrong, mind you (cf. mortgage-backed securities) but in the general case the price of any security reflects all the information everyone in the world has on it on average, so if you're wrong you're in good company. When you buy a nice diversified bond fund, you have access to a bunch of bonds at a pretty-standard price. So that's interest rates for you. But you asked about prices. As it turns out, they're the same thing! - just expressed slightly differently. One way or another a bond is essentially meant to be a stream of payments worth a certain amount in the end - this is why you'll hear them referred to sometimes as a \"\"fixed-income security\"\". The interest rate is essentially the difference between the price you pay now, and the value you receive later, except expressed as a rate. Technically, you could structure the bonds differently (e.g. does the bond pay little bits of interest as you go along, or just pay one big lump sum in the end?) but you can use Math to convert between these two situations, and figure out how much money is worth which when, so it doesn't really matter. Anyway. This means that rising interest rates means lower bond prices on bonds you already own (and falling interest rates means higher bond prices). So if the Federal Reserve increases interest rates, the face value of your bond funds will fall. Also, if people think that the companies issuing the bonds are too risky, the face value of those bonds will also fall. (You were probably expecting the latter effect, though.) Mind you, you will still get the same amount of future money out of them as you would otherwise: that's why they're fixed-income securities. However, a higher interest rate means \"\"I can get more money in the future for less money now\"\", and so people will be willing to pay you less for your bond in the present. This is known as interest rate risk. It is higher on longer term bonds, because those have more time to earn interest.\"", "title": "" }, { "docid": "dec07f6c5b9c7e847b529784a16bef05", "text": "\"I think there's value in charging family members/friends interest if it will make them take the loan seriously. The problem is that if you're thinking about charging interest because the person seems to be borrowing from you too cavalierly, it may be too late to make them take it seriously. In the situation you describe, if you're concerned about the loans being paid back, I think you need to have a serious conversation with the kids and make it clear you expect them to pay the loans back on whatever schedule you agreed to. If, based on your knowledge of your kids, you think charging interest would help motivate them to do this, great. If not, charging interest is unlikely to accomplish anything that the conversation itself won't accomplish. If you haven't previously outlined a specific schedule or set of expectations for how you want to be paid back, just doing that (in writing) may be enough to make them realize it's not a joke. The conventional wisdom is that you shouldn't lend money to anyone unless you're either a) okay with never being paid back; or b) willing to pursue legal remedies to ensure you're paid back. Most people aren't willing to sue their own family members over small loans, which means in most cases it's not a good idea to loan money to family unless you're \"\"okay with\"\" never being repaid (whatever level of \"\"okay with\"\" makes sense for you). I should note that I don't have kids; my advice here is just how I would handle it if I were considering loaning money to my brother or a close friend or the like. This means I don't really know anything about \"\"teaching the kids about the real world\"\", but I have to say my hunch is that if your kids are 25+ and married, it's too late to radically change their views on how \"\"the real world\"\" works; unless they had a very sheltered early adulthood, they've been living in the real world for too long and will have their own ideas of how it works.\"", "title": "" }, { "docid": "5e59f6fd26f143687f8c78306f2bbb7d", "text": "\"It may be the case that some of your debts have a flat regular fee in addition to the interest, which will go away when the debt is completely paid. For example, my mortgage has an approximately $400/year \"\"package fee\"\" as well as its (quite low) interest. When I finish paying the mortgage, I won't have to pay that fee anymore, so it is theoretically possible that spending extra money on paying off my mortgage would be better than spending it on paying off some other debt. I think it's unlikely that it would actually ever be my optimal move in practice, but the point is, there may be an advantage, financial or otherwise, to getting rid of a particular debt, other than merely removing the burden of interest. Those are special situations, though, and in the majority of cases, starting with the highest interest loan will be the right move.\"", "title": "" }, { "docid": "ba2ffd3d9a2721b4e06f7c2d830e42d3", "text": "\"I was afraid of this. If you are using 12 P/Y and 12 C/Y, then your interest rate should not be divided by 12. Also, you should use \"\"END\"\" as this means monthly payments are made at the end of the month - a usual default.\"", "title": "" }, { "docid": "0389ef13c4efdfebeb2cfe9c55344eb3", "text": "\"This might not map well, because personal finance is not the global economy; but let's start by talking about this in terms of the cost of a loan vs the gain of an investment. If you can buy a house with a mortgage at 3%, but make 7% on average in the stock market... You should take as looong as possible to pay that off, and invest every penny you can spare in the markets. Heck, if you can take on even more debt at 3%, you should still do the same. Now imagine you have the power to literally print money, but, doing so is effectively a form of \"\"loan\"\" to yourself. We call the \"\"interest\"\" on that loan \"\"inflation\"\", and it comes out to roughly 2%, basically the same rate that US treasuries pay (they aren't strictly locked, but they rarely drift far apart). So, if you can print money at 1%, you should rationally print as much money as you possibly can to buy US treasuries at 2+%. But someone has to take that money off your hands - Pallets of money siting in a warehouse aren't worth any more than the paper they're made of. There we get into trade imbalances... Whether printing money costs you 0.1% or 10% or 1000% per year depends on whether your country is, on average, making or losing money on international trade (I'm glossing over a hell of a lot there, as full disclosure), and by how much. If you're printing money as fast as you can just to buy food to stay alive with zero exports, you're screwed; if your country exports $10 to the US (or equivalents) for every $1 you import, the rest of that is essentially \"\"invested\"\" in USD, in that you didn't need to print it yourself just to feed your people.\"", "title": "" }, { "docid": "eeaaa8a25d877e0bee9104edeae47c39", "text": "The periodic rate (here, the interest charged per month), as you would enter into a finance calculator is 9.05%. Multiply by 12 to get 108.6% or calculate APR at 182.8%. Either way it's far more than 68%. If the $1680 were paid after 365 days, it would be simple interest of 68%. For the fact that payment are made along the way, the numbers change. Edit - A finance calculator has 5 buttons to cover the calculations: N = number of periods or payments %i = the interest per period PV = present value PMT = Payment per period FV= Future value In your example, you've given us the number of periods, 12, present value, $1000, future value, 0, and payment, $140. The calculator tells me this is a monthly rate of 9%. As Dilip noted, you can compound as you wish, depending on what you are looking for, but the 9% isn't an opinion, it's the math. TI BA-35 Solar. Discontinued, but available on eBay. Worth every cent. Per mhoran's comment, I'll add the spreadsheet version. I literally copied and pasted his text into a open cell, and after entering the cell shows, which I rounded to 9.05%. Note, the $1000 is negative, it starts as an amount owed. And for Dilip - 1.0905^12 = 2.8281 or 182.8% effective rate. If I am the loanshark lending this money, charging 9% per month, my $1000 investment returns $2828 by the end of the year, assuming, of course, that the payment is reinvested immediately. The 108 >> 182 seems disturbing, but for lower numbers, even 12% per year, the monthly compounding only results in 12.68%", "title": "" }, { "docid": "ffb06ce27518d327cca2437728abe156", "text": "Welcome to the world of personal finance. IMO, you are heading for trouble. To answer your question, the APR is the annual percentage rate, or what you pay to borrow money from the CC issuer. For example, if you charge $100, and the bill comes, and you pay $100 on or before the due date you pay nothing. If you pay the minimum payment, which would be around $15, you would then borrow $85 (100-15) and pay interest on that amount. The next month's balance would be 85 + any new charges + interest. The interest in this case can be estimated as follows: 85*.199/12 = 1.41. For your information that is a very high interest rate especially given the current market for borrowed money. Many people become saddled with debilitating debt starting off just like you are planning. If we were friends, I would implore you not to get a CC, instead save up and pay for things with cash.", "title": "" }, { "docid": "8ab90eea050860a8a0fd05acc26713a6", "text": "\"To understand the Twist, you need to understand what the Yield Curve is. You must also understand that the price of debt is inverse to the interest rate. So when the price of bonds (or notes or bills) rises, that means the current price goes up, and the yield to maturity has gone down. Currently (Early 2012) the short term rate is low, close to zero. The tools the fed uses, setting short term rates for one, is exhausted, as their current target is basically zero for this debt. But, my mortgage is based on 10yr rates, not 1 yr, or 30 day money. The next step in the fed's effort is to try to pull longer term rates down. By buying back 10 year notes in this quantity, the fed impacts the yield at that point on the curve. Buying (remember supply/demand) pushes the price up, and for debt, a higher price equates to lower yield. To raise the money to do this, they will sell short term debt. These two transactions effectively try to \"\"twist\"\" the curve to pull long term rates lower and push the economy.\"", "title": "" } ]	fiqa
78c2d4c5d4e514158e48fedb8105d751	How can contractors recoup taxation-related expenses?	[ { "docid": "ec10c380a56fa00b64882857f79bcd17", "text": "They are already indirectly paying these expenses. They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse. The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income.", "title": "" }, { "docid": "36bc3419347f5ab9a094d1c7d866fbae", "text": "\"Anything is negotiable. Clearly in the current draft of the contract the company isn't going to calculate or withhold taxes on your behalf - that is your responsibility. But if you want to calculate taxes yourself, and break out the fees you are receiving into several \"\"buckets\"\" on the invoice, the company might agree (they might have to run it past their legal department first). I don't see how that helps anything - it just divides the single fee into two pieces with the same overall total. As @mhoran_psprep points out, it appears that the company expects you to cover your expenses from within your charges. Thus, it's up to you to decide the appropriate fees to charge, and you are assuming the risk that you have estimated your expenses incorrectly. If you want the company to pay you a fee, plus reimburse your expenses, you will need to craft that into the contract. It's not clear what kind of expenses you need to be covered, and sometimes companies will not agree to them. For specific tax rule questions applicable to your locale, you should consult your tax adviser.\"", "title": "" } ]	[ { "docid": "3c240eb80447171c476c7943200e8042", "text": "One possibility that I use: I set up an LLC and get paid through that entity. Then I set up a payroll service through Bank of America and set up direct deposit so that it is free. I pay myself at 70% of my hourly rate based on the number of hours I work, and the payroll service does all the calculations for me and sets up the payments to the IRS. Typically money is left over in my business account. When tax time rolls around, I have a W2 from my LLC and a 1099 from the company I work for. I put the W2 into my personal income, and for the business I enter the revenue on the 1099 and the payroll expenses from paying myself; the left over in the business account is taxed as ordinary income. Maybe it's overkill, but setting up the LLC makes it possible to (a) set up a solo 401(k) and put up to $51k away tax-free, and (b) I can write off business expenses more easily.", "title": "" }, { "docid": "16581677e644eac47253d3d85e446f77", "text": "I suggest you have a professional assist you with this audit, if the issue comes into questioning. It might be that it wouldn't. There are several different options to deal with such situation, and each can be attacked by the IRS. You'll need to figure out the following: Have you paid taxes on the reimbursement? Most likely you haven't, but if you had - it simplifies the issue for you. Is the program qualified under the employers' plan, and the only reason you're not qualified for reimbursement is that you decided to quit your job? If so, you might not be able to deduct it at all, because you can't take tax benefits on something you can be reimbursed for, but chose not to. IRS might claim that you quitting your job is choosing not to get reimbursement you would otherwise get. I couldn't find from my brief search any examples of what happened after such a decision. You can claim it was a loan, but I doubt the IRS will agree. The employer most likely reported it as an expense. If the IRS don't contest based on what I described in #2, and you haven't paid taxes on the reimbursement (#1), I'd say what you did was reasonable and should be accepted (assuming of course you otherwise qualify for all the benefits you're asking for). I would suggest getting a professional advice. Talk to a EA or a a CPA in your area. This answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer", "title": "" }, { "docid": "0fb8ad9020bf14fbf901fe9c1f18a4c4", "text": "\"If you receive a 1099-MISC from YouTube, that tells you what they stated to the IRS and leads into most tax preparation software guided interviews or wizards as a topic for you to enter. Whether or not you have a 1099-MISC, this discussion from the IRS is pertinent to your question. You could probably elect to report the income as a royalty on your copyrighted work of art on Schedule E, but see this note: \"\"In most cases you report royalties in Part I of Schedule E (Form 1040). However, if you ... are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040).\"\" Whether reporting on Schedule E or C is more correct or better for your specific circumstances is beyond the advice you should take from strangers on the internet based on a general question - however, know that there are potentially several paths for you. Note that this is revenue from a business, so if you paid for equipment or services that are 100% dedicated to your YouTubing (PC, webcam, upgraded broadband, video editing software, vehicle miles to a shoot, props, etc.) then these are a combination of depreciable capital investments and expenses you can report against the income, reducing the taxes you may owe. If the equipment/services are used for business and personal use, there are further guidelines from the IRS as to estimating the split. These apply whether you report on Sch. E, Sch. C, or Sch C-EZ. Quote: \"\"Self-Employment Income It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income. All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040. Use Form 1040, Schedule C, Profit or Loss from Business, or Form 1040, Schedule C-EZ, Net Profit from Business (Sole Proprietorship) to report income and expenses. Taxpayers will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 21 as Other Income. Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer. Fees received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if each client paid less than $600 for the year. Someone who repairs computers in his or her spare time needs to report all monies earned as self-employment income even if no one person paid more than $600 for repairs.\"\"\"", "title": "" }, { "docid": "4f23189bc5ab93bc85fe590c711b5301", "text": "If you want to subcontract some of your excess work to somebody else, you better be in business! While some kinds of employees (e.g. commissioned salespeople) are permitted to deduct some expenses on their income tax, generally only a real business can deduct wages for additional employees, or the cost of services provided by subcontractors. Do you invoice your clients and charge HST (GST)? Or do you tell your clients each pay period how many hours you worked and they compensate you through their payroll system like everybody else that walks through the door? If you're not invoicing and charging HST (GST) (assuming you exceed the threshold, and if you have too much work, you probably do!), then perhaps your clients are treating you as an employee – by default – and withholding taxes, CPP, and EI so they don't get in trouble? After all, Canada Revenue Agency is likely to consider any person providing a service to a company to be an employee unless there is sufficient evidence to the contrary, and when there isn't enough evidence, it's the company paying for the services that would be on the hook for unpaid taxes, CPP, and EI. Carefully consider what form of business you are operating, or were intending to operate. It's essential for your business to be structured appropriately if you want to hire or subcontract. You ought to be either self-employed as a sole proprietor, or perhaps incorporated if it makes more sense to your situation. Next, act accordingly. For instance, it's likely that your business should be taking care of the source deductions, CPP, and EI. In fact, self-employed individuals shouldn't even be paying into EI – an independent contractor wouldn't qualify to make an EI claim if they lost a contract. As an independent, one doesn't have a job, one has a business, and EI doesn't cover the business itself, only the employees that the business deals with at arm's length. As a business owner, you would be considered non-arms-length, and exempt from EI. Growing your business in the way that you are suggesting is an important enough a step that you should seek professional advice in advance. Find a good accountant that deals with self-employed individuals & small businesses and run all this by him. He should be able to guide you accordingly. Find a lawyer, too. A lawyer can guide you on how to properly subcontract others while protecting you and your business. Finally, be mindful of what it is you agreed to in your contract with your client: Do they expect all services to be performed by you, personally? Even if it wasn't written down who exactly would be performing the services, there may be an assumption it's you. Some negotiation may be in order if you want to use subcontractors.", "title": "" }, { "docid": "2c471849f109297f8aa0872aaa94b4cd", "text": "I am not an accountant, but I have a light accounting background, despite being primarily an engineer. I also have a tiny schedule C business which has both better and worse years. I am also in the United States and pay US taxes. I assume you are referring to the US Form 1040 tax return, with the attached Schedule C. However little I know about US taxes, I know nothing about foreign taxes. You are a cash-basis taxpayer, so the transactions that happen in each tax year are based on the cash paid and cash received in that year. You were paid last year, you computed your schedule C based on last year's actual transactions, and you paid taxes on that income. You can not recompute last years schedule C based on the warranty claim. You might want to switch to an accrual accounting method, where you can book allowances for warranty claims. It is more complex, and if your business is spotty and low volume, it may be more trouble than it is worth. At this point, you have two months to look for ways to shift expenses into next year or being income into this year, both of which help offset this loss. Perhaps a really aggressive accountant would advise otherwise (and remember, I am not an accountant), but I would take the lumps and move on. This article on LegalZoom (link here) discusses how to apply a significant net operating loss (NOL) in this year to the previous two years, and potentially carry it forward to the next two years. This does involve filing amended returns for the prior two years, showing this year's NOL. For this to be relevant, your schedule C loss this year must exceed your other W2 and self-employment income this year, with other tests also applied. Perhaps a really aggressive accountant would advise otherwise (and remember, I am not an accountant), but I would take the lumps and move on.", "title": "" }, { "docid": "20c142df943348a0135a62c9553986d0", "text": "\"I don't see why you would need an \"\"international tax specialist\"\". You need a tax specialist to give you a consultation and training on your situation, but it doesn't seem too complicated to me. You invoice your client and get paid - you're a 1099 contractor. They should issue you a 1099 at the end of the year on everything they paid you. Once you become full-time employee - you become a W2 employee and will get a W2 at the end of the year on the amounts paid as such. From your perspective there's nothing international here, regular business. You have to pay your own taxes on the 1099 income (including SE taxes), they have to withhold taxes from your W2 income (including FICA). Since they're foreign employers, they might not do that latter part, and you'll have to deal with that on your tax return, any decent EA/CPA will be able to accommodate you with that. For the employer there's an issue of international taxation. They might have to register as a foreign business in your state, they might be liable for some payroll taxes and State taxes, etc etc. They might not be aware of all that. They might also be liable (or exempt) for Federal taxes, depending on the treaty provisions. But that's their problem. Your only concern is whether they're going to issue you a proper W2 and do all the withholdings or not when the time comes.\"", "title": "" }, { "docid": "6cf3d98f83f8d22c5222e2e9560689cd", "text": "To be confident in your solution, and get the best solution for you, consult a local accountant, preferably one who is specialized in taxes for businesses. Or muddle through the code and figure it out for yourself. The primary advantage in consulting with an accountant is that you can ask them to point out ways you can restructure your expenses, debts and income in order to minimize your tax burden. They can help you run the numbers for the various options and choose the one that is right, numerically.", "title": "" }, { "docid": "052cdbc0b5131c019a97ef5aaafb1df6", "text": "You need to clarify with Bob what your agreement is. If you and Bob are working together on these jobs as partners, you should get a written partnership agreement done by a lawyer who works with software industry entity formation. You can legally be considered a partnership if you are operating a business together, even if there is nothing in writing. The partnership will have its own tax return, and you each will be allocated 50% of the profits/losses (if that's what you agree to). This amount will be reported on your own individual 1040 as self-employment income. Since you have now lost all the expense deductions you would have taken on your Schedule C, and any home office deduction, it's a good idea to put language in the partnership agreement stating that the partnership will reimburse partners for their out-of-pocket expenses. If Bob is just hiring you as a contractor, you give him your SSN, and he issues you a 1099, like any other client. This should be a situation where you invoice him for the amount you are charging. Same thing with Joe - figure out if you're hiring him as an independent contractor, or if you have a partnership. Either way, you will owe income and self-employment tax on your profits. In the case of a partnership, the amount will be on the K-1 from the partnership return. For an independent contractor who's operating as a sole proprietor, you report the income you invoiced for and received, and deduct your expenses, including independent contractors that you hired, on your Schedule C. Talk to your tax guy about quarterly estimated payments. If you don't have a tax guy, go get one. Find somebody people in your city working in your industry recommend. A good tax person will save you more money than they cost. IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.", "title": "" }, { "docid": "15014a9abec8b2f5665cd75e5482fb1c", "text": "\"Linkedlinked, You might want to seriously take another look at the links that Chris provided you. Specifically the ones on the IRS website: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html From the IRS website: Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination. Perhaps more importantly... pay attention to what happens if you're WRONG: Consequences of Treating an Employee as an Independent Contractor If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information. I would STRONGLY recommend that you and your partners give your accountant a call and discuss the matter. They will be able to help you make the right decision. One of biggest mistakes businesses make in this are is to classify their employees as independent contractors. The IRS (who happens to be hungry for money right now) comes in and says, \"\"Nooooooooo... those are employees.\"\" ...and the COMPANY gets to pay the employment taxes. I actually have person experience with this as I worked for a company this happened to. Every contractor was re-classified as an employee except for two (myself and one other). The key reason in that case was that none of the other contractors had any other clients. While I understand that you have other clients, I would still recommend talking to your accountant for an hour or so... just to be 100% sure. Sincerely, Andrew Smith TaxQueries.com\"", "title": "" }, { "docid": "bd1ea9e7005d801f8ae1f194260d983f", "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "title": "" }, { "docid": "653e490ace6c1b315324cea013d7d9ef", "text": "Not correct. First - when you say they don't tax the reimbursement, they are classifying it in a way that makes it taxable to you (just not withholding tax at that time). In effect, they are under-withholding, if these reimbursement are high enough, you'll have not just a tax bill, but penalties for not paying enough all year. My reimbursements do not produce any kind of pay stub, they are a direct deposit, and are not added to my income, not as they occur, nor at year end on W2. Have you asked them why they handle it this way? It's wrong, and it's costing you.", "title": "" }, { "docid": "61ca24fc9ed4a1d70bc253d5905a22d6", "text": "\"If all of the relocation expenses are paid by your employer to the moving companies, then you should not have any tax liability for those payments. Relocation expenses should be treated as normal business expenses by your employer. Note I emphasize \"\"should\"\" because it's possible that your employer \"\"could\"\" consider it income to you, but companies generally do not go out of their way to classify normal business expenses as income since it costs both them and you more money in taxes. As a side note, the reason your company is paying these expenses directly is probably to lessen the likelihood of these expenses being questioned in an audit (in comparison to if they cut you a reimbursement check which could get more scrutiny).\"", "title": "" }, { "docid": "938db83ce9d0d8d64a670ca38b919a3b", "text": "Note: This is not professional tax advice. If you think you need professional tax advice, find a licensed professional in your local area. What are the expected earnings/year? US$100? US$1,000? US$100,000? I would say if this is for US$1,000 or less that registering an EIN, and consulting a CPA to file a Partnership Tax return is not going to be a profitable exercise.... all the earnings, perhaps more, will go to paying someone to do (or help do) the tax filings. The simplest taxes are for a business that you completely own. Corporations and Partnerships involve additional forms and get more and more and complex, and even more so when it involves foreign participation. Partnerships are often not formal partnerships but can be more easily thought of as independent businesses that each participants owns, that are simply doing some business with each other. Schedule C is the IRS form you fill out for any businesses that you own. On schedule C you would list the income from advertising. Also on schedule C there is a place for all of the business expenses, such as ads that you buy, a server that you rent, supplies, employees, and independent contractors. Amounts paid to an independent contractor certainly need not be based on hours, but could be a fixed fee, or based on profit earned. Finally, if you pay anyone in the USA over a certain amount, you have to tell the IRS about that with a Form 1099 at the beginning of the next year, so they can fill out their taxes. BUT.... according to an article in International Tax Blog you might not have to file Form 1099 with the IRS for foreign contractors if they are not US persons (not a US citizen or a resident visa holder).", "title": "" }, { "docid": "77274bf8fc4eb5596d7e82304644c11d", "text": "You report it as an expense against the 1099 income when you do your taxes. You will only be taxed on the amount after the lawyers fees (but if it cost you more in lawyers fees than you recover in damages, the loss is not deductible). Be sure to keep documentation of the lawyers bill and the contract. Compensatory damages are generally not taxable at all. You can see here for more information on that.", "title": "" }, { "docid": "51ed33515dc0b812d9ab8cf1afe6668f", "text": "Well, we work in the power markets. It might be overkill, but several have PhD although there have been a few with masters or CFA charter. The Risk Operations group is less theoretical and a bit less stringent. I know the society of actuaries has a Chartered Enterprise Risk Analyst credential that might be useful.", "title": "" } ]	fiqa
71b11cbd7eebc5ab6fe34decd676fe0b	What is the best way for me to invest my money into my own startup?	[ { "docid": "9544e680df24c706b1a1c32ec201f96b", "text": "\"It will depend somewhat on the rules where the company is formed, and perhaps how much you're talking about investing. I don't know about Canada, but when I've formed businesses in the U.S., I've been advised to invest some of the money as an equity investment, and the bulk of the remainder as a loan. You say \"\"more shares\"\", so it sounds like you've already invested some money and need to inject another round. If you make a loan to the company, make sure everything is done at arm's length -- you'll need to wear the hat of the Company Management and sign a contract with yourself, use a market-based interest rate, and make sure the company is paying you back with interest. An alternative which may work if you expect cash flow soon is to pay for certain expenses personally and then submit an expense report to the company, which will pay you back. Overall, a quick consultation with your accountant should be a relatively inexpensive way to get the best answer for your specific circumstances.\"", "title": "" }, { "docid": "c5bf73ff2c8973bf282521eda8b1c959", "text": "Ask your accountant about convertable preference shares. This would permit you to loan money to your company and then convert the debt to equity, should you so choose, at a later stage. As with the answer by bstpierre, these are all contractual arrangements conducted at arms-length.", "title": "" } ]	[ { "docid": "94df20a3803d4faadf3eb4d71a9339f1", "text": "\"Kudos for wanting to start your own business. Now let's talk reality. Unless you already have some kind of substantial track record of successful investing to show potential investors, what you want to do will never happen, and that's just giving you the honest truth. There are extensive regulatory requirements for starting any kind of public investment vehicle, and meeting them costs money. You can be your own hedge fund with your own money and avoid all of this if you like. Keep in mind that a \"\"hedge fund\"\" is little more than someone who is contrarian to the market and puts their money where their mouth is. (I know, some of you will argue this is simplistic, and you'd be right, but I'm deliberately avoiding complexity for the moment) The simple truth is that nobody is going to just give you their money to invest unless, for starters, you can show that you're any good at it (and for the sake of it we'll assume you've had success in the markets), and (perhaps most importantly) you have \"\"skin in the game\"\", meaning you have a substantial investment of your own in the fund too. You might have a chance at creating something if you can show that whatever your hedge fund proposes to invest in isn't already overrun by other hedge funds. At the moment, there are more mutual and hedge funds out there than there are securities for them to invest in, so they're basically all fighting over the same pie. You must have some fairly unique opportunity or approach that nobody else has or has even considered in order to begin attracting money to a new fund these days. And that's not easy, trust me. There is no short or easy path to what you want to do, and perhaps if you want to toy around with it a bit, find some friends who are willing to invest based on your advice and/or picks. If you develop a track record of success then perhaps you could more seriously consider doing what you propose, and in the meanwhile you can look into the requirements for laying the foundations toward your goal. I hope you don't find my answer cruel, because it isn't meant to be. I am all about encouraging people to succeed, but it has to start with a realistic expectation. You have a great thought, but there's a wide gulf from concept to market and no quick or simple way to bridge it. Here's a link to a web video on how to start your own hedge fund, if you want to look into it more deeply: How To Legally Start A Hedge Fund (From the Investopedia website) Good luck!\"", "title": "" }, { "docid": "578d2f1ea175a3c42514e0fc59eb897c", "text": "That is a loaded question but I'll give it a shot. First things first you need to determine if you are ready to invest in stocks. If you have a lot of high interest debt you would be much better served paying that off before investing in stocks. Stocks return around 8%-10% in the long run, so you'd be better off paying off any debt you have that is higher than 8%-10%. Most people get their start investing in stocks through mutual funds in their 401k or a Roth IRA. If you want to invest in individual stocks instead of mutual funds then you will need to do a lot of reading and learning. You will need a brokerage account or if you have a stock in mind they might have a dividend reinvestment plan (DRIP) that you could invest in directly with the company. You will have to compare the different brokerage firms to determine which is best for you. Since you seem to be internet savvy, I suggest you use a discount brokerage that let's you buy stocks online with cheaper commissions. A good rule of thumb is to keep commissions below 1% of the amount invested. Once you have your online brokerage account open with money in there the process of actually buying the stock is fairly straightforward. Just place an order for the amount of shares you want. That order can be a market order which means the purchase will occur at the current market price. Or you can use a limit order where you control at what price your purchase will occur. There are lots of good books out there for beginners. Personally I learned from the Motley Fool. And last but not least is to have fun with it. Learn as much as you can and welcome to the club.", "title": "" }, { "docid": "167e7ba61ac8b036dc0a477a9e81d0df", "text": "Don't start by investing in a few individual companies. This is risky. Want an example? I'm thinking of a big company, say $120 billion or so, a household name, and good consistent dividends to boot. They were doing fairly well, and were generally busy trying to convince people that they were looking to the future with new environmentally friendly technologies. Then... they went and spilled a bunch of oil into the Gulf of Mexico. Yes, it wasn't a pretty picture if BP was one of five companies in your portfolio that day. Things would look a lot better if they were one of 500 or 5000 companies, though. So. First, aim for diversification via mutual funds or ETFs. (I personally think you should probably start with the mutual funds: you avoid trading fees, for one thing. It's also easier to fit medium-sized dollar amounts into funds than into ETFs, even if you do get fee-free ETF trading. ETFs can get you better expense ratios, but the less money you have invested the less important that is.) Once you have a decent-sized portfolio - tens of thousands of dollars or so - then you can begin to consider holding stocks of individual companies. Take note of fees, including trading fees / commissions. If you buy $2000 worth of stock and pay a $20 commission you're already down 1%. If you're holding a mutual fund or ETF, look at the expense ratio. The annualized real return on the stock market is about 4%. (A real return is after adjusting for inflation.) If your fee is 1%, that's about a quarter of your earnings, which is huge. And while it's easy for a mutual fund to outperform the market by 1% from time to time, it's really really hard to do it consistently. Once you're looking at individual companies, you should do a lot of obnoxious boring stupid research and don't just buy the stock on the strength of its brand name. You'll be interested in a couple of metrics. The main one is probably the P/E ratio (price/earnings). If you take the inverse of this, you'll get the rate at which your investment is making you money (e.g. a P/E of 20 is 5%, a P/E of 10 is 10%). All else being equal, a lower P/E is a good thing: it means that you're buying the company's income really cheap. However, all else is seldom equal: if a stock is going for really cheap, it's usually because investors don't think that it's got much of a future. Earnings are not always consistent. There are a lot of other measures, like beta (correlation to the market overall: riskier volatile stocks have higher numbers), gross margins, price to unleveraged free cash flow, and stuff like that. Again, do the boring research, otherwise you're just playing games with your money.", "title": "" }, { "docid": "1c5bd2ce8b907fb18c884646da71f621", "text": "sell drugs? (joking) In all seriousness though, your options to legally invest this money are limited, which leaves you to extra-legal options..... which many young people engage, different kind of candy I guess. Ok so you cannot invest into stocks, to day trade. Because you're not an adult. You can put the money in a bank, but the interest rate on that amount of money is in the realm of ~0.1%. You can use the money to seed another legal business venture, say another kind of better candy. My advice is to get a parental unit to put the cash into a mutual fund, in your name... then hand that over to you when you turn 18.", "title": "" }, { "docid": "96fc11d801210378ea9b1d0552225226", "text": "There's a few options you may want to look into. First, I'm writing from an US point of view, I do not know if these are available in Russia. First look into DRIPS (Dividend Reinvestment Plans). These seem tailor made for your request. They are plans set up by companies that pay dividends. If you own at least one share (costing no more than say $100 often less), then these companies will take the dividends paid on these shares and automatically buy more shares as the income from the dividends pile up. This is a low cost of entry way of getting in on many high quality stocks. Stalwart stocks such as GE and many utility and real estate stocks (REITs) offer this. Check out these links: Secondly you can look at brokerages that specialize in buying smaller amount of stocks on a regular basis to simulate a DRIP, ShareBuilder will allow you to invest say $50 or $100 a month into one or more stocks. However, at smaller amounts, their commission fees can eat in to your returns. Folio investing does the same thing as Sharebuilder. It's worth looking at them both and comparing their commissions and other features", "title": "" }, { "docid": "8885f17a460291a9344b1c9e6e161cc7", "text": "\"I am asking because startups are super risky and 99% of the times you fail and lose the money. First of all, that 99% number is exaggerated. Only 96% of companies fail within ten years. But starting your own business is not a pure game of chance. It mostly depends on how good your business idea is and if you have the necessary skills and resources to succeed with it. Yes, there is luck involved, but a smart businessman can calculate the risks and possible rewards and then decide if a certain business idea is a good or a bad gamble. Also, a business failing does not necessarily mean that the business owner failed. A good business owner knows when to fold. A business might be profitable at first, but market circumstances might change at any time making it unprofitable. A smart business owner notices that early, liquidates the unprofitable business as quickly as possible and refocuses on their next business idea. Only those who can not let go of an unprofitable business or take too long to notice that it is failing are those who get dragged down with it. So should you have a \"\"startup fund\"\"? Saving your disposable income is never a mistake. If you never end up starting a business, it will eventually serve you as a retirement fund. So yes, you should save a part of your money each month. But should you start a company with it? That depends on whether or not you have a business idea where you know you will succeed. How do you know that? When you answered yes to all of these questions, then you might want to consider it.\"", "title": "" }, { "docid": "035d6bea1dd42ac71c51671df2da59f4", "text": "\"Read the book, \"\"Slicing Pie: Fund Your Company Without Funds\"\". You can be given 5% over four years and in four years, they hire someone and give him twice as much as you, for working a month and not sacrificing his salary at all. Over the four years, the idiot who offered you the deal will waste investors money on obvious, stupid things because he doesn't know anything about how to build what he's asking you to build, causing the need for more investment and the dilution of your equity. I'm speaking from personal experience. Don't even do this. Start your own company if you're working for free, and tell the idiot who offered you 5% you'll offer him 2% for four years of him working for you for free.\"", "title": "" }, { "docid": "71edadf0bf5e87a03ff97820bd72cee1", "text": "50 (dollars, Euros?) is a very small amount to invest. The first time I ever bought stock I picked a winner. It went up by about 40% in the first few months. I sold it and lost money. How? I only bought 10 shares at $7.50 each. The profit was less than the two commissions for buying and selling (about $17 a piece). If you are thinking of buying individual stocks, You simply need to save up more money before it will be practical. If you are not trying to beat the market, which is probably not something an amateur like you or I should attempt, then you should consider low cost index funds. I have money in mutual funds, some of which, have as low as a $100 minimum investment. I have moved entirely away from picking stocks. It was a good experience and I could afford to lose the money, but as a long term strategy, it just was not working for me. Note: This is coming from an American. If this somehow does not apply in Europe...", "title": "" }, { "docid": "7b7bf351cd2a799c09043b696a6fae8e", "text": "\"I did this a couple of years ago, and boy do I regret it. After many months of delayed, and new faces coming onto the team for a short period before leaving, there wasn't much hope to ever complete the project. I ended up accumulating debt (About 4.5 grand) that I am still paying off because I chased my dream. Unfortunately, anything can happen when you choose to pursue a goal. It can get delayed, stopped, or outright fail. At the bare minimum, you would best be prepared to deal with delays, competing products, and outright failures. If you say \"\"I have enough money to last me 12 months and I expect to take 7 months\"\", then you best be prepared to answer: These are just a handful of ideas, and there are plenty more that would need to be addressed. Probably the best thing that I have seen a few friends do is to ask for reduced hours. Working part time allows you more time while reducing, but not eliminating, the pay. Even better is that depending on your company, you could ask to go back to full time if your startup didn't work out. Another option is to do what I'm doing currently: Find a job with lots of downtime. My job is critical and the market here is starved of good techs. Even then, I have a solid 2-4 hours of work each day. The other 4-6 hours I can spend on my personal projects that may eventually lead into a startup. If you plan to do this though, make sure to read your agreements carefully. There may be restrictions on copyright and the likes by working on a personal project on company property. If you do plan to go this route, you might want to consult a lawyer (like I did) to make sure you won't get screwed later.\"", "title": "" }, { "docid": "1d6f220dd1677d35b3bed386d664808f", "text": "Investing in mutual funds, ETF, etc. won't build a large pool of money. Be an active investor if your nature aligns. For e.g. Invest in buying out a commercial space (on bank finance) like a office space and then rent it out. That would give you better return than a savings account. In few years time, you may be able to pay back your financing and then the total return is your net return. Look for options like this for a multiple growth in your worth.", "title": "" }, { "docid": "31e1ce71a7f15957a93f7ccce27b3144", "text": "if you have 30k to invest use some of it to hire someone because the returns you'd get with some sort of professional would probably make up for what your paying them in comparison to doing it on your own. although if you're really against it then like mjvcaj said, ETF's would probably be a good idea.", "title": "" }, { "docid": "af19554812ea5ad1f221e47cdb1600d1", "text": "For most people, investing in the stock market directly is one of the last things to do. That's not to say you shouldn't, but rather that there are other things to consider as well. Start with automatic monthly deposits to a liquid account such as savings or money market. The morale boost you get from seeing the balance grow is nearly impossible to beat. Following that, paying down any debts such as student loans or credit cards. Once you've done that, then you should look at company sponsored 401k plans or IRAs. Sharebuilder offers IRAs holding whichever stock or fund you pick. Again, automatic monthly deposits are the way to go here. Good luck, and happy investing :)", "title": "" }, { "docid": "e92c138a220871b654595fe3b11985c8", "text": "Well, to get money, you need to leverage your assets. So your options basically are: - Asset: Cash. Well, I figure if you had, you wouldn't have asked how to get more of it, but its always worth mentioning. Don't forget about cash that can be in tricky places to tap, like 401ks, IRAs, investment accounts, etc. There is usually some way to get at the cash, but it may not be worth it and you could end up sacrificing long term financial stability if you do. - Asset: Job Skills and Initiative. Get a job and and earn the cash. $2k is not a ton, and if you live frugally you should be able to save it. There are tons of websites dedicated to living frugally and earning extra cash on the side. My personal favorite is r/beermoney. - Asset: Good Credit. Borrow the money from a traditional bank. Signature loans go up to $35k at most banks, just ask what it would take to qualify. You could also get a credit card for that amount, and use it to start up the business. - Asset. Bad Credit. If you've got bad credit, you can still take out a loan from a place like Prosper or Lending Club or Sofi (these places are handy if you have good credit, too). Your rates will be much higher, but they will still lend to you. - Asset: Property. If you own stuff, you can sell it and get cash. Clean out your attic (or ask relatives if you can have the stuff in theirs!) and sell it. If you own fancy stuff, you can borrow against it (home, car, boat, etc.). - Asset: Your Charm and Winning Smile. If you have a good, solid business plan (written down and professional looking), ask around and see if you can find an investor. It could be friends or family, but it could also be someone who is looking to invest. Be professional, and be sure to draw up the appropriate business docs if you do a partnership or take a private loan. - Asset: Your Government. If you live in the US, there are federal programs that offer Small Business Loans. Check out sba.gov for more info. You will need a business plan and will have to meet the criteria of the loan or grant. Not sure if your Ecommerce business will meet the criteria, as the intent of these types of programs are to spur the economy by allowing small business owners to hire workers. But its worth checking out.", "title": "" }, { "docid": "d69f5e6cf8b569f776788242ee66c6a8", "text": "\"Chris - you realize that when you buy a stock, the seller gets the money, not the company itself, unless of course, you bought IPO shares. And the amount you'd own would be such a small portion of the company, they don't know you exist. As far as morals go, if you wish to avoid certain stocks for this reason, look at the Socially Responsible funds that are out there. There are also funds that are targeted to certain religions and avoid alcohol and tobacco. The other choice is to invest in individual stocks which for the small investor is very tough and expensive. You'll spend more money to avoid the shares than these very shares are worth. Your proposal is interesting but impractical. In a portfolio of say $100K in the S&P, the bottom 400 stocks are disproportionately smaller amounts of money in those shares than the top 100. So we're talking $100 or less. You'd need to short 2 or 3 shares. Even at $1M in that fund, 20-30 shares shorted is pretty silly, no offense. Why not 'do the math' and during the year you purchase the fund, donate the amount you own in the \"\"bad\"\" companies to charity. And what littleadv said - that too.\"", "title": "" }, { "docid": "992d568e9fb89ec12d5ec9d42554e089", "text": "What is your investing goal? And what do you mean by investing? Do you necessarily mean investing in the stock market or are you just looking to grow your money? Also, will you be able to add to that amount on a regular basis going forward? If you are just looking for a way to get $100 into the stock market, your best option may be DRIP investing. (DRIP stands for Dividend Re-Investment Plan.) The idea is that you buy shares in a company (typically directly from the company) and then the money from the dividends are automatically used to buy additional fractional shares. Most DRIP plans also allow you to invest additional on a monthly basis (even fractional shares). The advantages of this approach for you is that many DRIP plans have small upfront requirements. I just looked up Coca-cola's and they have a $500 minimum, but they will reduce the requirement to $50 if you continue investing $50/month. The fees for DRIP plans also generally fairly small which is going to be important to you as if you take a traditional broker approach too large a percentage of your money will be going to commissions. Other stock DRIP plans may have lower monthly requirements, but don't make your decision on which stock to buy based on who has the lowest minimum: you only want a stock that is going to grow in value. They primary disadvantages of this approach is that you will be investing in a only a single stock (I don't believe that can get started with a mutual fund or ETF with $100), you will be fairly committed to that stock, and you will be taking a long term investing approach. The Motley Fool investing website also has some information on DRIP plans : http://www.fool.com/DRIPPort/HowToInvestDRIPs.htm . It's a fairly old article, but I imagine that many of the links still work and the principles still apply If you are looking for a more medium term or balanced investment, I would advise just opening an online savings account. If you can grow that to $500 or $1,000 you will have more options available to you. Even though savings accounts don't pay significant interest right now, they can still help you grow your money by helping you segregate your money and make regular deposits into savings.", "title": "" } ]	fiqa
90de88db7f177663db0b990a76f2f091	Which countries allow eChecks?	[ { "docid": "0976c6faeba12a231f65909166300652", "text": "eChecks (and ACH) are a (desperate?) try of the US banking system to get into the 21st century. All EU countries (and some others) have direct deposits and transfers as the standard way of transferring money since about 20 years, and since about 5 years it is cost-free and one-day across all the EU. The rest of the world runs mostly country specific system, as there is not that large a demand for cross country shifting, and exchange rates are also an issue in any such transaction. Because they have different ways that work fine since decades, other countries will consider the eCheck idea as a step backwards and will probably ignore it, so your answer is 'none'. International companies work with banks in a different relationship than retail customers, so they can do things you and me cannot do - depending on size and volume. Some large companies get a banking license and then handle their own stuff; medium sized companies make favorable contracts with banks (they are golden goose customers - never an issue, no brick and mortar presence needed, banks love them), or they simply suck up the transfer cost (if you move millions, who cares about a 40 $ fee). Small businesses whine and live with what they get...", "title": "" } ]	[ { "docid": "6de8dbdd7d1c1b74f23efaba007ed493", "text": "All banks in the US that I have ever worked with will allow you to deposit checks if: In your case, you have 3 options:", "title": "" }, { "docid": "2144900adda283d9aab04af7d01df219", "text": "So apparently ACH and eCheck are interchangeable. The confusion arises from PayPal's ambiguous use of terminology. According to this thread ( https://www.paypal-community.com/t5/Sending-money-Archive/how-do-i-change-from-a-echeck-to-an-instant-payment/td-p/92459 ) the payment process PayPal takes is a bit complicated, but if you try to send money to another person via PayPal:", "title": "" }, { "docid": "b6c4988c510794c55b679ed4c439b519", "text": "ACH as offered in US is a very broad and versatile network used for a range of business case. There is no other network as versatile. In Europe UK has BACS as equivalent about 50-70% of what US-ACH offers. Most European countries also have ACH [Collectively Called ACH, have 90% of the layouts that are identical, called by different names domestically, different business capabilities and rules]. Most countries in Asia also have similar networks. For example in India there is ECS now replaced by NACH. In Singapore/Indonesia/Thailand/Malaysia they have Giro's. China has CNAPS and BEPS. So essentially every country has addressed the business need differently and bis.org has a decent over-view country wise on the clearing systems available.", "title": "" }, { "docid": "7e6ce529c96e20905f0789621c8fcfea", "text": "The easiest options appear to be to open an account with one of the large multinational banks like Citi. They have options such as opening two separate checking accounts, one in each currency, and Citi in particular has an international account that appears to make mutli-currency personal banking easier. All of the options have minimum balance requirements or fees for conversion, but if you need quick access this seems to be the best bet. Even if this is a one-time event and you don't need the account, a bank like Citi may be able to help you cash the check and get access to the funds quicker than a national or local bank. http://www.citibank.com/ipb-global/homepage/newsite/content/english/multi_cap_bank_depo.htm Alternatively if you know anyone with a US bank account you can deposit it with them and take the cash withdrawal from their account, assuming they agree, the check isn't too large, etc.", "title": "" }, { "docid": "650e4ca37c7a41bdde7a424fb49feb39", "text": "I know someone around there, who might be able to collect it for me.Would I still be able to cash it out in the other country? Or can he/she cash it out for me? Unlikely. Unless they deposit it into a US bank account in your name. You can cash US checks in almost any decent bank anywhere in the world, but it may cost you some and will probably take 2-3 weeks. Since the amount is won in the US, how would I pay the taxes? , since its earned over there. You would file a tax return with the IRS and send them a payment. You can buy drafts in US dollars almost anywhere in the world.", "title": "" }, { "docid": "50b90e32fa37358b7376129babad2d16", "text": "France is one country where cheques are common. More an more people are using credit cards for typical store payments and wire transfers are slowly gaining traction. There are several cases where cheques come handy: Sure, all these cases could ultimately be resolved with a wire transfer. Sometimes it is just simpler/faster to mail a piece of paper. This said, I believe than in 1à years from now even France will go cheque-less.", "title": "" }, { "docid": "40853e4dfaf1a2a3ce25732cd544dd0a", "text": "While in the UK and travelling to Europe, I heard of the FairFX euro card from the website Money Supermarket (affiliate link which waives the sign-up fee). The link also includes many other alternative prepaid euro cards which may be better suited for your uses. The FairFX card is available in both GBP and EUR, and both products come with chip and pin. They also charge relatively little as compared to most bank cards (no currency conversion on use, $2~ withdrawal charges from ATM). I generally had a good experience with this card, and was able to purchase items both in person as well as online using it.", "title": "" }, { "docid": "b349fa2cd507828c15535760edc5280e", "text": "There are sites in India that offer this, http://www.intuit.in/ is one such site. Apart from this some banks like ICICI offer this to limited extent.", "title": "" }, { "docid": "2e2b7ecb54679f017ac62a53df048ed4", "text": "China was the only place that I've traveled to where they had built in privacy screens as you're going through security. One person at a time through the metal detector and once you pass through the metal detector you're in an area that has complete privacy. Nobody before or after the line can see you. In a way it's good if implemented in the USA but sometimes it makes me wonder how that can be abused.", "title": "" }, { "docid": "b8f00666597667cba3f609b5c26ee232", "text": "Some countries in European Union are starting to implement credit history sharing, for example now history from polish bureau BIK and German Schufa are mutually available. Similar agreements are planned between polish BIK and bureaus in the Netherlands and United Kingdom.", "title": "" }, { "docid": "658ecab6aac4f062f8a612d195179c13", "text": "There were several incidences of cash shortages in the Danish system recently. On particular saturdays when the streets were bloated with shoppers, you could see the queues for the ATMs stretching for 40-50 yards, and people shaking their heads about why their cards didnt work in the shops. They have a separate national system to visa called Dankort which everyone is very proud of. But it is curiously prone to failures from time to time. Large cash transactions (over 10,000 DKK) are monitored and questioned verbally when withdrawn or deposited in banks. Interesting also how Danish banks are the most heavily leveraged in Europe...", "title": "" }, { "docid": "1efe012004c978e7b829c44528c40646", "text": "Lol you moron. Chip and pin significantly reduced physical retailer fraud when we introduced it in Europe (a decade ago? 15 years?) - a signature is absurdly easy to fake and retailers have little to no way of protecting against it.", "title": "" }, { "docid": "ad0238d88d414fea8b5afbebfdffccf9", "text": "What I ended up doing was finding where each ticker of Novo was registered (what exchange), then individually looking up the foreign taxation rules of the containing country. Luckily, most companies only have a few tickers so this wasn't too hard in the end.", "title": "" }, { "docid": "990c695c06f83b04293bc55ff1980a6d", "text": "I suspect @SpehroPefhany is correct and that your bank will cash a check from the US Department of the Treasury. Especially since they're the same ones who guarantee the U.S. Dollar. They may hold the funds until the check clears, but I think you'll have good luck going through your bank. Of course, fees and exchange rate are a factor. Consider browsing the IRS and US Treasury Department websites for suggestions/FAQs. I suggest you line up a way to cash it, and make sure there's enough left after fees and exchange rate and postage to get the check that the whole process is worth it, all before you ask it to be shipped to you. If there's no way to do it through your bank, through a money exchange business (those at the airport come to mind) or through your government (postal bank?), and the check is enough that you're willing to go through some trouble, then you should look into assigning power of attorney for this purpose. I don't know if it is possible, but it might be worth looking into. Look for US based banks in your area.", "title": "" }, { "docid": "c9d6be6f0e86bffd710cc7970c6d52dc", "text": "Traveller's cheques. That's exactly what they were intended for. Their usage has dropped a lot since everyone can use ATMs in foreign countries, but they still exist.", "title": "" } ]	fiqa
4ab72b52fcc84ac704f50b974b2d9568	Which technical indicators are suitable for medium-term strategies?	[ { "docid": "a27a2131386bb326d295d3241415a143", "text": "If I knew a surefire way to make money in FOREX (or any market for that matter) I would not be sharing it with you. If you find an indicator that makes sense to you and you think you can make money, use it. For what it's worth, I think technical analysis is nonsense. If you're just now wading in to the FOREX markets because of the Brexit vote I suggest you set up a play-money account first. The contracts and trades can be complicated, losses can be very large and you can lose big -- quickly. I suspect FOREX brokers have been laughing to the bank the last couple weeks with all the guppies jumping in to play with the sharks.", "title": "" }, { "docid": "d21c1340705ac92ff3ff9454d231cd7d", "text": "Speaking from stock market point of view, superficially, TA is similarly applicable to day trading, short term, medium term and long term. You may use different indicators in FX compared to the stock market, but I would expect they are largely the same types of things - direction indicators, momentum indicators, spread indicators, divergence indicators. The key thing with TA or even when trading anything, is that when you have developed a system, that you back test it, to prove that it will work in bear, bull and stagnant markets. I have simple systems that are fine in strong bull markets but really poor in stagnant markets. Also have a trading plan. Know when you are going to exit and enter your trades, what criteria and what position size. Understand how much you are risking on each trade and actively manage your risk. I urge caution over your statement ... one weakened by parting the political union but ought to bounce back ... We (my UK based IT business) have already lost two potential clients due to Brexit. These companies are in FinServ and have no idea of what is going to happen, so I would respectfully suggest that you may have less knowledge than professionals, who deal in currency and property ... but one premise of TA is that you let the chart tell you what is happening. In any case trade well, and with a plan!", "title": "" } ]	[ { "docid": "8a9e5b48462236d2c9f48d836295b40f", "text": "Yes, it makes sense. Like Lagerbaer says, the usefulness of technical indicators can not be answered with a simple yes or no. Some people gain something from it, others do not. Aside from this, applying technical indicators (or any other form of technical analysis - like order flow) to instruments which are composed of other instruments, such as indexes (more accurately, a derivative of it), does make sense. There are many theories why this is the case, but personally i believe it is a mixture of self fulfilling prophecy, that the instruments the index is composed of (like the stocks in the S&P500) are traded in similar ways as the index (or rather a trade-able derivative of it like ETFs and futures), and the idea that TA just represents human emotion and interaction in trading. This is a very subjective topic, so take this with a grain of salt, but in contrast to JoeTaxpayer i believe that yields are not necessary in order to use TA successfully. As long as the given instrument is liquid enough, TA can be applied and used to gain an edge. On the other hand, to answer your second question, not all stocks in an index correlate all the time, and not all of them will move in sync with the index.", "title": "" }, { "docid": "02e7e6416c346bea938301c41d6f9366", "text": "Fundamental Analysis can be used to help you determine what to buy, but they won't give you an entry signal for when to buy. Technical Analysis can be used to help you determine when to buy, and can give you entry signals for when to buy. There are many Technical Indicator which can be used as an entry signal, from as simple as the price crossing above a moving average line and then selling when the price crosses back below the moving average line, to as complicated as using a combination of indicators to all line up for an entry signal to be valid. You need to find the entry signals that would suit your investing or trading and incorporate them as part of your trading plan. If you want to learn more about entry signals you are better off learning more about Technical Analysis.", "title": "" }, { "docid": "2e7fa2cff773fce251baa01ef94778ef", "text": "We have custom software written in mostly C# for the long term strategies. Day trading is done on multiple platforms. Currently using ToS scripts for some futures and equities strategies to great success, and sierra charts for a few futures exclusively. I just moved into a position to work with day trading so I'm still learning more about the systems he uses", "title": "" }, { "docid": "87fd0ffbacf2f9c408959b74bf24807b", "text": "I interned at a wealth management firm that used very active momentum trading, 99% technicals. Strictly ETFs (indexes, currencies, commodities, etc), no individual equities. They'd hold anywhere from 1-4 weeks, then dump it as soon as the chart starts turning over. As soon as I get enough capital I'm adopting their same exact strategy, it's painfully easy", "title": "" }, { "docid": "81c016998574efc6dbf2244659066d3b", "text": "\"Strategy would be my top factor. While this may be implied, I do think it helps to have an idea of what is causing the buy and sell signals in speculating as I'd rather follow a strategy than try to figure things out completely from scratch that doesn't quite make sense to me. There are generally a couple of different schools of analysis that may be worth passing along: Fundamental Analysis:Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management. When analyzing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis. The term is used to distinguish such analysis from other types of investment analysis, such as quantitative analysis and technical analysis. Technical Analysis:In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable. There are tools like \"\"Stock Screeners\"\" that will let you filter based on various criteria to use each analysis in a mix. There are various strategies one could use. Wikipedia under Stock Speculator lists: \"\"Several different types of stock trading strategies or approaches exist including day trading, trend following, market making, scalping (trading), momentum trading, trading the news, and arbitrage.\"\" Thus, I'd advise research what approach are you wanting to use as the \"\"Make it up as we go along losing real money all the way\"\" wouldn't be my suggested approach. There is something to be said for there being numerous columnists and newsletter peddlers if you want other ideas but I would suggest having a strategy before putting one's toe in the water.\"", "title": "" }, { "docid": "50532dba417e7878dd4042a85918e8ac", "text": "Look into commodities futures & options. Unfortunately, they are not trivial instruments.", "title": "" }, { "docid": "95c9136b6a18a7bfe1e2b2a665febe59", "text": "Information is useless in this case. IR is useful when you are trying to replicate the risk exposures of an index and beat it. I.E.If I am a tech fund, I would compare myself to the tech S&P. IR is useless in this case as it is just the ratio of excess returns over the benchmark to vol. From a trading sense he needs a rate of wins to losses, so a sharpe like construct of R/SemiDeviation. Essentially his avg return divided by negative volatility. Going further on that is omega which introduces a threshold as in trading you care more about the equity curve so MAXDD is probably more relevant.", "title": "" }, { "docid": "733bdfd0269c974184d15a1ad82c5f9a", "text": "For a non-technical investor (meaning someone who doesn't try to do all the various technical analysis things that theoretically point to specific investments or trends), having a diverse portfolio and rebalancing it periodically will typically be the best solution. For example, I might have a long-term-growth portfolio that is 40% broad stock market fund, 40% (large) industry specific market funds, and 20% bond funds. If the market as a whole tanks, then I might end up in a situation where my funds are invested 30% market 35% industry 35% bonds. Okay, sell those bonds (which are presumably high) and put that into the market (which is presumably low). Now back to 40/40/20. Then when the market goes up we may end up at 50/40/10, say, in which case we sell some of the broad market fund and buy some bond funds, back to 40/40/20. Ultimately ending up always selling high (whatever is currently overperforming the other two) and buying low (whatever is underperforming). Having the industry specific fund(s) means I can balance a bit between different sectors - maybe the healthcare industry takes a beating for a while, so that goes low, and I can sell some of my tech industry fund and buy that. None of this depends on timing anything; you can rebalance maybe twice a year, not worrying about where the market is at that exact time, and definitely not targeting a correction specifically. You just analyze your situation and adjust to make everything back in line with what you want. This isn't guaranteed to succeed (any more than any other strategy is), of course, and has some risk, particularly if you rebalance in the middle of a major correction (so you end up buying something that goes down more). But for long-term investments, it should be fairly sound.", "title": "" }, { "docid": "60ceb43c0ecd568017e8c3bdf28bdb17", "text": "While historical performance is not necessarily indicative of future performance, I like to look at the historical performance of the markets for context. Vanguard's portfolio allocation models is one source for this data. Twenty years is a long term timeline. If you're well diversified in passively managed index funds, you should be positioned well for the future. You've lost nothing until it's realized or you sell. Meanwhile, you still own an asset that has value. As Warren Buffet says, buy low and sell high.", "title": "" }, { "docid": "4fa92ad0902f38740df9ef82aa632621", "text": "\"[Toronto, 1 August 2014](http://www.rbc.com/newsroom/news/2014/20140801-pmi.html) - kanadiske produsenter erfarne en ytterligere bedring i hele virksomhetsforhold i juli, ifølge den [RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI)](https://www.rbcwmfa.com/thewoogroup/), drevet av raskere stiger, nye ordrer og sysselsetting i begynnelsen av tredje kvartal. I mellomtiden input kostnadsinflasjon fortsatte til moderat, som i sin tur bidro til laveste veksten i produsentenes produksjon kostnader så langt i år. En månedlig undersøkelse, i samarbeid med Markit og tjenester ledende global finansiell informasjon i Supply Chain Management Association (SCMA), RBCPMI tilbyr en omfattende og tidlig indikator på trender i kanadiske industrien. På 54.3 i juli handelspartnere opp fra 53.5 i juni, overskriften RBC kanadiske Manufacturing PMI postet over nøytral 50.0 verdien for sekstende påfølgende måned. Siste lesing var høyest siden November 2013 og signaliserte en robust generell forbedring i produksjon sektor forretningsforhold. \"\"Canadas produsenter sparket av andre halvdel av 2014 sterkere fotfeste, tydelig fordel fra bedre global økonomisk aktivitet-det er oppmuntrende å se momentum,\"\" sa Paul Ferley, assisterende sjef økonom, RBC. \"\"Med den amerikanske økonomien dytter videre, vi forventer denne trenden vil fortsette.\"\" Overskriften RBC PMI gjenspeiler endringer, nye ordrer, sysselsetting, varelager og leveringstid for leverandør. Viktige funn fra juli undersøkelsen inkluderer: - Skarpeste forbedring i forretningsvilkår siden November 2013 - En pick up i produksjon og nye bestillinger vekst - Bemanningen steg for sjette etterfølgende måned Sterkere priser av produksjon og ny vekst var nøkkelen positiv innflytelse på overskriften indeksen i juli. Siste data signaliserte at produksjonsvekst i industrien akselerert for andre måned kjører og var den raskeste siden November 2013. Ny vekst også gjenvunnet fart så langt i sommer, med den siste økningen i innkommende nytt arbeid de bratteste på åtte måneder. Rapporter fra spørreundersøkelsen sitert underliggende etterspørselen og større tillit blant klienter. Videre ble nye business inntak også støttet av sterkere eksport salg i juli, med nye eksport ordre vekstraten den mest merkede siden mars. Økt etterspørsel mønstre bidro til en økning i ordrereserven arbeid over industrien sjette påfølgende måned i juli. Gjeldende periode av økende mengder uferdig arbeid er den lengste opptak av undersøkelsen for tre år, som i sin tur støttes videre produksjon jobb etableringen. Nyeste dataene viser til en solid økning i lønn tall med hastighet på vekst i sysselsettingen nådde sin sterkeste siden September 2013. Juli data indikerte at produsentene fortsatte å øke volumene inngang kjøpe i juli, og den siste utvidelsen av kjøper aktiviteten var de bratteste i 2014 hittil. Til tross for en solid økning i input kjøpe, pre-produksjon lager volumer dyppet for tredje måned kjører. I mellomtiden bestander av ferdigvarer også redusert i juli. Siste reduksjon i post-produksjon varelager var den skarpeste for 12 måneder, med noen firmaer Siterer sterkere enn forventet salg på sine fabrikker. I mellomtiden input kostnadsinflasjon lettet videre fra nær-tre år høy sett i løpet av mars. Selv om fortsatt skarp, var den siste økningen i gjennomsnittlig kostnad byrder den minste merkede siden januar. En mykere økning i input prisene i juli bidratt til svakeste økningen i produsentenes produksjon kostnader siden desember 2013. Regionale høydepunkter inkluderer: - Quebec fortsatte å registrere sterkeste oppgangen i generelle forretningsvilkår - Alle fire regioner signaliserte en økning i produksjon sysselsetting nivåer... - .. .led av Quebec og Ontario - Nye eksportere ordrer steg i alle fire regioner overvåket av undersøkelsen \"\"Canadian produsenter har laget en lyse start til tredje kvartal 2014, som fremhevet av sterkere vekst og en annen bedring salgsvolum i juli, sier Cheryl Paradowski, president og administrerende direktør, SCMA. \"\"Derfor den siste undersøkelsen tyder en avgjørende dreining mot raskere vekst over industrien i sommer, med produksjon, ny virksomhet og sysselsetting alle stiger på raskeste priser sett så langt i år. Videre er forretningsforhold bedre mot en bakgrunn av mykgjørende kostnadspress, som i sin tur bidro til laveste økningen i produsentenes produksjon kostnader siden slutten av 2013.\"\"\"", "title": "" }, { "docid": "3749bd9223d2080c026d8c67c9ac9201", "text": "\"Translation : Funds managers that use traditionnal methods to select stocks will have less success than those who use artificial intelligence and computer programs to select stocks. Meaning : The use of computer programs and artificial intelligence is THE way to go for hedge fund managers in the future because they give better results. \"\"No man is better than a machine, but no machine is better than a man with a machine.\"\" Alternative article : Hedge-fund firms, Wall Street Journal. A little humour : \"\"Whatever is well conceived is clearly said, And the words to say it flow with ease.\"\" wrote Nicolas Boileau in 1674.\"", "title": "" }, { "docid": "b809e27c7650e4615cd9a31b7744ab4f", "text": "From my 15 years of experience, no technical indicator actually ever works. Those teaching technical indicators are either mostly brokers or broker promoted so called technical analysts. And what you really lose in disciplined trading over longer period is the taxes and brokerages. That is why you will see that teachers involved in this field are mostly technical analysts because they can never make money in real markets and believe that they did not adhere to rules or it was an exception case and they are not ready to accept facts. The graph given above for coin flip is really very interesting and proves that every trade you enter has 50% probability of win and lose. Now when you remove the brokerage and taxes from win side of your game, you will always lose. That is why the Warren Buffets of the world are never technical analysts. In fact, they buy when all technical analysts fails. Holding a stock may give pain over longer period but still that is only way to really earn. Diversification is a good friend of all bulls. Another friend of bull is the fact that you can lose 100% but gain any much as 1000%. So if one can work in his limits and keep investing, he can surely make money. So, if you have to invest 100 grand in 10 stocks, but 10 grand in each and then one of the stocks will multiply 10 times in long term to take out cost and others will give profit too... 1-2 stocks will fail totally, 2-3 will remain there where they were, 2-3 will double and 2-3 will multiply 3-4 times. Investor can get approx 15% CAGR earning from stock markets... Cheers !!!", "title": "" }, { "docid": "8313daf3ed3b50a118993059f1fd633f", "text": "\"Although is not online, I use a standalone version from http://jstock.sourceforge.net It got drag-n-drop boxes, to let me design my own indicators. However, it only contain technical analysis information, not fundamental analysis information. It does come with tutorial http://jstock.sourceforge.net/help_stock_indicator_editor.html#indicator-example, on how to to build an indicator, to screen \"\"Stock which Its Price Hits Their 14 Days Maximum\"\"\"", "title": "" }, { "docid": "06b62c09e55c622ec61569b475874023", "text": "The study of technical analysis is generally used (sometimes successfully) to time the markets. There are many aspects to technical analysis, but the simplest form is to look for uptrends and downtrends in the charts. Generally higher highs and higher lows is considered an uptrend. And lower lows and lower highs is considered a downtrend. A trend follower would go with the trend, for example see a dip to the trend-line and buy on the rebound. A simple strategy for this is shown in the chart below: I would be buying this stock when the price hits or gets very close to the trendline and then it bounces back above it. I would then have sold this stock once it has broken through below the trendline. This may also be an appropriate time if you were looking to short this stock. Other indicators could also be used in combination for additional confirmation of what is happening to the price. Another type of trader is called a bottom fisher. A bottom fisher would wait until a break above the downtrend line (second chart) and buy after confirmation of a higher high and possibly a higher low (as this could be the start of a new uptrend). There are many more strategies dealing with the study of technical analysis, and if you are interested you would need to find and learn about ones that suit your investment styles, whether you prefer short term trading or longer term investing, and your appetite for risk. You can develop strategies using various indicators and then paper trade or backtest these strategies. You can also manually backtest a strategy in most charting packages. You can go back in time on the chart so that the right side of the chart shows a date in the past (say one year ago or 10 years ago), then you can click forward one day at a time (or one week at a time if using weekly charts). With your indicators on the chart you can do virtual trades to buy or sell whenever a signal is given as you move forward in time. This way you may be able to check years of data in a day to see if your strategy works. Whatever you do, you need to document your strategies in writing in a written trading or investment plan together with a risk management strategy. You should always follow the rules in your written plan to avoid you making decisions based on emotions. By backtesting or paper trading your strategies it will give you confidence that they will work over the long term. There is a lot of work involved at the start, but once you have developed a documented strategy that has been thoroughly backtested, it will take you minimal time to successfully manage your investments. In my shorter term trading (positions held from a couple of days to a few weeks) I spend about half an hour per night to manage my trades and am up about 50% over the last 7 months. For my longer term investing (positions held from months to years) I spend about an hour per week and have been averaging over 25% over the last 4 years. Technical Analysis does work for those who have a documented plan, have approached it in a systematic way and use risk management to protect their existing and future capital. Most people who say that is doesn't work either have not used it themselves or have used it ad-hock without putting in the initial time and work to develop a documented and systematic approach to their trading or investing.", "title": "" }, { "docid": "e0fd5f580d29bb7dc0d3a235d31ffdf2", "text": "\"All of these frameworks, Markowitz, Mean/CVaR, CARA, etc sit inside a more general framework which is that \"\"returns are good\"\" and \"\"risk/lack of certainty in the returns is bad\"\", and there's a tradeoff between the two encoded as some kind of risk aversion number. You can measure \"\"lack of certainty in returns\"\" by vol, CVaR, weighted sum of higher moments, but even sector/region concentration. Similarly do I want more \"\"returns\"\" or \"\"log returns\"\" or \"\"sqrt returns\"\" in the context of this tradeoff? You don't need any formal notion of utility at that point - and I don't know what formal ideas of utility beyond \"\"I want more returns and less risk\"\" really buys you. The Sharpe ratio only really gets its meaning because you've got some formal asset-pricing notion of utility. In my view the moment that you're putting constraints on the portfolio (e.g. long only, max weights, don't deviate too much from the benchmark ...) - really you're operating in this more general framework anyway and you're not in \"\"utility-land\"\" anymore.\"", "title": "" } ]	fiqa
2bd226169bfc83679abff50dd35a3830	How to pay taxes on YouTube if I'm a dependent?	[ { "docid": "6d62b0de44db8893a1aed6549889899b", "text": "\"The Form 1040 (U.S. tax return form) Instructions has a section called \"\"Do You Have To File?\"\". Below a certain income, you are not required to file a tax return and pay any tax. This amount of income at which you are required to file depends on several things, including your dependency status (you are a dependent of your parents), your marital status, and other factors. The instructions have charts that show what these numbers are. You would fall under Chart B. Assuming that you are under age 65, unmarried, and not blind, you only have to file when you reach the following conditions: Your unearned income was over $1,050. Your earned income was over $6,300. Your gross income was more than the larger of— $1,050, or Your earned income (up to $5,950) plus $350. (Note: Income from YouTube would count as \"\"earned income\"\" for the purposes above.) However, if you are producing your own videos and receiving revenue from them, you are technically self-employed. This means that the conditions from Chart C also apply, which state: You must file a return if any of the five conditions below apply for 2015. As a self-employed person, you can deduct business expenses (expenses that you incur in producing your product, which is this case is your videos). Once your revenue minus your expenses reach $400, you will need to file an income tax return.\"", "title": "" } ]	[ { "docid": "4cf29d950fdc42da450810e87d3e1eac", "text": "\"I am not aware of any place that the tax forms ask, \"\"How many people live in your house?\"\" They ask how many dependants you have, and not everyone who lives in your house is your dependant. There are very specific rules about that. If your girlfriend is being claimed as a dependent on her parents' tax return, then she cannot also be claimed on anyone else's return, and there's no need to investigate further. To claim someone as a dependent, they have to meet a number of conditions. I am not a lawyer. See IRS Publication 17. But the gist of it is that they must, (a) either be a relative (there's a list of what sorts of relatives qualify) or live with you all year; (b) Living with you must not violate local law; (c) Must make less than $4000 per year; and (d) You must provide over half of their support. Your girlfriend may meet the \"\"live with you all year\"\" or maybe not. But the real stumper is likely to be (d). Unless your parents are paying her tuition, they almost certainly don't meet this test.\"", "title": "" }, { "docid": "9d19da4db1e61fc1df456ca82329d5d1", "text": "Get answers from your equivalent of the IRS, or a local lawyer or accountant who specializes in taxes. Any other answer you get here would be anectdotal at best. Never good to rely on legal or medical advice from internet strangers.", "title": "" }, { "docid": "4d8138041b3ccb69d73a2e767b142572", "text": "\"Not sure I understood, so I'll summarize what I think I read: You got scholarship X, paid tuition Y < X, and you got 1098T to report these numbers. You're asking whether you need to pay taxes on (X-Y) that you end up with as income. The answer is: of course. You can have even lower tax liability if you don't include the numbers on W2, right? So why doesn't it occur to you to ask \"\"if I don't include W2 in the software, it comes up with a smaller tax - do I need to include it?\"\"?\"", "title": "" }, { "docid": "c4da0f6689c697989f3e85d5e528ac56", "text": "\"It says that you are exempt \"\"as long as such interest income is not effectively connected with a United States trade or business\"\". So the interest is from money earned from doing business with/through AirBnb, a US company. So you will have to report it. Even if your bank doesn't send you a 1099-INT, you have to report it, unless it is under $0.49 because the IRS allows rounding.\"", "title": "" }, { "docid": "263429fb2da879af84a0686ceef092e0", "text": "There is a moral and legal obligation to file the earnings. Not doing so is tax fraud. You should keep a ledger or some record of your earnings, helpful guidelines here. Records are required by the CRA: According to the law, your responsibilities include: (source) You could get in trouble if one of your pupils report the expense at their tax filing, and the CRA finds no matching statement on your filing report. Tutoring are eligible for tax credit in case of disability: Tutoring services that are supplementary to the primary education of a person with a learning disability or an impairment in mental functions, and paid to a person in the business of providing these services to individuals who are not related to the person. A medical practitioner must certify in writing that these services are necessary. So if one of your pupils fall under that provision, you will get tax trouble sooner or later. Bottom line: start making records now, and report your earnings. Collect your tax as any lawful citizen is required to.", "title": "" }, { "docid": "96503ad0863d795ad2f0d81405f41c31", "text": "75k is short of the 'highly compensated' category. Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense. Tax shelters usually don't come into play for this level of income. However, there are certain things which provide deductions. Some things that make it better to pay someone: Use the free online tax forms to sandbox your returns. If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA. Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding. Tax treaties likely make sure that you get credit on each side for the money paid in the other. For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US. If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero. By the same token, if I have not paid up to my US burden, then I owe the balance to the US. But this is way better than paying taxes to your home country and to the host country where you earned the money.", "title": "" }, { "docid": "caac26bdd391f8e851b7ad6108cc0407", "text": "Yes, you do. Depending on your country's laws and regulations, since you're not an employee but a self employed, you're likely to be required to file some kind of a tax return with your country's tax authority, and pay the income taxes on the money you earn. You'll have to tell us more about the situation, at least let us know what country you're in, for more information.", "title": "" }, { "docid": "e8fa467567be1b8c0dc0e2381ed95906", "text": "While you are required to do so as others have said, it's actually in your interest to do so. In a recent article at GlobeInvestor, Tim Cestnick discusses the benefits of filing tax returns for teens. This situation may or may not apply to you but the message is the same. The main benefits are (1) create RRSP contribution room and (2) be eligible for GST/HST credits and other possible one-shot credits (think oil royalty surplus cheques in Alberta). Excerpt: You see, when Lincoln was 14, he filed a tax return and reported $2,000 of income that year. He paid no tax thanks to the basic personal tax credit, but he created $360 of RRSP contribution room that year. Beginning in 2003, Lincoln started working part-time in his father's business. His father agreed to pay him $6,000 each summer to work in the business, to help save money for university. Lincoln didn't pay any tax on the money he earned in those summers because his basic personal tax credit was always higher than his earnings. In addition, Lincoln added to his RRSP contribution room simply by filing a tax return each year.", "title": "" }, { "docid": "054d1fd715f86a9e2710a4654ea243ee", "text": "Your phrasing of the question isn't very clear, but I believe you're asking: Does our total household income classify us as tax exempt? Or, can we avoid filing taxes if we make $22,500 or less per year? The answer is no. Your tax liability will be very low, and if you have dependents or other deductible expenses (mortgage interest, 401K contributions, etc.), you're likely looking at a close to $0 liability. You still have to file your taxes, and you can't claim exempt on your W-4. Even if you did qualify to be tax exempt, you still have to file taxes.", "title": "" }, { "docid": "708b0a0701ed4c6db8ded6937a20599b", "text": "\"There's no \"\"183 days\"\" rule. As a US citizen you must pay taxes on all your income, where you live is irrelevant.\"", "title": "" }, { "docid": "e948ca5b9558c42927b25e6330a3ae74", "text": "\"The real question you're asking is how you can work for your business. You cannot. Whether your \"\"friend\"\" pays you or not is entirely irrelevant. Claiming your work-related earnings as interest/dividend will make it also a tax fraud, in addition to the immigration violation (i.e.: not only deportation but also potentially jail time).\"", "title": "" }, { "docid": "70772d40b7d6a28b23290a08fa72a915", "text": "This is taxable in India. You need to declare the income and pay taxes accordingly", "title": "" }, { "docid": "0e0ae1e5e3f2fc011f870fc4b608327e", "text": "\"You can list it as other income reported on line 21 of form 1040. In TurboTax, enter at: - Federal Taxes tab (Personal in Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose \"\"Other reportable Income\"\". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring.\"", "title": "" }, { "docid": "6448d72794b93dcc59f4c095e6589e8a", "text": "One other consideration. If you are a US citizen or Resident Alien, you are going to owe US income taxes regardless of where you earn the money. Here it is straight from the horse's mouth: Tax guide for US Citizens living abroad", "title": "" }, { "docid": "c3146e19c2e6320686c78830040535e9", "text": "If you have an actual legal entity (legal partnership) that is jointly owned by you and your partner, then the partnership receives the money, and the partnership then sends money to you and your partner. Each of you will pay tax on your share. It's possible that the partnership itself may have to pay taxes. If you are not following that procedure in terms of actual money flow - for example if the royalties are paid into your personal account instead of a partnership account - then you may have trouble convincing the tax authorities that this is the legal situation. If this is a small amount of money then you may be better off just paying the taxes.", "title": "" } ]	fiqa
b3c0c138a9a5021158670edfafb77eb1	Recording of personal property contribution to S-Corp in QuickBooks	[ { "docid": "983e84eb31d74702554938415b8ccc43", "text": "One approach would be to create Journal Entries that debit asset accounts that are associated with these items and credit an Open Balance Equity account. The value of these contributions would have to be worked out with an accountant, as it depends on the lesser of the adjusted basis vs. the fair market value, as you then depreciate the amounts over time to take the depreciation as a business expense, and it adjusts your basis in the company (to calculate capital gains/losses when you sell). If there were multiple partners, or your accountant wants it this way, you could then debit open balance equity and credit the owner's contribution to a capital account in your name that represents your basis when you sell. From a pure accounting perspective, if the Open Balance Equity account would zero out, you could just skip it and directly credit the capital accounts, but I prefer the Open Balance Equity as it helps know the percentages of initial equity which may influence partner ownership percentages and identify anyone who needs to contribute more to the partnership.", "title": "" } ]	[ { "docid": "2d11e107b45fdc610c799bfd97e53ba5", "text": "\"This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income. Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income. (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of \"\"Gross Income\"\" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income. Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons. If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s)).\"", "title": "" }, { "docid": "15ad22bcdc1ba71d64e2cdba622599e3", "text": "Do not mix personal accounts and corporate accounts. If you're paid as your self person - this money belongs to you, not the corporation. You can contribute it to the corporation, but it is another tax event and you should understand fully the consequences. Talk to a tax adviser (EA/CPA licensed in your State). If they pay to you personally (1099) - it goes on your Schedule C, and you pay SE taxes on it. If they pay to your corporation, the corporation will pay it to you as salary, and will pay payroll taxes on it. Generally, payroll through corporation will be slightly more expensive than regular schedule C. If you have employees/subcontractors, though, you may earn money which is not from your own performance, in which case S-Corp may be an advantage.", "title": "" }, { "docid": "08c639825810cbc9f961658068dc39d2", "text": "Is it normal in QuickBooks to have credit card expenses being shows as liabilities? Is there a way I can correct this? If they are expenses they shouldn't be negative liabilities unless you overpaid your credit card by that amount. It sounds like perhaps when you linked the account the credit/debit mapping may have been mixed up. I've not used QB Online, but it looks like you might have to un-link the account, move all the existing transactions to 'excluded' and then link the account again and flip-flop the debit/credit mapping from what it is now. Hopefully there's an easier way. This QB community thread seems to address the same issue.", "title": "" }, { "docid": "df72925f51029c060510200978db244d", "text": "Yes. This income would be reported on schedule SE. Normally, you will not owe any tax if the amount is less than $400. Practically, $100 in a garage sale is not why the IRS created the form SE. I wouldn't lose sleep over keeping track of small cash sales over the course of a year. However, if you have the information I'm not going to tell you not to report it.", "title": "" }, { "docid": "23daa071e6209ff4ccaf3a2c8cc13b2e", "text": "You need to talk to an accountant who practices tax accounting, preferaby someone who is an Enrolled Agent (EA) with the IRS, and possibly an attorney who specializes in tax law. There are multiple issues here, and the executor of your father's estate might need to be involved here too. Presumably you were a minor in 2007 since the transactions took place in a custodial account, and perhaps you were a dependent of your father in 2007. So, were the transactions reported on your father's 2007 income tax return? or did he file a separate income tax return in your name? You say you have a W2 for 2007. So you were earning some income in 2007? This complicates matters. It is necessary to determine who has the responsibility to file income tax returns for a minor with earned income. Above all, I urge you to not file income tax returns on your own or using a tax return preparation program, or after talking to a tax return preparation service (where you will likely get someone who works on a seasonal basis and is unlikely to be familiar with tax law as of 2007).", "title": "" }, { "docid": "268e69dc5931c26a823eba881d202228", "text": "Conceptually, the entries are: Yes. And since you're the sole owner, your basis will equal to the equity balance on the balance sheet. Keep in mind the book and tax basis will probably be different, so you may want to keep a separate calculation to track the tax basis. There is no journal additional journal entry for this. If you're using bookkeeping software, be sure to research its book-closing/closing entries feature, as it is handled differently depending on the software. For example Quickbooks doesn't explicitly close its books, but re-computes the balance sheet dynamically depending on the selected date range.", "title": "" }, { "docid": "447c3f654c405b11900b5814b150328a", "text": "Alright, team! I found answers to part 1) and part 2) that I've quote below, but still need help with 3). The facts in the article below seem to point to the ability for the LLC to contribute profit sharing of up to 25% of the wages it paid SE tax on. What part of the SE tax is that? I assume the spirit of the law is to only allow the 25% on the taxable portion of the income, but given that I would have crossed the SS portion of SE tax, I am not 100%. (From http://www.sensefinancial.com/services/solo401k/solo-401k-contribution/) Sole Proprietorship Employee Deferral The owner of a sole proprietorship who is under the age of 50 may make employee deferral contributions of as much as $17,500 to a Solo 401(k) plan for 2013 (Those 50 and older can tack on a $5,500 annual catch-up contribution, bringing their annual deferral contribution to as much as $23,000). Solo 401k contribution deadline rules dictate that plan participant must formally elect to make an employee deferral contribution by Dec. 31. However, the actual contribution can be made up until the tax-filing deadline. Pretax and/or after-tax (Roth) funds can be used to make employee deferral contributions. Profit Sharing Contribution A sole proprietorship may make annual profit-sharing contributions to a Solo 401(k) plan on behalf of the business owner and spouse. Internal Revenue Code Section 401(a)(3) states that employer contributions are limited to 25 percent of the business entity’s income subject to self-employment tax. Schedule C sole-proprietors must base their maximum contribution on earned income, an additional calculation that lowers their maximum contribution to 20 percent of earned income. IRS Publication 560 contains a step-by-step worksheet for this calculation. In general, compensation can be defined as your net earnings from self-employment activity. This definition takes into account the following eligible tax deductions: (1) the deduction for half of self-employment tax and (2) the deduction for contributions on your behalf to the Solo 401(k) plan. A business entity’s Solo 401(k) contributions for profit sharing component must be made by its tax-filing deadline. Single Member LLC Employee Deferral The owner of a single member LLC who is under the age of 50 may make employee deferral contributions of as much as $17,500 to a Solo 401(k) plan for 2013 (Those 50 and older can tack on a $5,500 annual catch-up contribution, bringing their annual deferral contribution to as much as $23,000). Solo 401k contribution deadline rules dictate that plan participant must formally elect to make an employee deferral contribution by Dec. 31. However, the actual contribution can be made up until the tax-filing deadline. Pretax and/or after-tax (Roth) funds can be used to make employee deferral contributions. Profit Sharing Contribution A single member LLC business may make annual profit-sharing contributions to a Solo 401(k) plan on behalf of the business owner and spouse. Internal Revenue Code Section 401(a)(3) states that employer contributions are limited to 25 percent of the business entity’s income subject to self-employment tax. Schedule C sole-proprietors must base their maximum contribution on earned income, an additional calculation that lowers their maximum contribution to 20 percent of earned income. IRS Publication 560 contains a step-by-step worksheet for this calculation. In general, compensation can be defined as your net earnings from self-employment activity. This definition takes into account the following eligible tax deductions: (i) the deduction for half of self-employment tax and (ii) the deduction for contributions on your behalf to the Solo 401(k). A single member LLC’s Solo 401(k) contributions for profit sharing component must be made by its tax-filing deadline.", "title": "" }, { "docid": "6332c443215c5f6a7e53bd0f681b871a", "text": "\"If your business is structured as a partnership or sole proprietorship you call this investment \"\"partner equity\"\". If instead it is structured as a corporation, then the initial investment is called \"\"paid-in capital\"\". Either way, this represents the capital the initial investors or partners provided to the company in exchange for their ownership stake. The most important thing in your case is that since that initial investment is in the form of inventory, you are going to have to document the value of that investment somehow. You will definitely need a comprehensive manifest of what you contributed, including titles and condition, and if possible you should document the prices at which similar items are being offered for sale at the time you start operating. Having this information will support your claims as to the fair market value of the start-up contribution, should the tax authorities decide to question it.\"", "title": "" }, { "docid": "32637ccc9962c2adcab62d05df912a25", "text": "The short answer is you are not required to. The longer answer depends on whether you are referring to your organization as a sole proprietorship in your state, or for federal taxation. For federal tax purposes, I would suggest filing each side job as a separate Sch C though. The IRS uses the information you provide about your sole proprietorship to determine whether or not your categorization of expenses makes sense for the type of business you are. This information is used by the IRS to help them determine who to audit. So, if you are a service based business, but you are reporting cost of goods sold, you are likely to be audited.", "title": "" }, { "docid": "559b05e48a817e0e9841d2cc181a9a71", "text": "\"You are confusing entirely unrelated things. First the \"\"profit distribution\"\" issue with Bob's S-Corp which is in fact tax evasion and will probably trigger a very nasty audit. Generally, if you're the sole employee of your own S-Corp, and the whole S-Corp income is from your own personal services, as defined by the IRS - there's no profit there. All the net income from such a S-Corp is subject to SE tax, either through payroll or through your K-1. Claiming anything else would be lying and IRS is notorious for going after people doing that. Second - the reclassification issue. The reason employers classify employees as contractors is to avoid payroll taxes (which the IRS gets through Bob's S-Corp, so it doesn't care) and providing benefits (that is Bob's problem, not the IRS). So in the scenario above, the IRS wouldn't care whose employee Bob is since Bob's S-Corp would have to pay all the same payroll taxes. The reclassification is an issue when employees are abused. See examples of Fedex drivers, where they're classified as contractors and are not getting any benefits, spend their own money on the truck and maintenance, etc. The employees are the ones who sued for reclassification, but in this case the IRS would be interested as well since a huge chunk of payroll taxes was not paid (driver's net is after car maintenance and payments, not before as it would be if he was salaried). So in your scenario reclassification is not as much a concern to Bob as his tax evasion scheme claiming earnings from performing personal services as \"\"profits from S-Corp\"\". A precedent to look at, as I mentioned elsewhere, would be the Watson v Commissioner case.\"", "title": "" }, { "docid": "316710461de83750af605d1897addf25", "text": "Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses", "title": "" }, { "docid": "7ef47ed887fa8f884430c6b071e1e720", "text": "This answer assumes you're asking about how to handle this issue in the USA. I generally downvote questions that ask about a tax/legal issue and don't bother providing the jurisdiction. In my opinion it is extremely rude. Seeing that you applied for an LLC, I think that you somehow consider it as a relevant piece of information. You also attribute some importance to the EIN which has nothing to do with your question. I'm going to filter out that noise. As an individual/sole-proprietor (whether under LLC or not), you cannot use fiscal years, only calendar years. It doesn't matter if you decide to have your LLC taxed as S-Corp as well, still calendar year. Only C-Corp can have a fiscal year, and you probably don't want to become a C-Corp. So the year ends on December 31, and whether accrual or cash - you can only deduct expenses you incurred until then. Also, you must declare the income you got until then, which in your case will be the full amount of funding - again regardless of whether you decided to be cash-based or accrual based. So the main thing you need to do is to talk to a licensed tax adviser (EA/CPA licensed in your state) and learn about the tax law relevant to your business and its implications on your actions. There may be some ways to make it work better, and there are some ways in which you can screw yourself up completely in your scenario, so do get a professional advice.", "title": "" }, { "docid": "df87670ac7382775987c809f727ed906", "text": "\"A.1 and B.1 are properly balanced, but \"\"Business Expense\"\" is an expense, not an asset. The T entries should be timestamped. The time should be equal to the time on the credit card receipts. This will make audit and balancing easier. A or B can be used, but if the the business is to be reimbursed for personal expenses, the accounts should be renamed to reflect that fact. More explicit account names could be \"\"Business expense - stationary\"\" and \"\"Personal expense - lunch\"\" or even better \"\"Personal expense - cammil - lunch\"\". With a consistent format, the account names can be computer parsed for higher resolution and organization, but when tallying these high resolution accounts, debits & credits should always be used. When it comes time to collect from employees, only accounts with \"\"Personal expense\"\" need be referenced. When it comes time to collect from \"\"cammil\"\", only net accounts of \"\"Personal expense - cammil\"\" need be referenced. An example of higher resolution, to determine what \"\"cammil\"\" owes, would be to copy the main books, reverse any account beginning with \"\"Personal expense - cammil\"\", and then take the balance. Using the entries in the question as an example, here's the account to determine \"\"cammil\"\"'s balance: Now, after all such balancing entries are performed, the net credit \"\"Personal expense - cammil\"\" is what \"\"cammil\"\" owes to the business. The scheme for account names should be from left to right, general to specific.\"", "title": "" }, { "docid": "b45d5ec4b229bc9bf365f2b849ee8988", "text": "\"-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love). How should I go about reporting this income for the items I don't have records for how much I purchased them for? There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). \"\"Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.\"\" Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds. So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50. As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it. Source Refer to above answer. Refer to above answer. Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale.\"", "title": "" }, { "docid": "87c9d0ed048118e676a8196605eb034b", "text": "A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total.", "title": "" } ]	fiqa
3a2209a19cae5f000877e7cb342d9dc1	Should I really pay off my entire credit card balance each month or should I maintain some balance?	[ { "docid": "22bc07702a3ba5e7d7fc61ddff925a0d", "text": "You should pay things off every month. You don't want to be paying 10%-25% interest if you don't have to. If you regularly use you card, the credit agencies can't tell the difference. The way it works is that every month, they send the credit agencies your current balance and if you paid the last bill on time. There is nothing that indicates if this is a standing balance, or if you charged all of it since the last payment. Any business that you legitimately owe a debt to can report that to the credit agencies. Not all of them do. This includes utilities, cell phone companies, landlords, etc. If any of them report overdue items it will show up on your credit report, and your credit card company can use that to raise you interest rate. Some cards will automatically raise you credit limit. They are basically looking to make money fro you. If you often charge near the limit, and pay the minimum balance each month, they may raise your limit to get you to charge more, and pay more interest. You can also call them and ask. They have some internal rules to decide if, based on your history with them and your credit history, if you are a good risk.", "title": "" }, { "docid": "fa0b4a937bebc51fe2f72ca4f027888b", "text": "I think you got the message mixed up a little: Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit scores don't care.) You typically can increase your scores by limiting your charges to 30% or less of a card's limit. -- from 7 Ways to Fix Your Credit Score In other words, ALWAYS pay off your balance if you can. But don't fill up your card to the max of your credit limit each month. i.e. if your credit limit is $5000, only spend $2000 each month.", "title": "" }, { "docid": "3f73291fad05f11d85e9a94aa8a7389b", "text": "Always pay on time, and stop listening to whoever is telling you not to -- they are clueless. Credit cards are revolving accounts with a grace period. The balance owed is due on the statement date, and you have a grace period of 20-40 days to pay. Paying bills on time is the single most important thing that you can do to have a good credit score. Always pay on time.", "title": "" } ]	[ { "docid": "2141da6b860a33f040ec308bbd9ff0c3", "text": "This is a slightly different reason to any other answer I have seen here about irrationality and how being rationally aware of one's irrationality (in the future or in different circumstances) can lead you to make decisions which on the face of it seem wrong. First of all, why do people sometimes maintain balances on high-interest debt when they have savings? Standard advice on many money-management sites and forums is to withdraw the savings to pay down the debt. However, I think there is a problem with this. Suppose you have $5,000 in a savings account, and a $2,000 credit card balance. You are paying more interest on the credit card than you get from the savings account, and it seems that you should withdraw some money from the savings account, and pay off the cc. However, the difference between the two scenarios, other than the interest you lose by keeping the cc balance, is your motivation for saving. If you have a credit card balance of $2,000, you might be obliged to pay a minimum payment of $100 each month. If you have any extra money, you will be rewarded if you pay more in to the credit card, by seeing the balance go down and understanding that you will soon be free from receiving this awful bill each month. To maintain your savings goal, it's enough to agree with yourself that you won't do any new spending on the cc, or withdraw any savings. Now suppose that you decide to pay off the cc with the savings. There is now nothing 'forcing' you to save $100 each month. When you get to the end of the month, you have to motivate yourself that you will be adding spare cash to your $3,000 savings balance, rather than that you 'have to' pay down your cc. Yes, if you spend the spare cash instead of saving it, you get something in return for it. But it is possible that spending $140 on small-scale discretionary spending (things you don't need) actually gets you less for your money than paying the credit card company $40 interest and saving $100? You might even be tempted to start spending on your credit card again, knowing that you have a 0 balance, and that you 'can always pay it off out of savings'. It's easy to analogize this to a situation with two types of debt. Suppose that you have a $2,000 debt to your parents with no interest and a $2,000 loan at high interest, and you get a $2,000 windfall. Let's assume that your parents don't need the money in a hurry and aren't hassling you to pay them (otherwise you could consider the guilt or the hassle as a form of emotional interest rate). Might it not be better to pay your parents off? If you do, you are likely to keep paying off your loan out of necessity of making the regular payments. In 20 paychecks (or whatever) you might be debt free. If you pay off your loan, you lose the incentive to save. After 20 months you still owe your parents $2,000. I am not saying that this is always what makes sense. Just that it could make sense. Note that this is an opposite to the 'Debt Snowball' method. That method says that it's better to pay off small debts, because that way you have more free cash flow to pay off the larger debts. The above argues that this is a bad idea, because you might spend the increased cash flow on junk. It would be better to keep around as many things as possible which have minimum payments, because it restricts you to paying things rather than gives you the choice of whether to save or spend.", "title": "" }, { "docid": "d4bad8b443e8f4992518d4ee53d3a81b", "text": "If it's feasible, try to get one card down to zero balance, and preferably one of your cash-back cards. Then keep that at zero every month (pay it off in full), and use it for your purchases as you describe above. The idea would be to get it so that you are not paying interest on your month to month purchases. This not only reduces the 20% or whatever that you're paying on that balance, but also the 20% or whatever you're paying on those purchases - remember, a card you carry a balance on charges you interest on those purchases from the current month. If this isn't feasible (if these are all very high balance cards), then I suppose the way you're currently doing it would be okay, though I think you're overthinking things to some extent - but with 80% interest, if that's a significant pile of money, you may need to as clearly that needs to be tackled first. I think it's mostly better for you to pay your day to day stuff out of pocket and not use your cards the way you are suggesting, but with the 80% loan(s) you may need to. The reason I say it's better not to use your card the way you suggest is that it is difficult to do properly and never get it wrong (i.e., never go over a balance), and it's also leaving you in the habit of using credit. It doesn't help you budget necessarily, either. Instead, set up a fully developed budget that includes all of those minimum payments and pay them. Certainly once you have the > 50% debt handled, I would switch to this method (not using credit cards at all).", "title": "" }, { "docid": "a9a0c340b3bf375e4f39ea4894b91e6b", "text": "\"Ironically, the worst financial advice I read comes from \"\"bankers.\"\" The top dozen members here can be trusted to give better advice than the average banker. Your score is not improved by maintaining a balance, only by using the card(s) regularly. No need to carry charges month to month and pay interest, rather, have the bill reflect a 1-9% utilization. I'd recommend Credit Karma to see how the factors affect your score. FICO scoring prefers to see a large number of accounts, low utilization, high average account age, low number of inquiries, no late payments. CK will let you see a simulated score and how it changes based on these variables.\"", "title": "" }, { "docid": "a5077894aaa3a2ea67000dba261b4cf5", "text": "\"One of the things that you have to be aware of is a little gotcha in the credit utilization rate. They, or at least the credit company I worked for, used the \"\"high balance\"\" in figuring the credit utilization, not the ending balance. For example, say you had a single card with a $2000 credit limit and used it to charge everything during the month. Say that the high balance was $1900 and you paid it down to zero at the end of the month. The company would calculate your credit utilization at 95%. This is not good and not really fair, but that was the way it was done. Increasing the credit limit helps, but you can also usually make interim payments, say as a paycheck comes in, during the month, if you have an online account.\"", "title": "" }, { "docid": "6d74c157a41a9d5a8f0fb4c2a3cd6e00", "text": "It is COMPLETELY no use to pay earlier (during a billing cycle) to better your credit score! Your credit score gets affected ONLY once a month from each creditor, and that happens when they post your monthly statement. Thus, no matter what you do or pay and how many times a month or how many days earlier than your due date, it has NO EFFECT WHATSOEVER on your score. Anything you do will be reflected only after the statement. What you pay in between those two statements is irrelevant. So, as far as credit score goes IT DOESN'T MATTER. However, if you want to save on interest being charged, it is wise to pay as early as possible, so your balance is as low as possible for day-by-day calculation of your interest.", "title": "" }, { "docid": "8b9620a800b6f6147c6c93aeefef92c5", "text": "If you pay your statement balance in full before the due date you will never pay a cent in interest no matter what your interest rate is.* In fact, I don't even know what my interest rates are. Credit card companies offer this sort of thing in the hopes you will spend more than you can afford to pay completely in those first 15 months. * Unless you use a cash advance, with those you will accrue interest immediately upon receiving the cash sometimes with an additional fee on top.", "title": "" }, { "docid": "c83dfb8bae683361cff5422a87ac9b70", "text": "\"The fact that you pay the bill reliably is going to count more for your credit rating than anything else, even if you are paying it off in full every month. Lenders seem to like to see at least one instance where you charged a large balance, held it a couple months, then paid it off in full... but I wouldn't go out of my way to do that. Remember that the credit card company is making money on transaction fees as well as interest. If you're pushing money through their system, they're happy. They'd be happier if you were paying them interest too -- reportedly, they actually refer to those of us who pay in full every month as \"\"deadbeats\"\" -- but they aren't going to kick you out or ding your credit rating for it. The quote you give says that a small balance \"\"may be slightly better\"\". I submit that \"\"may be slightly\"\" is too small a difference to be worth worrying about, unless you have reason to believe that your credit rating actively needs to be repaired. (And as noted in the comments, it's actually stated even less strongly than that!) Personal recommendation: You can get a free credit report each year from each of the \"\"big three\"\" credit rating agencies. Those reports usually include a brief explanation of what they think the most negative item on your record is. The phrasing of those explanations is often somewhat misleading, but I'd still suggest that you get these reports and see what they think would improve your rating. I'm willing to bet it won't be \"\"doesn't carry a high enough debt balance.\"\"\"", "title": "" }, { "docid": "e1e4f845de85823dfcc1a47aae283ee6", "text": "it is better for your credit score to pay them down over time. This is a myth. Will it make much of a difference? You are paying additional interest even though you have the means to pay off the cards completely. Credit score is a dynamic number and it really only matters if you are looking to make a big purchase (vehicle, home), or perhaps auto insurance or employment. Pay off your credit cards, consolidate your debt, and buy yourself a beer with the money you will be saving. :)", "title": "" }, { "docid": "55e0198a883112249e659ac901527644", "text": "If you've got the money to pay off your credit cards, do it. Today, if possible. There is no need to pay another penny of interest to them. They may or may not cancel your cards. That is up to them. We can't know what will trigger an individual bank to cancel your card. The answers you got on your other question offer some speculation on why some banks might cancel, but this is not something banks reveal. Anything you do on your own to try to keep the cards open is just a guess, and may or may not succeed. But ask yourself: why do you want to keep these cards? Is it for the convenience of the card? I agree that credit cards (paid in full monthly) are convenient, but when they start costing you money, they aren't worth it anymore, in my opinion. Debit cards have most of the same conveniences of credit cards, and are free. If it is for emergencies, I recommend instead building up an emergency cash fund. That way, if an emergency arises, you won't be forced to borrow money at high credit card interest rates. If the reason you want to hang on to the credit card is so you can spend more than you have, then you will find yourself in the same situation again. If I were you, I would pay off the cards ASAP. If the banks cancel your cards, just switch to a debit card and be thankful that you are no longer continuously leaking money to the banks.", "title": "" }, { "docid": "f8cb30dfac269383f5139658d78c770d", "text": "Yes. You can pay towards your credit card before the actual bill becomes due every month. However, your credit usage ratio does not get sent to credit reporting agencies exactly on the day of your bill; this data can be sent to the agencies any day of the month. So, keep your balance low at all times throughout the month, not just right before your statement closing date.", "title": "" }, { "docid": "a1ab358564480177021f5fb532b66329", "text": "I want to know if I cut the citi card in half for example, how much would the min payment go down? If you goal is to become debt-free, the minimum payment shouldn't matter. Even if the minimum payment goes down, continue your current payment amount (or more, if you can afford it) until the balance is paid off. Paying the minimum will just keep you in debt longer.", "title": "" }, { "docid": "8f229eb53e942ea83863cbc7633be620", "text": "I am going to break rank slightly with the consensus so far. Here's the deal, it probably DOES help your credit slightly to pay it multiple times per month if it isn't a hassle, but the bump is likely to be minimal and very temporary. Here's why: A key component of your score is your credit usage ratio. That is the ratio of how much of your credit limits you are using. You want to keep this number down as low as possible. Now here is where it gets tricky. Although you have a grace period to pay off your card with no interest, the credit card companies don't generally report the balance as of the due date. They either report the high balance or an average balance over the month. That is, it is based on how much you use, not how much balance you carry over each month. It isn't very intuitive, but that's just how it is. So technically, keeping that balance lower over the course of the month WILL probably help you, but the credit usage ratio is generally a rolling average over the last x months, so the effect will wear off quickly. So it is probably not worth doing unless you know you are going to apply for a loan in the next 6 months and need a temporary, small bump. Another consideration is that paying early provides no real financial benefit in terms of finance charges, but you are giving up liquidity which does have some value. 1) You probably could get at least a little interest for keeping the money in your account a few more weeks. 2) If you have a major financial emergency, e.g. broken down car, you might appreciate the fact that you kept your options open to carry that balance over a month.", "title": "" }, { "docid": "239b261eb6f0510cc7e5d288f171eecc", "text": "\"Not everyone pays their balance in full every month. They may not make interest off of you or me but they do make interest off of a lot of cardholders. In many cases, the interest is variable and the larger your (running) balance, the higher your rate. If you're close to your limit and making minimum payments, you can literally take decades to pay off $2,000 or so. Some people don't pay at all every month and end up paying late fees. Some people use their cards overseas and pay foreign transaction fees. Ever take a cash advance? Me neither but they charge you interest right away for that instead of waiting until your statement. The list of fees and charges is as long as my arm and in tiny print. That's how they make money. The points/bonus/cash back and other rewards programs are to get you in the door. It's like when you see a luxury car advertised for a \"\"too good to be true\"\" price and you get to the lot and find out that the one they are selling for that price is a manual transmission without AC or a radio, they only had one and they sold it an hour before you got there. It got you on the lot though. The rewards programs function in much the same way (minus the disappearing part), they get you interested in their offering among a sea of virtually identical products but rest assured, if the card issuers were losing money because of them, they wouldn't exist for very long.\"", "title": "" }, { "docid": "c8f7a3ce6a223974c1913148af62ded8", "text": "\"To avoid nitpicks, i state up front that this answer is applicable to the US; Europeans, Asians, Canadians, etc may well have quite different systems and rules. You have nothing to worry about if you pay off your credit-card statement in full on the day it is due in timely fashion. On the other hand, if you routinely carry a balance from month to month or have taken out cash advances, then making whatever payment you want to make that month ASAP will save you more in finance charges than you could ever earn on the money in your savings account. But, if you pay off each month's balance in full, then read the fine print about when the payment is due very carefully: it might say that payments received before 5 pm will be posted the same day, or it might say before 3 pm, or before 7 pm EST, or noon PST, etc etc etc. As JoeTaxpayer says, if you can pay on-line with a guaranteed day for the transaction (and you do it before any deadline imposed by the credit-card company), you are fine. My bank allows me to write \"\"electronic\"\" checks on its website, but a paper check is mailed to the credit-card company. The bank claims that if I specify the due date, they will mail the check enough in advance that the credit-card company will get it by the due date, but do you really trust the USPS to deliver your check by noon, or whatever? Besides the bank will put a hold on that money the day that check is cut. (I haven't bothered to check if the money being held still earns interest or not). In any case, the bank disclaims all responsibility for the after-effects (late payment fees, finance charges on all purchases, etc) if that paper check is not received on time and so your credit-card account goes to \"\"late payment\"\" status. Oh, and my bank also wants a monthly fee for its BillPay service (any number of such \"\"electronic\"\" checks allowed each month). The BillPay service does include payment electronically to local merchants and utilities that have accounts at the bank and have signed up to receive payments electronically. All my credit-card companies allow me to use their website to authorize them to collect the payment that I specify from my bank account(s). I can choose the day, the amount, and which of my bank accounts they will collect the money from, but I must do this every month. Very conveniently, they show a calendar for choosing the date with the due date marked prominently, and as mhoran_psprep's comment points out, the payment can be scheduled well in advance of the date that the payment will actually be made, that is, I don't need to worry about being without Internet access because of travel and thus being unable to login to the credit-card website to make the payment on the date it is due. I can also sign up for AutoPay which takes afixed amount/minimum payment due/payment in full (whatever I choose) on the date due, and this will happen month after month after month with no further action necessary on my part. With either choice, it is up to the card company to collect money from my account on the day specified, and if they mess up, they cannot charge late payment fees or finance charge on new purchases etc. Also, unlike my bank, there are no fees for this service. It is also worth noting that many people do not like the idea of the credit-card company withdrawing money from their bank account, and so this option is not to everyone's taste.\"", "title": "" }, { "docid": "c253f40e797ebdded76b3a0e223b40f0", "text": "I would take a closer look at each provider. I have one credit-card provider who when there is a large portion of credit available, they frequently offer promotions on balance transfers so you fill that credit, sometimes it can be 0% for xx months, or a very low % until paid off in full. If this is the case clear that card fully and balance transfer the remainder to get an even lower interest to make the repayments eaier to clear.", "title": "" } ]	fiqa
80e5cd2613dc0f589220e52238abe384	Does the Fed keeping interest rates low stimulate investment in the stock market and other investments?	[ { "docid": "233ea902448875e6343af9b6290c5305", "text": "Investopedia has this note where you'd want the contrapositive point: The interest rate, commonly bandied about by the media, has a wide and varied impact upon the economy. When it is raised, the general effect is a lessening of the amount of money in circulation, which works to keep inflation low. It also makes borrowing money more expensive, which affects how consumers and businesses spend their money; this increases expenses for companies, lowering earnings somewhat for those with debt to pay. Finally, it tends to make the stock market a slightly less attractive place to investment. As for evidence, I'd question that anyone could really take out all the other possible economic influences to prove a direct co-relation between the Federal Funds rate and the stock market returns. For example, of the dozens of indices that are stock related, which ones would you want that evidence: Total market, large-cap, small-cap, value stocks, growth stocks, industrials, tech, utilities, REITs, etc. This is without considering other possible investment choices such as direct Real Estate holdings, compared to REITs that is, precious metals and collectibles that could also be used.", "title": "" } ]	[ { "docid": "729c5aedd5093e6ba46e0c0a70f6ab49", "text": "The stock market in general likes monetary easing. With lower interest rates and easy cheap money freely available, companies can borrow at reduced cost thus improving profits. As profits increase share prices generally follow. So as John Benson said Quantitative Easing usually has a positive effect on stocks. The recent negativity in the stock markets was partly due to the possibility of QE ending and interest rates being raised in the future.", "title": "" }, { "docid": "298aceb6b086f2bd4e05a455c82ccb76", "text": "When inflation is high or is rising generally interest rates will be raised to reduce people spending their money and slow down the rate of inflation. As interest rates rise people will be less willing to borrow money and more willing to keep their money earning a good interest rate in the bank. People will reduce their spending and invest less into alternative assets but instead put more into their bank savings. When inflation is too low and the economy is starting to slow down generally interest rates will be raised to encourage more spending to restart the economy again. As interest rates drop more will take their saving out of their bank accounts as is starts to earn very little in interest rate and more will be willing to borrow as it becomes cheaper to borrow. People will start spending more and investing their money outside of bank savings.", "title": "" }, { "docid": "d03d7422fd930df0f13189e84937a6fa", "text": "The current FED's spend is to encourage spends by putting in more liquidity, SOME of this funds [directly or indirectly] reach emerging markets and get invested in stocks ... so without these forex inflows, the Balance of Payments would be under pressure ... so these forex are artificially keeping the Exchange rate down. For example the USD vs INR rate was in the range of 1 USD to around INR 50 for nearly 4-5 years. In the period the inflation in India was around 10-15%, so ideally the rate should have slowly moved towards INR 60, however it took a news of FED cut-back to more the rates in the range of INR 65 before stabilizing to Rs 60", "title": "" }, { "docid": "174d0dde5a33952ccf7e1b619bfc6b38", "text": "When the inflation rate increases, this tends to push up interest rates because of supply and demand: If the interest rate is less than the inflation rate, then putting your money in the bank means that you are losing value every day that it is there. So there's an incentive to withdraw your money and spend it now. If, say, I'm planning to buy a car, and my savings are declining in real value, then if I buy a car today I can get a better car than if I wait until tomorrow. When interest rates are high compared to inflation, the reverse is true. My savings are increasing in value, so the longer I leave my money in the bank the more it's worth. If I wait until tomorrow to buy a car I can get a better car than I would be able to buy today. Also, people find alternative places to keep their savings. If a savings account will result in me losing value every day my money is there, then maybe I'll put the money in the stock market or buy gold or whatever. So for the banks to continue to get enough money to make loans, they have to increase the interest rates they pay to lure customers back to the bank. There is no reason per se for rising interest rates to consumers to directly cause an increase in the inflation rate. Inflation is caused by the money supply growing faster than the amount of goods and services produced. Interest rates are a cost. If interest rates go up, people will borrow less money and spend it on other things, but that has no direct effect on the total money supply. Except ... you may note I put a bunch of qualifiers in that paragraph. In the United States, the Federal Reserve loans money to banks. It creates this money out of thin air. So when the interest that the Federal Reserve charges to the banks is low, the banks will borrow more from the Feds. As this money is created on the spot, this adds to the money supply, and thus contributes to inflation. So if interest rates to consumers are low, this encourages people to borrow more money from the banks, which encourages the banks to borrow more from the Feds, which increases the money supply, which increases inflation. I don't know much about how it works in other countries, but I think it's similar in most nations.", "title": "" }, { "docid": "ba16217f8b6e04587785eb12e95c7f63", "text": "The Fed is trying to keep the money supply growing at a rate just slightly faster than the increase in the total production in the economy. If this year we produced, say, 3% more goods and services than last year, than they try to make the money supply grow by maybe 4% or 5%. That way there should be a small rate of inflation. They are trying to prevent high inflation rates on one hand or deflation on the other. When the interest rate on T-bills is low, banks will borrow more money. As the Fed creates this money out of thin air when banks buy a T-bill, this adds money to the economy. When the interest rate on T-bills is high, banks will borrow little or nothing. As they'll be repaying older T-bills, this will result in less growth in the money supply or even contraction. So the Feds change the rate when they see that economic growth is accelerating or decelerating, or that the inflation rate is getting too high or too low.", "title": "" }, { "docid": "fac469245c0605d033cba9fca4684cc3", "text": "Reasons for no: In your first sentence you say something interesting: rates low - prices high. Actually those 2 are reversely correlated, imagine if rates would be 5% higher-very few people could buy at current prices so prices would drop. Also you need to keep in mind the rate of inflation that was much higher during some periods in the US history(for example over 10% in the 1980) so you can not make comparisons just based on the nominal interest rate. Putting all your eggs in one basket. If you think real estate is a good investment buy some REITs for 10k, do not spend 20% of your future income for 20 years. Maintenance - people who rent usually underestimate this or do not even count it when making rent vs mortgage comparisons. Reasons for yes: Lifestyle decision - you don't want to be kicked out of your house, you want to remodel... Speculation - I would recommend against this strongly, but housing prices go up and down, if they will go up you can make a lot of money. To answer one of questions directly: 1. My guess is that FED will try to keep rates well bellow 10% (even much lower, since government can not service debts if interest rates go much higher), but nobody can say if they will succeed.", "title": "" }, { "docid": "ee8956aa55fc36f0508e248e8a16627c", "text": "Nah it's far from that simple. The effects of low interest rates will decline over time. That's the nature of the beast. Without continuous input of bullish stimuli, and as leveraged longs grow and grow, stock market growth will become increasingly vulnerable to small shocks which turn into bigger shocks.", "title": "" }, { "docid": "7cff897020391a620928a2dc45c9594c", "text": "Thanks. It has taken me some time to understand how all this works, and there are still many gray areas I want to understand further. The Fed interest rate is the rate charged by banks to loan to each other to balance overnight reserves but only using the reserves they hold at the Fed. That adds no new money to the system, but increases the money multiplier a little since perhaps more loans can be made. Basically one bank with excess reserves can loan to another bank that needs reserves. The Fed injects no money here, only sets the rate for banks to do this with each other. When the Fed buys securities that effectively adds that many more dollars into circulation, which then gets hit by the money multiplier, adding a lot of new liquidity. I think historically the latter tracks increases in the money supply much better than the former. I think the St. Louis Fed has records online for all this dating back to the 1940's or so.", "title": "" }, { "docid": "ac7828370d866a6e91c3a456e08d6155", "text": "So after you learn some basics about bubbles you might then see that interest rates kept at their lowest since the days they were backed with gold may allow a bubble to form in housing. You know the bond purchases increased real estate prices right? What is it about the magic $2 Trillion that makes you think the FED hit the spot right on?", "title": "" }, { "docid": "f7f27dfffa398fe03986c118eb595efc", "text": "The Fed controls the base interest rate for lending to banks. It raises this rate when the economy is doing well to limit inflation, and lowers this rate when the economy is doing poorly to encourage lending. Raising the interest rate signals that the Fed believes the economy is strong/strengthening. Obviously it's more complicated than that but that's the basic idea.", "title": "" }, { "docid": "1542bcc538c404dc66e2c16e89a01340", "text": "Lowered rates = boom for equities, currently held bonds, and assets. Cheaper money means a (disproportionately) good time had by all. This all comes with malinvestment, potential for moral hazard, and savers losing in a big way. Why save for retirement when your risk free return on US Treasuries can barely keep up with inflation? As an aside, it is not really a risk free rate anymore, with $20 trillion in debt and no real hope of paying it off. This is why we see the rate increases and movement towards asset sales by the Fed to get the poop off their books. They are worried about all of the above and need more arrows in their quiver when the next recession hits. They won't have enough, however. They are trying to right a ship that is fully overturned. This is now the longest period of growth (however tepid) since the tech bubble of the 1990's. Are the fundamentals really better than then?", "title": "" }, { "docid": "cfb8eb76f144b9bc12d00e547c5e16c9", "text": "\"I'd refer you to Is it true that 90% of investors lose their money? The answer there is \"\"no, not true,\"\" and much of the discussion applies to this question. The stock market rises over time. Even after adjusting for inflation, a positive return. Those who try to beat the market, choosing individual stocks, on average, lag the market quite a bit. Even in a year of great returns, as is this year ('13 is up nearly 25% as measured by the S&P) there are stocks that are up, and stocks that are down. Simply look at a dozen stock funds and see the variety of returns. I don't even look anymore, because I'm sure that of 12, 2 or three will be ahead, 3-4 well behind, and the rest clustered near 25. Still, if you wish to embark on individual stock purchases, I recommend starting when you can invest in 20 different stocks, spread over different industries, and be willing to commit time to follow them, so each year you might be selling 3-5 and replacing with stocks you prefer. It's the ETF I recommend for most, along with a buy and hold strategy, buying in over time will show decent returns over the long run, and the ETF strategy will keep costs low.\"", "title": "" }, { "docid": "eac18c368c7af4420ed6b45910472d03", "text": "\"He's misunderstanding Buffett's argument, which is that all forms of investment compete, and so when interest rates give you guaranteed low returns, it makes sense for stocks to give you average low returns. That implies high prices for current stocks, because your return on equities is the price tomorrow over the price today. Buffett would likely agree with him that this implies slow growth in the future, though he may not want to say so for competitive reasons. Historical P/E norms are a more wrong metric, because they don't capture any fundamental change that might have happened in the economy. What's likely going on is a surplus of capital: as business becomes more efficient (i.e. generates more revenue with fewer workers), that excess cash flow becomes investable capital, but as it becomes more efficient (i.e. less of that revenue filters down to workers in the form of wages that they can spend on consumer goods), the amount of productive uses where that capital can be effectively deployed in income-generating activities declines. More capital + fewer investable opportunities = higher supply + lower demand = the price of securities for the few areas of the economy that are doing well increases. This is why you see insane valuations for tech companies. If we do get a major economic crash, it will likely come from a Carlota Perez-style financial crisis, where all the money gets concentrated within emerging new industries focused on new technology, who can't sell their products because nobody else has any money. We're on the path to that already, but it will likely take a decade or two to play out; there's still a lot of money left in the \"\"old economy\"\" which can be extracted. Also, these style of financial crises usually are accompanied by war and a breakdown of the established political order, and so all bets are off anyway.\"", "title": "" }, { "docid": "499cbb262d13898effa9df7e596acf0a", "text": "Interest rates can't remain this low. It's like having extremely low blood pressure. When you raise the rates, banks are incented to loan money and that movement of capital is good for the economy. It forces us to become savers instead of spenders, and our pensions, 401ks, social security are all getting killed by not being able to use debt to get safer stable returns. Interest rates have to come back up.", "title": "" }, { "docid": "b01d95f8b94c0c2cbca6f0916c0342b8", "text": "One thing to note before buying bond funds. The value of bonds you hold will drop when interest rates go up. Interest rates are at historical lows and pretty much have nowhere to go but up. If you are buying bonds to hold to maturity this is probably not a major concern, but for a bond fund it might impair performance if things suddenly shift in the interest rate market.", "title": "" } ]	fiqa
aed3e8779871c2a01d77d04321eba8b9	How to find if a public company has taken out a loan?	[ { "docid": "1596afff2f3ee3401968378a590116e6", "text": "Somewhat. The balance sheet will include liabilities which as Michael Kjörling points out would tell you the totals for the debt which would often be loans or bonds depending on one's preferred terminology. However, if the company's loan was shorter than the length of the quarter, then it may not necessarily be reported is something to point out as the data is accurate for a specific point in time only. My suggestion is that if you have a particular company that you want to review that you take a look at the SEC filing in full which would have a better breakdown of everything in terms of assets, liabilities, etc. than the a summary page. http://investor.apple.com/ would be where you could find a link to the 10-Q that has a better breakdown though it does appear that Apple doesn't have any bonds outstanding. There are some companies that may have little debt due to being so profitable in their areas of business.", "title": "" } ]	[ { "docid": "23b8c89a673ed3d13114a805d1a96364", "text": "If you're researching a publicly traded company in the USA, you can search the company filings with the SEC. Clicking 'Filings' should take you here.", "title": "" }, { "docid": "e4a90d1ebbcee62fce3683b0de21ecd4", "text": "I'm a big believer in pulling the quarterly and or annual statements and deriving your own analysis. The automated parsing systems at Google, Yahoo, and others are a good starting point and they'll let you generally compare various metrics of different companies or market segments. With that in mind, there are any number of reasons Google's scripts could have broken out or combined a couple of cash flow line items. If you're digging this deep in the weeds on this company you should pull the SEC filings and build out your own data.", "title": "" }, { "docid": "03a783452b4908e9fcc071843916546c", "text": "Depending on the specific bond, here is the official info. http://www.wilmingtontrust.com/gmbondholders/index.html Bottom line, it won't be determined for a while yet, as the filing with the Bankruptcy Court still has lots of blanks.", "title": "" }, { "docid": "20296fe9a4968915cc50c9b279524a09", "text": "\"If by \"\"most public companies\"\" you mean ALL public companies. Heck, even some non-public companies have to file 10-Ks. OP, I'd avoid any exchange-based list (a public company may be de-listed, for example) and go right to the source: Edgar.\"", "title": "" }, { "docid": "e5e09133cbc43f68cf3491c9243f3fac", "text": "The best source of financial statements would be from the company in question. On corporate websites of public listed companies, you can find such financial statements uploaded in the Investor's Relations section of their website. If their company does not have an online presence, another alternative would be to go to the website of the exchange the company is trading in (e.g. NYSE or NASDAQ) for financial data.", "title": "" }, { "docid": "f245448cef4bd0cb4b082095362b7a41", "text": "Your best bet is to just look at comparative balance sheets or contact the company itself. Otherwise, you will need access to a service like PrivCo to get data.", "title": "" }, { "docid": "0498d551c7e0a4ad4de52bfab30b7d3e", "text": "How can I get quarterly information about private companies? Ask the owner(s). Unelss you have a relationship and they're interested in helping you, they will likely tell you no as there's no compelling reason for them to do so. It's a huge benefit of not taking a company public.", "title": "" }, { "docid": "def659aae548de1cffe0daa87eeb0196", "text": "I believe that it's not possible for the public to know what shares are being exchanged as shorts because broker-dealers (not the exchanges) handle the shorting arrangements. I don't think exchanges can even tell the difference between a person selling a share that belongs to her vs. a share that she's just borrowing. (There are SEC regulations requiring some traders to declare that trades are shorts, but (a) I don't think this applies to all traders, (b) it only applies to the sells, and (c) this information isn't public.) That being said, you can view the short interest in a symbol using any of a number of tools, such as Nasdaq's here. This is often cited as an indicator similar to what you proposed, though I don't know how helpful it would be from an intra-day perspective.", "title": "" }, { "docid": "c4358d19edb2a53d219d633e838d8e96", "text": "There are multiple places where you can see this. Company house website On any financial news website, if you have access e.g. TESCO on FT On any 3rd party website which supply information on companies e.g. TESCO on Companycheck An observation though, FT lists down more shareholders for me than Companycheck as I pay for FT.", "title": "" }, { "docid": "5505b568f3ca227fb45391f812adff8c", "text": "You can look at the company separately from the ownership. The company needs money that it doesn't have, therefore it needs to borrow money from somewhere or go bankrupt. And if they can't get money from their bank, then they can of course ask people related to the company, like the two shareholders, for a loan. It's a loan, like every other loan, that needs to be repaid. How big the loan is doesn't depend on the ownership, but on how much money each one is willing and capable of giving. The loan doesn't give them any rights in the company, except the right to get their money back with interest in the future. Alternatively, such a company might have 200 shares, and might have given 75 to one owner and 25 to the other owner, keeping 100 shares back. In that case, the shareholders can decide to sell some of these 100 shares. I might buy 10 shares for $1,000 each, so the company has now $10,000 cash, and I have some ownership of the company (about 9.09%, and the 75% and 25% shares have gone down, because now they own 75 out of 110 or 25 out of 110 shares). I won't get the $10,000 back, ever; it's not a loan but the purchase of part of the company.", "title": "" }, { "docid": "9d77881dc3d8a425eeea4703c169e0b3", "text": "\"First, don't use Yahoo's mangling of the XBRL data to do financial analysis. Get it from the horse's mouth: http://www.sec.gov/edgar/searchedgar/companysearch.html Search for Facebook, select the latest 10-Q, and look at the income statement on pg. 6 (helpfully linked in the table of contents). This is what humans do. When you do this, you see that Yahoo omitted FB's (admittedly trivial) interest expense. I've seen much worse errors. If you're trying to scrape Yahoo... well do what you must. You'll do better getting the XBRL data straight from EDGAR and mangling it yourself, but there's a learning curve, and if you're trying to compare lots of companies there's a problem of mapping everybody to a common chart of accounts. Second, assuming you're not using FCF as a valuation metric (which has got some problems)... you don't want to exclude interest expense from the calculation of free cash flow. This becomes significant for heavily indebted firms. You might as well just start from net income and adjust from there... which, as it happens, is exactly the approach taken by the normal \"\"indirect\"\" form of the statement of cash flows. That's what this statement is for. Essentially you want to take cash flow from operations and subtract capital expenditures (from the cash flow from investments section). It's not an encouraging sign that Yahoo's lines on the cash flow statement don't sum to the totals. As far as definitions go... working capital is not assets - liabilities, it is current assets - current liabilities. Furthermore, you want to calculate changes in working capital, i.e. the difference in net current assets from the previous quarter. What you're doing here is subtracting the company's accumulated equity capital from a single quarter's operating results, which is why you're getting an insane result that in no way resembles what appears in the statement of cash flows. Also you seem to be using the numbers for the wrong quarter - 2014q4 instead of 2015q3. I can't figure out where you're getting your depreciation number from, but the statement of cash flows shows they booked $486M in depreciation for 2015q3; your number is high. FB doesn't have negative FCF.\"", "title": "" }, { "docid": "0c41ae0b3760a3df1db01624405faaab", "text": "There's a bit of truth to that, except in reality when you ask for business loan the bank most definitely looks at the background of the owners (assuming it's a small business). You might have some luck fooling investors as a way to get some capital, but that's doubtful as well if you have a history of starting companies that later fail.", "title": "" }, { "docid": "9ebc43ac297c2c5d3bad28059236f170", "text": "Check the Financial section in this list of Open Source Software", "title": "" }, { "docid": "7bc709e0c92e4abf2f119a1a3f385d46", "text": "You can go to the required company's website and check out their investor section. Here is an example from GE and Apple.", "title": "" }, { "docid": "7c26484c75879a3b97115ad25d7a5928", "text": "for buying: High PE, low debt, discount = win. a company with high debt (in relation to revenues and cash on hand) will have to pay interest and pay off the debt, stunting their growth. and just like a normal person, will barely be able to pay their bills and keep borrowing and might go bankrupt determining discount is just looking for a technical retracement to a support level or lower. (but if you dont enter at the support level, you most likely missed the best entry)", "title": "" } ]	fiqa
58ae7543fa42d6d0ddcd2aec239c46dc	What is a Master Limited Partnership (MLP) & how is it different from plain stock?	[ { "docid": "9aeb6ea330ab89ab7f767e72d9ee2209", "text": "I was hesitant to answer this question since I don't own MLP even though I'm aware of how they work. But hear crickets on this question, so here goes. I'll try to keep this as non technical as possible. MLPs are partnerships where a shareholder is a partner and liable for the partnership's taxes. MLPs don't pay corporate tax since the tax burden flows to you, the shareholder. So does that mean like a partnership the partners are liable for the company's actions? Technically, yes. Has it happened before? No. Of course there are limitations to the liability, but are not definitely shielded in a way normal shareholders are. MLPs issue a K-1 at the beginning of the year (feb/mar). The tax calculations are relatively complex and I'm not going to go over that in this post. Generally MLPs are a bad choice for tax-deferred accounts like IRAs since there are tax implications beyond certain limits of distribution (yes even out of an IRA you'll have to pay taxes if above the limit). Not all types of businesses can become MLPs (hey no corporate tax, let's form an MLP!) Only companies engaged in businesses related to real estate, commodities or natural resources can become MLPs. There are a number of MLPs out there. The largest is Kinder Morgan Energy Partners. Hope this helps!", "title": "" }, { "docid": "b81dbe18ed78eebbf4324a30acf44a7d", "text": "I own a few MLPs that operate oil/gas pipelines (TSE:IPL-UN, NYSE:BPT, NYSE:APL), and I'm very happy with their performance. Because they don't pay corporate tax MLPs tend to pay higher dividends than most regular stocks. I pay H&R Block to do my taxes, and they sort out all the arcane details.", "title": "" }, { "docid": "14a3463bd63b7c6201c5dc01fce10d48", "text": "\"MLP stands for master limited partnership. Investors who buy into one are limited partners, rather than shareholders, and have their taxable income reported on K-1s, rather than 1099s. MLPs are engaged in businesses (e.g. real estate, natural resources) that generate a lot of cash that doesn't need to be \"\"reinvested,\"\" or put back into the company. Because of this feature, the IRS will exempt it from corporate tax if it pays out at least 95% of its income in the form of dividends. The advantage is that you avoid the \"\"double taxation\"\" common to most corporations, and get a higher yield as a result. The disadvantage is that the company can't retain earnings for growth, and needs to borrow money if it wants to grow. In this regard, an MLP is much like a utility (except that a utility has to pay corporate taxes, and is otherwise heavily regulated by the Federal and/or state governments). You can look upon an MLP as an unregulated utility. This means that MLPs are most suitable for utility type investors who are more interested in current income, than capital gains. Because they are unregulated, they are riskier than utilities.\"", "title": "" }, { "docid": "3b4d3c2ebd30bc79d663beed4223cbea", "text": "My question is: absent the corporate shield, to what extent are partners liable for a serious disaster or accident such as the BP Gulf incident. IN other words, if an oil pipeline had a major spill or explosion in which there were serious liabilities, to what extent would this effect the owners of a listed partnership beyond the effects of corporate liability on a common stock holding?", "title": "" } ]	[ { "docid": "7e71aab4db2eebd2a6cc2e519ded63c7", "text": "\"Life would be nicer had we not needed lawyers. But for some things - you better get a proper legal advice. This is one of these things. Generally, the United States is a union of 50 different sovereign entities, so you're asking more about Texas, less about the US. So you'd better talk to a Texas lawyer. Usually, stock ownership is only registered by the company itself (and sometimes not even that, look up \"\"street name\"\"), and not reported to the government. You may get a paper stock certificate, but many companies no longer issue those. Don't forget to talk to a lawyer and a tax adviser in your home country, as well. You'll be dealing with tax authorities there as well. The difference between \"\"unoted\"\" (never heard of this term before) and \"\"regular\"\" stocks is that the \"\"unoted\"\" are not publicly traded. As such, many things that your broker does (like tax statements, at source withholding, etc) you and your company will have to do on your own. If your company plans on paying dividends, you'll have to have a US tax ID (ITIN or SSN), and the company will have to withhold the US portion of the taxes. Don't forget to talk to a tax adviser about what happens when you sell the stock. Also, since the company is not publicly traded, consider how will you be able to sell it, if at all.\"", "title": "" }, { "docid": "3ccaab31cbf55185b353f68bf4441bad", "text": "Presumably you're talking about the different share class introduced in the recent stock split, which mean that there are now three Google share classes: Due to the voting rights, Class A shares should be worth more than class C, but how much only time will tell. Actually, one could very well argue that a non-voting share of a company that pays no dividends has no value at all. It's unlikely the markets will see it that way, though.", "title": "" }, { "docid": "fe94b7253c0a5ea576467306a3beadef", "text": "NYSE and Nasdaq are secondary markets where stocks are bought or sold. The process of creating new stocks via IPO or private placements etc are called Private Market.", "title": "" }, { "docid": "4e35c62837d601cc2ddb9af278e6287e", "text": "Cornerstone Strategic Value Fund, Inc. is a diversified, closed-end management investment company. It was incorporated in Maryland on May 1, 1987 and commenced investment operations on June 30, 1987. The Fund’s shares of Common Stock are traded on the NYSE MKT under the ticker symbol “CLM.”[1] That essentially means that CLM is a company all of whose assets are held as tradable financial instruments OR EQUIVALENTLY CLM is an ETF that was created as a company in its own right. That it was founded in the 80s, before the modern definition of ETFs really existed, it is probably more helpful to think of it by the first definition as the website mentions that it is traded as common stock so its stock holds more in common with stock than ETFs. [1] http://www.cornerstonestrategicvaluefund.com/", "title": "" }, { "docid": "1236af8e4e462d79ee4767c881cb6c3e", "text": "All shares of the same class are considered equal. Each class of shares may have a different preference in order of repayment. After all company liabilities have been paid off [including bank debt, wages owing, taxes outstanding, etc etc.], the remaining cash value in a company is distributed to the shareholders. In general, there are 2 types of shares: Preferred shares, and Common shares. Preferred shares generally have 3 characteristics: (1) they get a stated dividend rate every year, sometimes regardless of company performance; (2) they get paid out first on liquidation; and (3) they can only receive their stated value on liquidation - that is, $1M of preferred shares will be redeemed for at most $1M on liquidation, assuming the corporation has at least that much cash left. Common Shares generally have 4 characteristics: (1) their dividends are not guaranteed (or may be based on a calculation relative to company performance), (2) they can vote for members of the Board of Directors who ultimately hire the CEO and make similar high level business decisions; (3) they get paid last on liquidation; and (4) they get all value remaining in the company once everyone else has been paid. So it is not the order of share subscription that matters, it is the class. Once you know how much each class gets, based on the terms listed in that share subscription, you simply divide the total class payout by number of shares, and pay that much for each share a person holds. For companies organized other-than as corporations, ie: partnerships, the calculation of who-gets-what will be both simpler and more complex. Simpler in that, generally speaking, a partnership interest cannot be of a different 'class', like shares can, meaning all partners are equal relative to the size of their partnership interest. More complex in that, if the initiation of the company was done in an informal way, it could easily become a legal fight as to who contributed what to the company.", "title": "" }, { "docid": "8dd14465a90edf3ad4f5450dd7ba028f", "text": "Just from my experience and observation... VC there are spikes of activity. Where many deals are closing and board meetings and issues pile up on top of each other and happen all at once. But VC there are lulls where not much is going on. PE is more consistent and predictable in general. Yes of course exceptions arise but I found PE to be more 9 to 5 ish.", "title": "" }, { "docid": "19c215406af14db05a1acffe9423ae75", "text": "Nothing. Stockbrokers set up nominee accounts, in which they hold shares on behalf of individual investors. Investors are still the legal owners of the shares but their names do not appear on the company’s share register. Nominee accounts are ring-fenced from brokers’ other activities so they are financially secure.", "title": "" }, { "docid": "d0635c74f875d15a57b2671500a2f318", "text": "Most corporations have a limit on the number of shares that they can issue, which is written into their corporate charter. They usually sell a number that is fewer than the maximum authorized number so that they have a reserve for secondary offerings, employee incentives, etc. In a scrip dividend, the company is distributing authorized shares that were not previously issued. This reduces the number of shares that it has to sell in the future to raise capital, so it reduces the assets of the company. In a split, every share (including the authorized shares that haven't been distributed) are divided. This results in more total shares (which then trade at a price that's roughly proportional to the split), but it does not reduce the assets of the company.", "title": "" }, { "docid": "985975023a13cbcb386766fa4e23c83d", "text": "See this link...I was also looking an answer to the same questions. This site explains with an example http://www.independent-stock-investing.com/PE-Ratio.html", "title": "" }, { "docid": "5332ab4fcf9969669a3adebdc5e92194", "text": "\"Bloomberg suggests that two Fidelity funds hold preferred shares of Snapchat Inc.. Preferred shares hold more in common with bonds than with ordinary stock as they pay a fixed dividend, have lower liquidity, and don't have voting rights. Because of this lower liquidity they are not usually offered for sale on the market. Whether these funds are allowed to hold such illiquid assets is more a question for their strategy document than the law; it is completely legal for a company to hold a non-marketable interest in another, even if the company is privately held as Snapchat is. The strategy documents governing what the fund is permitted to hold, however, may restrict ownership either banning non-market holdings or restricting the percentage of assets held in illiquid instruments. Since IPO is very costly, funds like these who look to invest in new companies who have not been through IPO yet are a very good way of taking a diversified position in start-ups. Since they look to invest directly rather than through the market they are an attractive, low cost way for start-ups to generate funds to grow. The fund deals directly with the owners of the company to buy its shares. The markdown of the stock value reflects the accounting principle of marking to market (MTM) financial assets that do not have a trade price so as to reflect their fair value. This markdown implies that Fidelity believe that the total NPV of the company's net assets is lower than they had previously calculated. This probably reflects a lack of revenue streams coming into the business in the case of Snapchat. edit: by the way, since there is no market for start-up \"\"stocks\"\" pre-IPO my heart sinks a little every time I read the title of this question. I'm going to be sad all day now :(.\"", "title": "" }, { "docid": "77531483389b020e183eed6d71d265e9", "text": "MKC is non-voting stock, MKC/V is voting stock. Ofter times you'll see two or more stock symbols for a company. These usually reflect different classes of stocks. For example, voting vs. non-voting (as in this case) or preferred vs non-preferred stock.", "title": "" }, { "docid": "76320099a37d8f9f9b4281d18080ef8b", "text": "Simple: Do a stock split. Each 1 Ordinary share now = 100 Ordinary shares (or 100,000 or whatever you choose). Then sell 20 (or 20,000) of them to your third party. (Stock splits are fairly routine occurrence. Apple for example has done several, most recently in 2014 when 1 share = 7 shares). Alternatively you could go the route of creating a new share class with different rights, preferences etc. But this is more complicated.", "title": "" }, { "docid": "4f68c6846abacc57b1e28ccd2437f1ec", "text": "\"A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a \"\"customer\"\" and not an \"\"owner\"\" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had.\"", "title": "" }, { "docid": "b684811210679ca9ab82c9ab2b31de94", "text": "I work for a Big4 and there are no shared audit and consulting clients. We go through pretty extreme independence controls to make sure we don't even have personal relationships with clients. I know people who had to refinance their house because the mortgage company became an audit or consulting client. It's a common misconception that big4s audit and provide consulting services to the same firm, but this is not true.", "title": "" }, { "docid": "509f6ff2ce216cbcf9f81b0460679e57", "text": "So you want to buy a car but have no money saved up.... That's going to be hard!! I'd suggest you get a part-time job, save up and buy a used car. Even with the minimum wage pay in the U.S., if you are in the U.S., you could save up and buy a car in less than a month. This route would be the quickest way for you to get a car but it would also teach you the responsibility of having one since it appears you have never owned a car before. Now the car will most definitely not be fancy or look like the cars that your peer's parents bought but at least it will get you from point A to point B. I'd look on Craigslist or your local neighborhood for cars that have not moved in a while or have for sale signs. Bring a mechanically inclined friend with you and contact the owner and explain them your situation. There are nice people out there that would give you deep discounts based on the fact that you are a student trying to get by. Now you have to get registration and insurance. There are many insurance companies that give discounts to students as well who have good GPAs and driving records. If you happen to get a car for a good deal, take good car of it. Once you graduate and further your career, you can resell it for a profit. I also would not suggest you get any loans for a car given your situation.", "title": "" } ]	fiqa
30434c646161c6c47bef396be418dc25	How to account for a shared mortgage in QuickBooks Online?	[ { "docid": "a74008f312d158040e8cebbef7e78c8e", "text": "How you should record the mortgage payments depends on if you are trying to achieve correct accounting, according to the standards, or if you are just tracking everything for you and your friends. If you're just keeping track for personal reasons, I'd suggest that you set up your check (or journal entry, your preference) how you'd like it to be recorded. Then, memorize that transaction. This allows you to use it as many times as you need to, without having to set it up each time. (Also note: there is no way to record a transaction that decreases cash and increases equity.) If you're trying to keep track of everything according to accounting standards, which it should be if you've set up an official business, then you have a lot more tracking to do with each payment. Mortgage payments technically do not affect the equity accounts of the owners. Each mortgage payment should decrease the bank balance, increase interest expense and decrease the mortgage balance, not to mention tracking any escrow account you may have. The equity accounts would be affected if the owners are contributing funds to the bank account, but equity would increase at the time the funds are deposited, not when the mortgage payments are made. Hope this helps!", "title": "" }, { "docid": "c776ae1e50f4a97d9e34f3bf6c8e8395", "text": "You could classify the mortgage as a different assets class and then create automated additions and deductions to the account as deems fit. other than that quickbooks online is a bit fishy so it seems.", "title": "" }, { "docid": "a129b49e6fa96db75858009a1b8c7591", "text": "What is the corporate structure? Your partnership agreement or LLC operating agreement should dictate how you approach this.", "title": "" } ]	[ { "docid": "a9f3c77acba7dc65b21c04e277737cba", "text": "\"You are right on track with your idea of setting up a separate account for invoiced income. Create a new account with the type other asset and call it \"\"Receivables\"\" (or something similar). Every time you invoice a client, enter a credit to this account with the amount of the invoice. Once the client pays and you deposit a check, enter a transfer from the \"\"Receivables\"\" account to the bank account. EDIT I overlooked that you wish to account for not-yet-invoiced income. I think that's a bad idea. It will become confusing and will give you the false sense that your financial condition is better than it really is. There are plenty of stories about businesses that have stellar sales, but fail because of lack of cash flow (the business' bills become due before it gets paid by its own customers).\"", "title": "" }, { "docid": "6ec9ed07eed727fa6ea5c2ba8cd7ad1f", "text": "My wife and I set up a shared bank account. We knew the monthly costs of the mortgage and estimated the cost of utilities. Each month, we transferred enough to cover these, plus about 20% so we could make an extra mortgage payment each year and build up an emergency fund, and did so using automatic transactions. Other shared expenses such as groceries, we handled on an ad-hoc basis, settling up every month or three. We initially just split everything 50-50 because we both earned roughly the same income. When that changed, we ended up going with a 60-40 split. We maintained our separate bank accounts, though this may have changed in the future. A system like this may work for you, or may at least provide a starting point for a discussion. And I do strongly advise having a frank and open discussion on these points. Dealing with money can be tricky in the bounds of a marriage.", "title": "" }, { "docid": "41f0b1acb57b7544bd49bad2965c8fb9", "text": "\"Should is a very \"\"strong\"\" word. You do what makes most sense to you. Should I be making a single account for Person and crediting / debiting that account? You can do that. Should I be creating a loan for Person? And if so, would I make a new loan each month or would I keep all of the loans in one account? You can create a loan account (your asset), you don't need to create a new account every time - just change the balance of the existing one. That's essentially the implementation of the first way (\"\"making a single account for a Person\"\"). How do I show the money moving from my checking account to Company and then to Person's loan? You make the payment to Company from your Checking, and you adjust the loan amount to Person from Equity for the same amount. When the Person pays - you clear the loan balance and adjust the Checking balance accordingly. This keeps your balance intact for the whole time (i.e.: your total balance sheet doesn't change, money moves from line to line internally but the totals remain the same). This is the proper trail you're looking for. How do I (or should I even) show the money being reimbursed from the expense? You shouldn't. Company is your expense. Payment by the Person is your income. They net out to zero (unless you charge interest). Do I debit the expense at any point? Of course. Company is your expense account. Should I not concern myself with the source of a loan / repayment and instead just increase the size of the loan? Yes. See above.\"", "title": "" }, { "docid": "69f20bd44d5ef7300d1080dd2bf9ccce", "text": "\"There are different approaches, but here is what we do and what I recommend. Now that you are officially a married couple, open a joint bank account, and eliminate your individual accounts. There are several reasons for this. Having a joint account promotes unity and teamwork. When you only have a joint account, you do not have \"\"your income\"\" and \"\"her income,\"\" or \"\"your expenses\"\" and \"\"her expenses.\"\" You work together in everything. You discuss your goals and set your household budget together. If one of you makes more money than the other, that person is no longer \"\"worth more,\"\" because your incomes are pooled together. If one person with a higher income has more in their account than the other person does, it can lead to envy, which you do not want in your marriage. Having a joint account is more efficient and makes more sense. With separate accounts, who pays the rent/mortgage? Who pays the utilities, or buys the food? If you have separate accounts, it takes a lot of work to worry about what is \"\"fair\"\" when deciding how to divide up the expenses. With a single household budget and a joint account, you decide together what the household expenses are, and they get paid from one account. If one of you has debt, you both have debt. You work together to get it paid off and strengthen your financial situation in the process. Having a joint account forces you to discuss your finances together. Working toward common financial goals together is crucial in a strong marriage, but if you maintain your separate accounts, you might be tempted to put off these discussions until you are forced to by life circumstances. It is better to work together from the start, and joining your finances facilitates that. You are intending your marriage to last. Live your financial life like you believe that you are a team for life. If you live in a community property state, separate accounts are a fiction anyway; everything is treated as if it was pooled together in the event of a divorce. I understand that if you are used to having your own money, it can be difficult to give up that sole control over your income, but in my opinion, it is worth it. You will certainly hear of examples from couples who maintain separate accounts and make it work. In my humble opinion, combining your finances completely is easier to do right.\"", "title": "" }, { "docid": "9fb5f84f227bcf9ce8d5c1fe5e39467d", "text": "\"I added \"\"Shared money in account\"\" (SMIA) as sub-account of my bank checking (CA) account and moved current difference to that account so total of CA was not changed but now private and shared money is separated. My cases would be handled the following The only downside I see is that now my balance in CA transaction log do not match exactly with bank so reconciliation will be slightly harder.\"", "title": "" }, { "docid": "4e2f45c23e571baea4581cfc708711d9", "text": "\"For any accounts where you have a wish to keep track of dividends, gains and losses, etc., you will have to set up a an account to hold the separately listed securities. It looks like you already know how to do this. Here the trading accounts will help you, especially if you have Finance:Quote set up (to pull security prices from the internet). For the actively-managed accounts, you can just create each managed account and NOT fill it with the separate securities. You can record the changes in that account in summary each month/year as you prefer. So, you might set up your chart of accounts to include these assets: And this income: The actively-managed accounts will each get set up as Type \"\"Stock.\"\" You will create one fake security for each account, which will get your unrealized gains/losses on active accounts showing up in your trading accounts. The fake securities will NOT be pulling prices from the internet. Go to Tools -> Securities Editor -> Add and type in a name such as \"\"Merrill Lynch Brokerage,\"\" a symbol such as \"\"ML1,\"\" and in the \"\"Type\"\" field input something like \"\"Actively Managed.\"\" In your self-managed accounts, you will record dividends and sales as they occur, and your securities will be set to get quotes online. You can follow the general GnuCash guides for this. In your too-many-transactions actively traded accounts, maybe once a month you will gather up your statements and enter the activity in summary to tie the changes in cost basis. I would suggest making each fake \"\"share\"\" equal $1, so if you have a $505 dividend, you buy 505 \"\"shares\"\" with it. So, you might have these transactions for your brokerage account with Merrill Lynch (for example): When you have finished making your period-end summary entries for all the actively-managed accounts, double-check that the share balances of your actively-managed accounts match the cost basis amounts on your statements. Remember that each fake \"\"share\"\" is worth $1 when you enter it. Once the cost basis is tied, you can go into the price editor (Tools -> Price Editor) and enter a new \"\"price\"\" as of the period-end date for each actively-managed account. The price will be \"\"Value of Active Acct at Period-End/Cost of Active Acct at Period-End.\"\" So, if your account was worth $1908 but had a cost basis of $505 on Jan. 31, you would type \"\"1908/505\"\" in the price field and Jan. 31, 2017 in the date field. When you run your reports, you will want to choose the price source as \"\"Nearest in Time\"\" so that GnuCash grabs the correct quotes. This should make your actively-managed accounts have the correct activity in summary in your GnuCash income accounts and let them work well with the Trading Accounts feature.\"", "title": "" }, { "docid": "dbf8d5a2db71f056ab85223ef6589783", "text": "I did that. What is allowed changes over time, though — leading up to the crisis, lenders would approve at the flimsiest evidence. In particular, my SO had only been in the country a couple years and was at a sweet spot where lack of history was no longer counting against her. Running the numbers, the mortgage was a fraction of a percent cheaper in her name than in mine. Even though she used a “stated income” (self reported, not backed by job history) of the household, not just herself. The title was in her name, and would have cost money to have mine added later so we didn’t. This was in Texas, which is a “community property” state so after marriage for sure everything is “ours”.", "title": "" }, { "docid": "8f39fca14ea7afb4292fba4707c494ce", "text": "Your account entries are generally correct, but do note that the last transaction is a mixture of the balance sheet and income statement. If Quickbooks doesn't do this automatically then the expense must be manually removed from the balance sheet. The expense should be recognized on the balance sheet and income statement when it accrues, and it accrues when the prepaid rent is extinguished when consumed by the landlord, so that is when the second entry in your question should be booked. The cash flow statement will reflect all of these cash transactions immediately.", "title": "" }, { "docid": "8695e8030ee3269d15f22929ed6fbf9f", "text": "I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees", "title": "" }, { "docid": "4a914636434e452ac8d108f7450b5140", "text": "I can't quite follow your question, so I'm proceeding under the following assumptions: - You paid £31,000 - Your partner paid £4,242 - You have at least one mortgage, which you both pay equally. If the relationship terminates, sell the property. You are reimbursed £31,000 and your partner is reimbursed £4,242. Any remaining proceeds from the sale are split 50-50. If the result is a net loss (i.e. you are underwater on your mortgage), you split the debt 50-50. If you are not both paying the same toward the mortgage, I'd split the profit or loss according to how much you each pay toward the mortgage. Of course, this is not the only possible way you can split things up. You can use pretty much any way you both think is fair. For example, maybe you should get more benefits from a profit because you contributed more up-front. The key thing, though, is that you must both agree in writing, in advance. This is reasonable; this is what I did, for example. Note that if the relationship ends, one or the other of you may wish to keep the property. I'd suggest including a clause in your written agreement simply disallowing this; specify criteria to force a sale. But I know lots of people are happy to allow this. They treat that situation as a forced sale from both people to one person. For example, if your partner chooses to stay in the house, he or she must buy the property from you at prevailing market rates.", "title": "" }, { "docid": "1b8aec839c09dcb7999a5de7634ce90b", "text": "\"We use mint for just that. We have a \"\"shared\"\" account. We each have the mobile app and share the same pin for the application (not our phones -- you can set a pin in the settings on the application). Thus we each share a login to the site, where we have setup all of our accounts. In the \"\"Your Profile\"\" link at the top of the page, you may select the Email & Alerts option. From here you may add a second e-mail account. This way if you go over a budget or have a bill upcoming each of you will get a notification. We have setup budgeting through the web site, and either of us can modify the budget via logging in.\"", "title": "" }, { "docid": "20e98e4667c085a816c0741afb09a41f", "text": "I use QuickBooks online... It's really the best out there for the price, just make sure to never upgrade to an edition you aren't 100% sure you need or you're forever stuck essentially. That's the mess I'm in right now. Paying $20 more than necessary a month, but it's still cheaper than switching to, say, xero. The starter edition of QuickBooks online is a lot more powerful than the equivalent plans anywhere else for the price.", "title": "" }, { "docid": "08c639825810cbc9f961658068dc39d2", "text": "Is it normal in QuickBooks to have credit card expenses being shows as liabilities? Is there a way I can correct this? If they are expenses they shouldn't be negative liabilities unless you overpaid your credit card by that amount. It sounds like perhaps when you linked the account the credit/debit mapping may have been mixed up. I've not used QB Online, but it looks like you might have to un-link the account, move all the existing transactions to 'excluded' and then link the account again and flip-flop the debit/credit mapping from what it is now. Hopefully there's an easier way. This QB community thread seems to address the same issue.", "title": "" }, { "docid": "bdc980ff5772058bbf3a0c61f9a81214", "text": "That's right. I wouldn't say that she directly caused Yahoo's downfall since that was put into motion long before she started. However, she did nothing that succeeded in changing Yahoo's trajectory after she took over. Yahoo could have done essentially nothing and it would have ended roughly the same. People are just upset that she got compensated quite well without achieving anything of significance.", "title": "" }, { "docid": "c1e070296b81b6c3baa14905b3d3a636", "text": "Generally if there are enough details, they would match this up with your loan account and pass appropriate credit. The worst that can happen is; In either case, watch your Loan account statement and it should show you the credit. If this does not then ask the company and they should be able to trace it and rectify. Under no scenario you would lose money.", "title": "" } ]	fiqa
61cca37572bca234ade559c0e2a63e9b	Money transfer to the U.K	[ { "docid": "575209e45e0e9bd0338345afba9058eb", "text": "\"I'd recommend an online FX broker like XE Trade at xe.com. There are no fees charged by XE other than the spread on the FX conversion itself (which you'll pay anywhere). They have payment clearing facilities in several countries (including UK BACS) so provided you're dealing with a major currency it should be possible to transfer money \"\"free\"\" (of wire charges at least). The FX spread will be much better than you would get from a bank (since FX is their primary business). The additional risk you take on is settlement risk. XE will not pay the sterling amount to your UK bank account until they have received the Euro payment into their account. If XE went bankrupt before crediting your UK account, but after you've paid them your Euros - you could lose your money. XE is backed by Custom House, which is a large and established Canadian firm - so this risk is very small indeed. There are other choices out there too, UKForex is another that comes to mind - although XE's rates have been the best of those I've tried.\"", "title": "" }, { "docid": "bb9c7a2b4d3a134dcd6af5b51cad29cc", "text": "I've been using xetrade for quite awhile, also used nzforex (associated with ozforex / canadian forex, probably ukforex as well) -- xetrade has slightly better rates than I've gotten at nzforex, so I've been using them primarily. That said, I am in the process of opening an account at CurrencyFair, because it appears that I'll be able to exchange money at better rates there. (XETrade charges me 1.5% off the rate you see at xe.com -- which is the FX conversion fee I believe -- there are no fees other than the spread charged). I think the reason CurrencyFair may be able to do better is because the exchange is based on the peer-to-peer trade, so you could theoretically get a deal better than xe.com. I'll update my answer here after I've been using CurrencyFair for awhile, and let you know. They theoretically guarantee no worse than 0.5% though (+ $4.00 / withdrawal) -- so I think it'll save me quite a bit of money.", "title": "" } ]	[ { "docid": "a2c39b55120ad4bbc45e75f660b117d0", "text": "Just a regular bank transfer. Call your US bank and ask for wire transfer instructions. I've transferred money like that from US to Europe and back a few times. Usually fees were in low two digits ($15-$30), but depending on your bank account a sending and receiving side may charge a fee.", "title": "" }, { "docid": "9ad90a43dbbddabdd2b952044b0237b6", "text": "Transfers of money to the UK for any purpose are not generally taxed, so you can just transfer it here and invest. Once the money is here, you'll be taxed on the business activity like anyone else - the company will have to pay corporation tax, and depending on your own residency you might have to pay income tax on any distributions from the company.", "title": "" }, { "docid": "dbb10172a87f97e2c6bcb5de0815d6b5", "text": "Use a remitting service such as Ria Money Transfer. Almost all these services allow you to transfer upto $2999 at a time. So, you would be able to transfer the entire amount of $4500 within 2 business days(There is a monthly limit too, but it will definitely be more than $4500). There are no fees to use these services, but they do scrape off a bit on the currency rate. As of today you are getting 624 GBP for $1000 whereas the market rate is $641.95. You still save roughly $17 and 4 transactions, which adds up to more than $100. Here is a link to Ria's website. Other services, include Xoom, Western Union, Money Dart and Money Gram.", "title": "" }, { "docid": "c0568dee1a562b5ddf66be45c0d8fcde", "text": "\"One option would be to physically ship the money from Israel to the US. I quickly ran the numbers for shipping different amounts of $100 bills (One pound equals 454 bills) using a popular shipping company. Here are the results: The \"\"sweet\"\" spot is $100,000. That would only cost you $76 to ship which is just 0.08% of the amount being transferred. Of course, the shipping company's website says international shipments of money are prohibited. Their website, however, let me categorize the shipment as \"\"money\"\". Strange.\"", "title": "" }, { "docid": "bd10a69b01f073d534e36116efede61d", "text": "\"I haven't used transfer wise, so can't speak to their price. Regardless of what service you use, what you should look for is whether the conversion price is greater than how much you think the currency's price will move. Example: if your bank charges ~8% on any currency exchange, you should ask yourself whether you think the pound (or whatever currency) will drop by >8% within whatever time frame you've set for yourself. If not, you're better off keeping your money in that currency. I checked out their site and it does look like transferwise is pretty inexpensive, around .9% in transaction costs. So again, ask yourself whether you think the pound will drop by 1% in your time frame. Doesn't seem like a lot, but also consider that currencies typically fluctuate by just a few tenths of a percentage per day. I know you're probably looking for an answer like \"\"pound will drop, sell it all,\"\" but I don't know enough about currencies to be giving advice there. I would definitely pay attention to Brexit negotiations though, as that will be one of the biggest influences on both currencies for quite some time.\"", "title": "" }, { "docid": "8e321dba6754b86de234292e9a90b25f", "text": "I think it really depends on how much you take out of your Nationwide account each month. At a certain point, it will become cheaper just to transfer your monthly rent + living allowance via an international bank transfer or using one of the currency transfer services like xe.com or Hifx. You will have to pay fees either way and/or you'll end up with a forex spread. If you have got enough money in your UK account to cover several months' worth of expenses in Germany, I would be tempted to make one big transfer every few months instead of a a monthly one; anything more than once a month is probably going to be too costly either way. It might also be worth comparing the transfer fees charged by the various banks, when I lived in the UK and had to regularly send money to Germany I found there was a massive difference between different banks for essentially the same service.", "title": "" }, { "docid": "da157099bd7822e78f0992c122a1b165", "text": "\"Usually services like Western Union or MoneyGram only give the recipient the money, not the information about who and when sent it. But you can verify with them directly. However, for legal/tax reasons, your friend might have to declare that it was a gift, and where it came from. So depending on the country of the destination you might not be able to completely \"\"hide\"\" from the recipient, even if the transfer service technically allows that. In any case, when you transfer the money out from the US you'll have to provide your personal identification and information. Since the USA PATRIOT Act, it is impossible to transact \"\"anonymously\"\" (not sure if it ever was possible in the US, actually).\"", "title": "" }, { "docid": "7851f4eb8431440619c6ffb3774188f0", "text": "\"As soon as I see the word \"\"friends\"\" along with money transfer I think scam. But ignoring that red flag.... You will have American companies reporting to the IRS that you are a Canadian Vendor they have hired. Then you are transferring money to people in Bangladesh. Assuming also that you fill out all the regulatory paperwork to establish this Money transfer business you may still face annual reporting requirements to 3 national taxing authorities. In the United states there are situations where the US Government hires a large company to complete a project. As part of that contract they require the large company to hire small businesses to complete some of the tasks. In a situation where the large company is imply serving as a conduit for the money between the government and the sub-contractor; and the large company has no other responsibilities; the usual fee for providing that function is 8% of the funds. This pays for their expenses for their accounting functions plus profit and the taxes that will trigger. Yet you said \"\"At the end of the day, I will not earn much, but the transactions will just burden my tax returns.\"\" The 8 percent fee doesn't include doesn't include having to file paperwork with 3 nations. Adding this to all the other risks associated with being an international bank, plus the legal costs of making sure you are following all the regulations...No thanks.\"", "title": "" }, { "docid": "19da4235bb5b11c1d9518c851550e211", "text": "Disclaimer: it's hard to be definitive as there may be some law or tax rule I'm not aware of. From a UK perspective, this should be perfectly legal. If it's just a one-off or occasional thing for personal reasons, rather than being done in the course of a business, there probably aren't any tax implications. In theory if there's an identifiable profit from the transaction, e.g. because you originally obtained the INR at a lower exchange rate, then you might be liable to capital gains tax. However this is only payable above approximately £10K capital gains (see http://www.hmrc.gov.uk/rates/cgt.htm) so unless this is a very large transaction or you have other gains in the tax year, you don't need to worry about that. I would only recommend doing this if you trust each other. If one side transfers the money and the other doesn't, the international nature will make it quite hard in practice to enforce the agreement legally, even though I think that in theory it should be possible. If the sums involved are large, you may find that the transaction is automatically reported to the authorities by your bank under money laundering regulations, or they may want documentation of the source of the funds/reason for the transaction. This doesn't automatically mean you'll have a problem, but the transaction may receive some scrutiny. I think that reporting typically kicks in when several thousand pounds are involved.", "title": "" }, { "docid": "6a078d5ad94146882425b26d8951d861", "text": "I have recently started using Transferwise to transfer money between the U.K. and The Netherlands. Transferwise has lower fees than other companies. They use a pseudo-peer-to-peer money transfer system. When person A transfers £ to €, and person B transfers € to £, they effectively cancel these two agains teach other, which significantly lowers exchange fees for both A and B. I am not affiliated with Transferwise other than as a customer.", "title": "" }, { "docid": "0917358d7171dfb49f861e4ea004f0e4", "text": "GBP is widely traded currency and it is definitely possible to send GBP internationally with out any conversion. Of late banks are trying to maximize the FX and if they see a Euro country the sending bank assumes the beneficiary account is in Euro and converts to get FX spread than letting the beneficiary bank decide. Keep complaining to your bank and then the sending bank will put your account in exception and not convert next payments", "title": "" }, { "docid": "dc53d9760e6493e8be78fe83c5079c90", "text": "The company says it's out of their control - it isn't. All they have to do is to INSTRUCT HSBC to send a certain amount of GBP, and then HSBC MUST send GBP. Obviously the bank doesn't like that because they make money through the conversion. That's not your problem. When told to send GBP, they must send GBP. Depending on what your relationship with that company is, you lost money because they didn't send the GBP. At the very least, they sent you four percent less in Euros than they should have sent you. So send them a bill for the difference. It's unfortunate that your bank charged for the conversion Euro to GBP, but fact is that less than the agreed amount arrived at your bank, and that's the responsibility of the sender.", "title": "" }, { "docid": "88c461ef9c397b80086de1ac45b49a68", "text": "I'm not sure I understand what you're trying to say, but in general its pretty simple: She goes to the UK bank and requests a wire transfer, providing your details as a recipient. You then go to your bank, fill the necessary forms for the money-laundaring regulations, you probably also need to pay the taxes on the money to the IRS, and then you have it. If you have 1 million dollars (or is it pounds?), I'm sure you can afford spending several hundreds for a tax attorney to make sure your liabilities are reduced to minimum.", "title": "" }, { "docid": "9fbd618f21167b6f2ca0204c0cb3d4ed", "text": "I ended up just trying. I gave A the IBAN of B's account, which I calculated online based on the bank code and account number (because B claimed IBAN won't work, so didn't give it to me), and B's name. A was able to transfer the money apparently without extra difficulties, and it appeared on B's account on the same day. Contrary to some other posts here, IBAN has nothing to do with the Euro zone, nor is it a European system. It started in Europe, but it has been adopted as an ISO standard (link). As usual of course some countries don't see the urgency to follow an international standard :) XE.com has a list of all IBAN countries; quite a few are non-European. Here is even the list formatted specially for the European-or-not discussion: link.", "title": "" }, { "docid": "f750e98ac42cb2c1e3eca83071e59030", "text": "\"Past results are not a predictor of future results. There is no explicit upper bound on a market, and even if individual companies' values were remaining unchanged one would expect the market to drift upward in the long term. Plus, there's been some shift from managing companies for dividends to managing stocks for growth, which will tend to increase the upward push. Trying to time the market -- to guess when it's going to move in any particular direction -- is usually closer to gambling than investing. The simplest answer remains a combination of buy-and-hold and dollar-cost averaging. Buy at a constant number of dollars per month (or whatever frequency you prefer), and you will automatically buy more when the stock/fund is lower, less when it is higher. That takes advantage of downturns as buying opportunities without missing out on possible gains at the other end. Personally, I add a bit of contrarian buying to that -- I increased my buying another notch or two while the market was depressed, since I had money I wouldn't need any time soon (buy and hold) and I was reasonably confident that enough of the market would come back strongly enough that I wasn't at significant risk of losing the investment. That's one of the things which causes me to be categorized as an \"\"aggressive investor\"\" even though I'm operating with a very vanilla mix of mutual funds and not attempting to micromanage my money. My goal is to have the money work for me, not vice versa.\"", "title": "" } ]	fiqa
c76212f57e6b76df02f218f534883a0d	Transfering money from NRE to saving account is taxable or not	[ { "docid": "418fb55a2e8a416913d748d69d161b35", "text": "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.", "title": "" }, { "docid": "adc2a34cdb337e738d7fdbaedf196d3d", "text": "There are quite a few things here; Edit: If you are away for 2.5 Years, you are NRE. Your situation is slightly tricky in the sense that you are getting a salary in India for doing work outside. Please consult a professional CA who can advise you better. If you were not getting an Indian salary, then whatever you earn outside India is non-taxable and you can transfer it into your NRE account. As per regulations an NRI cannot hold a savings account. Point 3 is more applicable if you are on a short visit.", "title": "" } ]	[ { "docid": "692b3a6e94da9825253cac3d88d26304", "text": "\"Taxability depends on residential status when the $ were earned. If it was earned during his status as \"\"Non-Resident\"\" in India, then its tax free. If the money was earned when his tax status was resident in India, then its taxable as per the tax bracket. Edit: Taxability does not depend on whether to transfer the money into India, or keep it out of India or bring it as Cash or Electronically. It only depends on NRI status. Of course transferring the funds into NRE makes the paperwork simpler in case there is a scrutiny.\"", "title": "" }, { "docid": "8af32a8a83a77bd924097fd3bf67c2b8", "text": "Is it possible to move money from NRE to NRO account Yes you can move money from NRE to NRO without any issue. You can't do the other way round. i.e. Move money from NRO to NRE. I would like to move USD earning to NRE Yes you can further move money in NRE to NRO account Yes you can I am planning to give NRO account to HDFC Home loan for EMI processing Yes you can. Depending on your long term plan it may not be a good idea. For example if you were to sell the house you cannot move the funds into NRE and outside of India without some amount of paperwork. However if you pay the EMI via NRE account, on the sale of house, you can transfer the funds into NRE account to the extent of the loan paid and the Original downpayment [if made from NRE account]. also I can deposit money from other savings account to NRO; As an NRI, you can't hold ordinary savings account in India. This is violation of norms. Please have any/all savings account in India converted to NRO at the earliest.", "title": "" }, { "docid": "d2607da71124ff7e0eaebde05e8124ce", "text": "Legally if you are NRI for tax purposes, then you are required to convert all your Savings Account into NRO accounts. For tax purposes it be advisable to open an NRE account. Depending on the Banks policy you can convert the account into NRO by submitted a scanned copy of passport along with the Visa page. You can transfer money from US to any Account in India [Savings/Current/NRO/NRE] using xoom or any other remittance services remit2india, money2india etc.", "title": "" }, { "docid": "e1a894f5029135a5475a956a5119d3ba", "text": "You have not mentioned the dates when you left India. Taxability is not depended on whether you transfer the funds to India or NOT. It is dependent on whether you are NRI for tax purposes for the given financial year. Refer to this question for more details Will it be taxable if I transfer money from UK account to India account? Edit: The lottery earnings are also treated in the same way. If you are NRI, you don't pay tax. Else you pay tax", "title": "" }, { "docid": "d70b3332a0dc83a54d81a4bfad3d98b8", "text": "As far as I know there is no legal or tax implication to you gifting money to your partner for her to save in a H2B ISA, or for any other purpose. You are also wrong when you say that you cannot withdraw money from the accounts - you can. Of course you probably won't want to because withdrawing money for any other purpose means losing the government bonus, but if you really needed to you could. An H2B ISA counts as a cash ISA so you are free to use the balance of your allowance in a S&S ISA, and presumably an Innovative Finance ISA (official name for the P2P ISA) when they become available.", "title": "" }, { "docid": "5b1cf704ce16e9fd7760049709f62754", "text": "I am assuming you are an NRI from tax perspective. Any income NRI earns is non-taxable in India. It is irrelevant whether the funds were transferred to India or not and whether they were transferred to NRO or NRE account is not relevant.", "title": "" }, { "docid": "e5ad8cbe0e4f19d476aebcb94e6e6d54", "text": "If the funds are in NRE account, then there is no issue. You just instruct your bank in India to transfer. If your tax status in India is Non-Resident Indian, you should not be holding a normal Savings bank account. Under the liberalized remittance scheme you can transfer upto 2,50,000 USD per year. You would need to instruct your bank in India to initiate a international wire transfer. The FAQs are here", "title": "" }, { "docid": "113bccb501de23092ce3cb991adfb603", "text": "In addition to above points : Interest earned on NRE accounts are tax free. But you can deposit any foreign currency except INR. Nothing is taxable. While the NRO account gives you a flexibility to deposit INR too, the interest will be taxable and tax will be deducted at source at the rate of 30.9%. It is necessary to convert the existing Indian local accounts to NRO as per the Reserve Bank of India circular: RBI/2007-2008/242 Master Circular No. 03 /2007- 08 . So basically you need:", "title": "" }, { "docid": "56ee167d90b2aa37b2e1dfd48632e95e", "text": "Is there any restriction to transfer fund from NRO to NRO There are no restrictions on transferring funds from NRO to another NRO account. Is there any tax deduction for that? This would depend on the purpose of the transfer. There is no tax on account of transfer of money. There may be tax to the other NRO account holder.", "title": "" }, { "docid": "6dc5b30099716ef79b76c85c3f1389fa", "text": "There is no difference in taxation in India if you transfer every month or bulk. If you use specialized remittance services from leading Indian Banks, there would be little difference in fees. Assuming you are keeping the funds in NRE account in India and hold it in GBP, you get a slight better rate of interest that what you would get in UK. The interest would not be taxable in India, however it would be in UK. If you convert the funds at hold it in NRE, Rupee account, you would get still better rate of interest. However you are taking the Fx risk when you try and convert this back to GBP incase you decide to stay on. There are no right or wrong answers Edit: There is no limit on the amount of funds earned as NRE that can be got into India tax free. There is a time limit of 7 Years to get the funds back to India tax free. From a tax point of view if you transfer into NRE account its easy. If you transfer into Normal Savings account you would need some paperwork.", "title": "" }, { "docid": "b5c208aa15db85fd959b6995ab8b9298", "text": "In short getting funds converted outside of the Banking channel is illegal in India as Foreign Exchange is still regulated. If you show only a credit from your friend's NRE account to your NRO account [note it can't be your NRE account], it would be treated as GIFT and taxed accordingly, else you would have to show it as loan and pay back. You may show the payback in USD. But then there is a limit of Fx every individual can get converted/repatriate out of India and there is a purpose of remittance, all these complicate this further.", "title": "" }, { "docid": "69215acbca7cb211aa3819f52979f193", "text": "Yes. You may be subjected to the US gift tax (if you transfer to anyone other than your legally married spouse or yourself). The receivers will have to deal with the Indian tax laws, which I'm not familiar with.", "title": "" }, { "docid": "3d2fd86c5ba6bd4bd78cf0806e8a84b8", "text": "Yes. The bank is right. The funds need to be deposited in NRO account. Under the liberalised remittance scheme, you can transfer upto 1 million USD per year. There are prescribed forms that need to be signed by a CA (essentially stating taxes are paid). You can then move this out of India.", "title": "" }, { "docid": "3a7a6ec1313cb73c04f7e0e1ba797cb9", "text": "House rent allowance:7500 House Rent can be tax free to the extent [less of] Medical allowance : 800 Can be tax free, if you provide medical bills. Conveyance Allowance : 1250 Is tax free. Apart from this, if you invest in any of the tax saving instruments, i.e. Specified Fixed Deposits, NSC, PPF, EPF, Tution Fees, ELSS, Home Loan Principal etc, you can get upto Rs 150,000 deductions. Additional Rs 50,000 if you invest into NPS. If you have a home loan, upto Rs 200,000 in interest can be deducted. So essentially if you invest rightly you need not pay any tax on the current salary, apart from the Rs 200 professional tax deducted.", "title": "" }, { "docid": "a2e60f8415a32d01d2afd7d0347793a2", "text": "foreign income, transfer it to my savings account in India Yes you can transfer to India. The right account would be NRO/NRE. As an NRI one should not hold a regular savings account. forum that foreign income is not taxable unless used to buy stocks, fds etc If you are an NRI, income earned outside of India is not taxable in India. However any income you generate in India is taxable, i.e. interest income, gains from shares etc. Do we need to pay taxes for the money transferred No tax if you are an NRI even if you transfer funds to India. Taxation does not depend on whether or not you transfer the money, it depends on your status used to pay home EMIs or principle amount? You can use the money for what ever you like.", "title": "" } ]	fiqa
64e5dd4cf8e8261df5dc92d49f29ac48	Are there any credit cards with a statement period longer than 1 month?	[ { "docid": "e4fc4ac4f7ca3ecb88f84aba4ae15a19", "text": "Most credit cards will allow you to pick the closing date. In fact almost every bill with the exception of utilities that collected usage by reading a meter at the house will either let you pick the closing date each month, or at least have several to pick from. They won't let you pick the length, but they will let you pick the day of the month. When I worked a job that paid once a month. I wanted all my bills due early in the month: get paid, pay bill, know how much I have left. When I went back to every other week spreading them out made more sense. No credit card had a problem with this. The transitional cycle was not the correct length, but after that it was fine. As Dheer pointed out extending the cycle to 90 days would involve them extending credit for much longer than they would be comfortable. Also the goal of keeping utilization under 30% would be very difficult, you would have to keep your spending per month to less than 10% of your credit limit. Some people have trouble not falling behind on credit card bills, having to set aside the money to pay the bill every 90 day may be way to tough for many people.", "title": "" }, { "docid": "3758baa568ae3cedb49f4c33837012cb", "text": "If the billing cycle is 2 to 3 months, it would mean Banks have to give credit for a longer period and it makes the entire business less profitable as well as more risky compared to the Monthly billing cycle. For example the current monthly billing cycle with a date say of 14th, means if you swipe your card on 1st day, one would effectively get a credit for 30+14, around 44 days. If you swipe on last day, one would get a credit for 14 days. On an average 22 days of credit. If we make this 3 months, the credit period would increase on an average (90+14)/2, 52 days. From a risk point of view, on monthly cycle if there is non-payment its flagged much earlier compared to a 3 months cycle. On offering different dates, shop around. In the older times the cycles were different, however with individuals having several cards, and trying to optimize every purchase to maximize credit period. Quite a few banks have streamlined it to monthly cycle. Shop around and some banks should be able to offer you different dates.", "title": "" } ]	[ { "docid": "9e88c6e1c6c8ea228540df3db741c995", "text": "\"You ask about the difference between credit and debit, but that may be because you're missing something important. Regardless of credit/debit, there is value in carrying two different cards associated with two different accounts. The reason is simply that because of loss, fraud, or your own mismanagement, or even the bank's technical error, any card can become unusable for some period of time. Exactly how long depends what happened, but just sending you a new card can easily take more than one business day, which might well be longer than you'd like to go without access to any funds. In that situation you would be glad of a credit card, and you would equally be glad of a second debit card on a separate account. So if your question is \"\"I have one bank account with one debit card, and the only options I'm willing to contemplate are (a) do nothing or (b) take a credit card as well\"\", then the answer is yes, take a credit card as well, regardless of the pros or cons of credit vs debit. Even if you only use the credit card in the event that you drop your debit card down a drain. So what you can now consider is the pros and cons of a credit card vs managing an additional bank account -- unless you seriously hate one or more of the cons of credit cards, the credit card is likely to win. My bank has given me a debit card on a cash savings account, which is a little scary, but would cover most emergencies if I didn't have a credit card too. Of course the interest rate is rubbish and I sometimes empty my savings account into a better investment, so I don't use it as backup, but I could. Your final question \"\"can a merchant know if I give him number of debit or credit card\"\" is already asked: Can merchants tell the difference between a credit card and embossed debit card? Yes they can, and yes there are a few things you can't (or might prefer not to) do with debit. The same could even be said of Visa vs. Mastercard, leading to the conclusion that if you have a Visa debit you should look for a Mastercard credit. But that seems to be less of an issue as time goes on and almost everywhere in Europe apparently takes both or neither. If you travel a lot outside the EU then you might want to be loaded down with every card under the sun, and three different kinds of cash, but you'd already know that without asking ;-)\"", "title": "" }, { "docid": "43e4ed84fdb1f925cabfef36d8b03482", "text": "\"Whether or not the specific card in question is truly 0% interest rate for the first 12 months, such cards do exist. However, the bank does make money out of it on the average: Still, 12 months of not having to think about paying the bill. Nice. This is exactly what they want you to do. Then in 12 months, when you start thinking about it, you may find out that you don't have the cash immediately available and end up paying the (usually very large) interest. It is possible to game this system to keep the \"\"free\"\" money in investments for the 12 months, as long as you are very careful to always follow the terms and dates. Because even one mishap can take away the small profits you could get for a 12 month investment of a few thousand dollars, it is rarely worth the effort.\"", "title": "" }, { "docid": "308f51e6fffb971b0f16420cd23e042f", "text": "For this scheme to work, you would require an investment with no chance of a loss. Money market accounts and short-term t-bills are about your only options. The other thing is that you will need to be very careful to never miss the payment date. One month's late charges will probably wipe out a few months' profit. The only other caveat, which I'm sure you've considered, is that having your credit maxed out will hurt your credit score.", "title": "" }, { "docid": "2c682ef5283bb51dbcdf86854fba99e8", "text": "Yes, but note that some credit card companies let you create virtual cards--you can define how much money is on them and how long they last. If you're worried about a site you can use such a card to make the payment, then get rid of the virtual number so nobody can do dirty deeds with it. In practice, however, companies that do this are going to get stomped on hard by the credit card companies--other than outright scams it basically does not happen. (Hacking is another matter--just pick up the newspaper. It's not exactly unusual to read of hackers getting access to credit card information that they weren't supposed to have access to in the first place.) So long as you deal with a company that's been around for a while the risk is trivial.", "title": "" }, { "docid": "c09a72c146bb06d09cf994f9b4017d45", "text": "It is called trailing interest, and you can read about it [here](http://www.extracreditcards.com/trailing-interest/). edit: IIRC, the argument is that resulting total interest charges are lower for the customer calculating the interest this was as apposed to whatever the alternative is. The sneakiness is that you don't expect to owe another $1.50 on the next statement, neglect to remit the payment on it, and boom, late fee. I used to encourage my clients to overpay their account when trying to achieve a payoff.", "title": "" }, { "docid": "b251bd183b378842ff6da7ed601a96b7", "text": "\"In the US, if your monthly statement was issued by the credit card company on January 1 and it showed a balance of $1000, then a payment must be made towards that balance by January 25 or so, not February 1 as you say, to keep the card in good standing. The minimum payment required to keep the card in good standing is specified in your monthly statement, and failure to meet this requirement can trigger various consequences such as an increase in the interest rate charged by the credit card company. With regard to interest charges, whether your purchase of $2000 on January 3 is charged interest or not depends entirely on what happened the previous two months. If you had paid both your monthly statements dated November 1 and December 1 of the previous year in full by the their respective due dates of November 25 and December 25, and the $1000 balance on the January 1 statement is entirely due to purchases (no cash advances) made in December, then you will not be charged interest on your January purchase of $2000 as long as you pay it off in full by February 25 (the charge will appear on your February 1 statement). But, if you had not paid your December 1 statement in full by December 25, then that $1000 billed to you on January 1 will include purchases made during December finance charges on the unpaid balance from the previous month plus finance charges on the purchases made during December. The finance charges will continue to accumulate during January until such time as you pay off the bill in full (these charges will appear on your February 1 statement), hopefully by the due date of January 25. But even if you pay off that $1000 in full on January 25, your charge of $2000 on January 3 will start to accumulate finance charges as of the day it hits the account and these finance charges will appear on your February 1 statement. If you paid off that $1000 on January 10, say, then maybe there will be no further finance charges on the $2000 purchase on January 3 after January 10 but now we are getting into the real fine print of what your credit card agreement says. Ditto for the case when you pay off that $1000 on January 2 and made the $2000 charge on January 3. You most likely will not be charged interest on that $2000 charge but again it depends on the fine print. For example, it might say that you will be charged interest on the average of the daily balances for January, but will not be charged interest on purchases during the February cycle (unless you miss the February 25 payment and the whole cycle starts all over again). As a general rule, it takes two monthly cycles of payment in full by the due date before one gets into the state of no finance charges for new purchases and effectively an \"\"interest-free\"\" loan of $2000 from January 3 (date of purchase) till February 25 (due date of payment). Matters become more complicated when cash advances are taken from a credit card which are charged interest from the day they are taken but don't trigger finance charges on new purchases or the so-called \"\"zero percent balance transfer offers\"\" are accepted.\"", "title": "" }, { "docid": "00e5b6849aa3eb56d71d5a50da47a537", "text": "\"Well, I answered a very similar question \"\"Credit card payment date\"\" where I showed that for a normal cycle, the average charge isn't due for 40 days. The range is 35-55, so if you want to feel good about the float just charge everything the day after the cycle closes, and nothing else the rest of the month. Why is this so interesting? It's no trick, and no secret. By the way, this isn't likely to be of any use when you're buying gas, groceries, or normal purchases. But, I suppose if you have a large purchase, say a big TV, $3000, this will buy you extra time to pay. It would be remiss of me to not clearly state that anyone who needs to take advantage of this \"\"trick\"\" is the same person who probably shouldn't use credit cards at all. Those who use cards are best served by charging what they can afford to pay at that moment and not base today's charges on what paychecks will come in by the due date of the credit card bill.\"", "title": "" }, { "docid": "dd8c7409b7e8aa91eec22d0b56fdad7b", "text": "Each bank is different. Usually in my experience for newer credit card accounts, there is a specific number of days in a billing cycle (something like 28) and then a 20-25 day grace period. Older accounts usually have 30+ day billing cycles. Back in the 90's, many cards also had 30-40 day grace periods. The language specific to your card is in the card agreement.", "title": "" }, { "docid": "585f805eb52017a01668c8f337d46eb9", "text": "Remember that if you make charges as the starting of your billing cycle, then you are receiving a free ~60-day loan. For those that are able to receive high interest rates on their, this means a greater opportunity to earn on their money. For example: Your billing statement ends on Jan 5th. On Jan 6th, you max out your credit card. Your billing statement ends on Feb 5th. Depending on your credit card, your grace period can be anywhere from 20 to 30 days. If your bill is due Mar 7th, you just gave yourself a free 60 day loan. If you have multiple credit cards with different due dates and long grace periods, you can rotate which cards you max out to optimize the money you keep in savings.", "title": "" }, { "docid": "334bff4f28f783af0492485b984f5c1e", "text": "I'm in the US, and I can't speak for all credit cards, but I have done this in the past. I've paid extra on my credit card, and had a positive balance on my credit card account. The purchases made after paying extra were applied to the balance, and if there was money left over on the statement closing date, I didn't owe anything that month. Of course, I didn't incur any interest charges, but I never pay interest anyway, as I always pay my statement in full each month and never take a cash advance on my credit card. You could call your credit card company and ask them what will happen, or if you are feeling adventurous, you could just send them some extra money and see what happens. Most likely, they will just apply it to your account and give you a positive balance.", "title": "" }, { "docid": "2c5147bfa6a3aafee6dce338a7345b10", "text": "How would you respond to these cases: Limited card options - If someone has a bad credit record the cards available may only be those with an annual fee. Not everyone will have your credit record and thus access to the cards you have. Some annual fees may be waived in some cases - Thus, someone may have a card with a fee that could be waived if enough transactions are done on the card. Thus, if someone gives enough business to the credit card company, they will waive the fee. On the point of the rewards, if the card is from a specific retailer, there could be a 10% discount for using that card and if the person purchases more than a couple thousand dollars' worth from that store this is a savings of $200 from the retail prices compared to what would happen in other cases that more than offsets the annual fee. If someone likes to be a handyman and visits Home Depot often there may be programs to give rewards in this case. Credit cards can be useful for doing on-line purchases, flight reservations, rental cars and a few other purchases that to with cash or debit can be difficult if not close to impossible. Some airline cards have a fee, but presumably the perks provide a benefit that outweigh that fee over the year. I'm thinking of the Citibank cards tied to American Airlines, first year free, then an $85 fee.", "title": "" }, { "docid": "3f923743d91c1fa030a1b035f61a77b3", "text": "If you have a credit card with no interest free period, there is no drawback as you will be saving interest the sooner you pay it off. However, if you have a credit card with an interest free period, the drawback on paying it earlier than the due date (such as when you first get the statement) is that you lose out on interest. For the period between when you first recieve the statement to when it is due, you could have your money earning you interest in a high interest paying savings account. Depending on how much you spend on your credit card each month and the interest rate you get, this may add up to quite a bit of additional cash each year.", "title": "" }, { "docid": "4e18a3c6cbff373b8ab0f583250150a6", "text": "A friend of mine has two credit cards. He has specifically arranged with the card issuers so that the billing cycles are 15 days out of sync. He uses whichever card has more recently ended its billing cycle, which gives him the longest possible time between purchase and the due date to avoid interest.", "title": "" }, { "docid": "17ce5593ba047d28569a420592ed0d29", "text": "If the rate is the same, then clearing one card to zero does have one advantage: getting your grace period back. Generally when you owe money on your credit card, and you make a new purchase that new purchase get charged interest starting on day one. But if you are not carrying a balance, in other words you pay off the charges every month, then new purchases aren't charged until you fail to pay the balance by the due date. That grace period can be 25 to 55 days depending where you are in the billing cycle. Having one clean card will allow you to use that card when you have no other choice. Lets say you have an emergency car repair while away from home. You don't have $500 in cash so you put it on the clean card. When you get home you know that you can pay the bill and not have been charged interest.", "title": "" }, { "docid": "cfee265d5f501a2248dd419c911656c1", "text": "Many mutual funds include such mechanisms. However, the higher fees for those funds (when compared to simple index funds) may cancel out any improvement the hedging strategy offers.", "title": "" } ]	fiqa
a39bf5c1155790b5f33c956c66122109	how much of foreign exchange (forex/fx) “deep liquidity” is really just unbacked leverage and what is the effect?	[ { "docid": "e13140ddbbd5bb612d992c09669ccc10", "text": "\"In essence the problem that the OP identified is not that the FX market itself has poor liquidity but that retail FX brokerage sometimes have poor counterparty risk management. The problem is the actual business model that many FX brokerages have. Most FX brokerages are themselves customers of much larger money center banks that are very well capitalized and provide ample liquidity. By liquidity I mean the ability to put on a position of relatively decent size (long EURUSD say) at any particular time with a small price impact relative to where it is trading. For spot FX, intraday bid/ask spreads are extremely small, on the order of fractions of pips for majors (EUR/USD/GBP/JPY/CHF). Even in extremely volatile situations it rarely becomes much larger than a few pips for positions of 1 to 10 Million USD equivalent notional value in the institutional market. Given that retail traders rarely trade that large a position, the FX spot market is essentially very liquid in that respect. The problem is that there are retail brokerages whose business model is to encourage excessive trading in the hopes of capturing that spread, but not guaranteeing that it has enough capital to always meet all client obligations. What does get retail traders in trouble is that most are unaware that they are not actually trading on an exchange like with stocks. Every bid and ask they see on the screen the moment they execute a trade is done against that FX brokerage, and not some other trader in a transparent central limit order book. This has some deep implications. One is the nifty attribute that you rarely pay \"\"commission\"\" to do FX trades unlike in stock trading. Why? Because they build that cost into the quotes they give you. In sleepy markets, buyers and sellers cancel out, they just \"\"capture\"\" that spread which is the desired outcome when that business model functions well. There are two situations where the brokerage's might lose money and capital becomes very important. In extremely volatile markets, every one of their clients may want to sell for some reason, this forces the FX brokers to accumulate a large position in the opposite side that they have to offload. They will trade in the institutional market with other brokerages to net out their positions so that they are as close to flat as possible. In the process, since bid/ask spreads in the institutional market is tighter than within their own brokerage by design, they should still make money while not taking much risk. However, if they are not fast enough, or if they do not have enough capital, the brokerage's position might move against them too quickly which may cause them lose all their capital and go belly up. The brokerage is net flat, but there are huge offsetting positions amongst its clients. In the example of the Swiss Franc revaluation in early 2015, a sudden pop of 10-20% would have effectively meant that money in client accounts that were on the wrong side of the trade could not cover those on the other side. When this happens, it is theoretically the brokerage's job to close out these positions before it wipes out the value of the client accounts, however it would have been impossible to do so since there were no prices in between the instantaneous pop in which the brokerage could have terminated their client's losing positions, and offload the risk in the institutional market. Since it's extremely hard to ask for more money than exist in the client accounts, those with strong capital positions simply ate the loss (such as Oanda), those that fared worse went belly up. The irony here is that the more leverage the brokerage gave to their clients, the less money would have been available to cover losses in such an event. Using an example to illustrate: say client A is long 1 contract at $100 and client B is short 1 contract at $100. The brokerage is thus net flat. If the brokerage had given 10:1 leverage, then there would be $10 in each client's account. Now instantaneously market moves down $10. Client A loses $10 and client B is up $10. Brokerage simply closes client A's position, gives $10 to client B. The brokerage is still long against client B however, so now it has to go into the institutional market to be short 1 contract at $90. The brokerage again is net flat, and no money actually goes in or out of the firm. Had the brokerage given 50:1 leverage however, client A only has $2 in the account. This would cause the brokerage close client A's position. The brokerage is still long against client B, but has only $2 and would have to \"\"eat the loss\"\" for $8 to honor client B's position, and if it could not do that, then it technically became insolvent since it owes more money to its clients than it has in assets. This is exactly the reason there have been regulations in the US to limit the amount of leverage FX brokerages are allowed to offer to clients, to assure the brokerage has enough capital to pay what is owed to clients.\"", "title": "" }, { "docid": "5671482527712efcef940b6b31d2b8fb", "text": "I'd think that liquidity and speed are prioritized (even over retail brokers and in come cases over PoP) for institutional traders who by default have large positions. When the going gets tough, these guys are out and the small guys - trading through average retail brokers - are the ones left holding the empty bag.", "title": "" }, { "docid": "b89990eeba193697f81dbf2659aaadf4", "text": "\"First it is worth noting the two sided nature of the contracts (long one currency/short a second) make leverage in currencies over a diverse set of clients generally less of a problem. In equities, since most margin investors are long \"\"equities\"\" making it more likely that large margin calls will all be made at the same time. Also, it's worth noting that high-frequency traders often highly levered make up a large portion of all volume in all liquid markets ~70% in equity markets for instance. Would you call that grossly artificial? What is that volume number really telling us anyway in that case? The major players holding long-term positions in the FX markets are large banks (non-investment arm), central banks and corporations and unlike equity markets which can nearly slow to a trickle currency markets need to keep trading just for many of those corporations/banks to do business. This kind of depth allows these brokers to even consider offering 400-to-1 leverage. I'm not suggesting that it is a good idea for these brokers, but the liquidity in currency markets is much deeper than their costumers.\"", "title": "" } ]	[ { "docid": "7e2700c8f97122b868a4a0ebfbcc9257", "text": "Which of these two factors is likely to be more significant? There is long term trend that puts one favourable with other. .... I realise that I could just as easily have lost 5% on the LSE and made 5% back on the currency, leaving me with my original investment minus various fees; or to have lost 5% on both. Yes that is true. Either of the 3 scenarios are possible. Those issues aside, am I looking at this in remotely the right way? Yes. You are looking at it the right way. Generally one invests in Foreign markets for;", "title": "" }, { "docid": "53a33eed609d2c59d67a43cc281aea4f", "text": "There are various indexes on the stock market that track the currencies. Though it is different than Forex (probably less leverage), you may be able to get the effects you're looking for. I don't have a lot of knowledge in this area, but looked some into FXE, to trade the Euro debt crisis. Here's an article on Forex, putting FXE down (obviously a biased view, but perhaps will give you a starting point for comparison, should you want to trade something specific, like the current euro/dollar situation).", "title": "" }, { "docid": "4a438d1fb8c6ec13210a1dd6eb9cf28c", "text": "However, is it a risk that they may withhold liquidity in a market panic crash to protect their own capital? Two cases exist here. One is if you access the direct market, then they cannot. Secondly if you are trading in the internal market created by them, yes they can do to save their behind, but that is open to question. They don't make money on your profit or loss, their money comes from you trading. So as long as you maintain the required margin in your accounts, you can go ahead. I had a mail exchange with IG Index regarding this and they categorically refuted on this point. Will their clients be unable to sell at a fair market price in a panic crash? No. Also, do CFD providers sometimes make an occasional downward spike to cream off their clients' cut-loss order? Need proof regarding this, not saying it cannot happen. They wouldn't antagonize the people bringing them business without any reason. They would be putting their money at risk. But you should know, their traders are also in the market. Which might look skimming your money, it would be their traders making money in the free market. After all Google, Facebook etc also sell your personal data for profit, why shouldn't the CFD firm also. Since they are market makers, what is to prevent them from attempting these tricks? Are these concerns also valid for forex brokers serving the retail public? What you consider as tricks are legitimate use of information to make money.", "title": "" }, { "docid": "fc585b7ea27021993ff665a62115bb94", "text": "\"No one is FORCED to use leverage. But most people do. Trading companies like it because, the more leverage, the more \"\"business\"\" (and total commissions). If someone starts with $1 million and leverages it up ten times to ten million, companies would rather do ten million of business than one. That's a given. On the other hand, if you're Warren Buffett or Bill Gates, and you say I want to do $1 billion of FX, no leverage, no trading company is going to turn it down. More often, it's a company like IBM or Exxon Mobil that wants to do FX, no leverage, because they just earned, say $1 billion Euros. Individuals USUALLY want to use more leverage in order to earn (or lose) more with their capital.\"", "title": "" }, { "docid": "b1226b18f17ae68a16316ef098513605", "text": "Very likely this refers to trading/speculating on leverage, not investing. Of course, as soon as you put leverage into the equation this perfectly makes sense. 2007-2009 for example, if one bought the $SPX at its highs in 2007 at ~$1560.00 - to the lows from 2009 at ~$683.00 - implicating that with only 2:1 leverage a $1560.00 account would have received a margin call. At least here in Europe I can trade index CFD's and other leveraged products. If i trade lets say >50:1 leverage it doesn’t take much to get a margin call and/or position closed by the broker. No doubt, depending on which investments you choose there’s always risk, but currency is a position too. TO answer the question, I find it very unlikely that >90% of investors (referring to stocks) lose money / purchasing power. Anyway, I would not deny that where speculators (not investors) use leverage or try to trade swings, news etc. have a very high risk of losing money (purchasing power).", "title": "" }, { "docid": "09b13ee63d56ee9974b135373bfa6061", "text": "\"Right... so the fundamental question is if the roll-over cessation will cause short term interest rates to decouple from the Fed's say-so. This is otherwise known as a bond auction failure. The fed wants the treasury debt off their books, but they don't want to raise interest rates to make that happen. So, they're going to experiment with uptake outside of the Fed to see if they can \"\"boil the frog\"\". If the frog starts to squirm, I guarantee you that they're going to take the pot off the burner. At their the proposed roll-over suspension rate, it'll take approximately 12 to 16 years to to get that two trillion off their books... and that assumes that nothing bad happens during that time. > Do you know of any good writeups that would back your side? The closest you're going to find would be anything written about the JCB post 1995... but it looks like their program of direct stock market participation (technically, they're using ETFs, probably for financial cryptography purposes) [began in earnest in 2010](https://www.bloomberg.com/news/articles/2017-07-19/japan-bourse-head-turns-surprise-critic-of-kuroda-etf-purchases) [this piece ](https://blog.kurtosys.com/central-banks-unthinkable-buying-stocks/) indicates that the Japanese aren't the only ones doing this. England, The Swiss and even the EU is doing the same thing across multiple exchanges. As the article points out, there's a two pronged effect of suppressing FX stock price correlations (strengthening or weakening of currencies raising or lowering stocks listed on associated bourses) and reducing volatility through market intervention (AKA plunge protection teams). They also reference an Investco survey of central bank reserve managers.\"", "title": "" }, { "docid": "89940e315a6cc1493916b85e348e62eb", "text": "In my experience thanks to algorithmic trading the variation of the spread and the range of trading straight after a major data release will be as random as possible, since we live in an age that if some pattern existed at these times HFT firms would take out any opportunity within nanoseconds. Remember that some firms write algorithms to predict other algorithms, and it is at times like those that this strategy would be most effective. With regards to my own trading experience I have seen orders fill almost €400 per contract outside of the quoted range, but this is only in the most volatile market conditions. Generally speaking, event investing around numbers like these are only for top wall street firms that can use co-location servers and get a ping time to the exchange of less than 5ms. Also, after a data release the market can surge/plummet in either direction, only to recover almost instantly and take out any stops that were in its path. So generally, I would say that slippage is extremely unpredictable in these cases( because it is an advantage to HFT firms to make it so ) and stop-loss orders will only provide limited protection. There is stop-limit orders( which allow you to specify a price limit that is acceptable ) on some markets and as far as I know InteractiveBrokers provide a guaranteed stop-loss fill( For a price of course ) that could be worth looking at, personally I dont use IB. I hope this answer provides some helpful information, and generally speaking, super-short term investing is for algorithms.", "title": "" }, { "docid": "9c18093cba429319b80d538cd41a3589", "text": "> Theoretically you'd expect the exchange rate to move against you enough to make this a bad investment. Actually, the theoretical and intentional expectation is that the currency with the highest interest rate should appreciate even more. Canada has traditionally offered an interest rate premium over the US specifically to help the strength of its currency and attract capital to stay there. > In reality this doesn't happen Because carry trades/fx have so little margin requirements, and so many speculators on one side of the trade, there is a significant short squeeze risk any time there is a de-risking shock to the economy. Any unwinding impulse, scares other carry trade participants to unwind, and then forces many more to unwind.", "title": "" }, { "docid": "5a484b5eb4efb839e85833035c389844", "text": "\"What you are saying is a very valid concern. After the flash crash many institutions in the US replaced \"\"true market orders\"\" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative.\"", "title": "" }, { "docid": "39992fa71ba6c1794c6d2f65443b5d45", "text": "\"Unless you are buying a significant value of your goods in USD then the relative strength of USD versus your local currency will have little to no effect on what the value of your investments is worth to you. In fact only (de\|in)flation will effect your purchasing power. If your investments are in your local currency and your future expenses (usage of the returns on the investments) will be in your local currency FX has no effect. To answer your question, however, since all investments involve flows of money there can be no investment (other than perhaps gold which is really a form of currency) that isn't bound to at least one currency. In general investments are expected to be valued against the investor's home currency (I tend to call it \"\"fund currency\"\" as I work with hedge funds) as the return on the investment will be paid out in the fund currency and returns will be compared on the same basis. If investments are to be made internationally then it is necessary to reduce, or \"\"hedge\"\" the exchange rate risk. This is normally done using FX swaps or futures that allow an exchange rate in the future to be locked in today. Far from being unbound from FX moves these derivatives are closely bound to any moves but crucially are bound in the opposite direction to the hoped for FX move. an example of this would be if I'm investing 100GBP (my local currency) in a US company XYZ corp which I expect to do well. Suppose I get 200USD for my 100GBP and so buy 1 * 200USD shares in XYZ. No matter what happens to XYZ stock any move in GBP/USD will affect my P&L so I buy a future that allows me to exchange 200USD for 100GBP in 6 month's time. If GBP rises I can sell the future and make money on both the higher exchange rate and the increase in XYZ corp. If GBP falls I can keep the future until maturity and exchange the 200USD from XYZ corp for 100GBP so I only take the foreign exchange hit on any profits. If I expect my profits to be 10USD I can even buy futures such that I can lock in the exchange rate for 110USD in 6 months so that I will lose even less of my profit from the exchange rate move.\"", "title": "" }, { "docid": "fa6070b128d30dc1befad2f10a9c1934", "text": "theoretically this concept makes sense. However as recent numbers have shown ( I do not have the source handy but one can simply obtain this information via the ECB's website) banks have tapped this LTRO, something in the likes of 500 billion or so, and instead of buying Sovereign debt, they instead prefer to park this money with the ECB, paying something like 25 bps on deposits. so instead of using this LTRO money to buy Sovereigns or perhaps lend to other banks, easing the strain on LIBOR, banks have just parked this money back with the ECB, as the ECB has seen its deposits once again reach record amounts (again, see the ECB website for proof). Just this speaks volumes about the LTRO carry trade and how it is evidently not going to achieve its long term goal of bringing spreads down in Europe. Perhaps in the short run yes, but if you look at the fundamentals (EURUSD, the EUR Basis Swap and the OIS-LIBOR Spread) they show how the situation in Europe is far from over, and the LTRO is nothing close to a long term and stable solution", "title": "" }, { "docid": "683ed52a2c1f779f32da70bf19112b14", "text": "Yes, and there's a good reason they might. (I'm gonna use equity options for the example; FX options are my thing, but they typically trade European style). The catch is dividends. Imagine you're long a deep-ITM call on a stock that's about to pay a dividend. If that dividend is larger than the time value remaining on the option, you'd prefer to exercise early - giving you the stock and the dividend payment - rather than hanging on to the time value of the option. You can get a similar situation in FX options when you're long a deep-ITM American call on a positive-carry currency (say AUDJPY); you might find yourself so deep in the money, with so little time value left on the option, that you'd rather exercise the option and give up the remaining time value in return for the additional carry from getting the spot position early.", "title": "" }, { "docid": "93ed9100864a8c4146441b8c7bc0dab5", "text": "Now, is there any clever way to combine FOREX transactions so that you receive the US interest on $100K instead of the $2K you deposited as margin? Yes, absolutely. But think about it -- why would the interest rates be different? Imagine you're making two loans, one for 10,000 USD and one for 10,000 CHF, and you're going to charge a different interest rate on the two loans. Why would you do that? There is really only one reason -- you would charge more interest for the currency that you think is less likely to hold its value such that the expected value of the money you are repaid is the same. In other words, currencies pay a higher interest when their value is expected to go down and currencies pay a lower interest when their value is expected to go up. So yes, you could do this. But the profits you make in interest would have to equal the expected loss you would take in the devaluation of the currency. People will only offer you these interest rates if they think the loss will exceed the profit. Unless you know better than them, you will take a loss.", "title": "" }, { "docid": "768afd430beaddf843064787b4537b0f", "text": "If we postulate that there is at least some element of truth to the phrase 'A leopard does not change his spots' and then consider this tidbit He conveniently forgets to mention his 1.5 million dollar fraud fine from the SEC over investment “advice” he sold through a news letter. The SEC claimed and the judge agreed that the report was “replete with lies”. I think that gives you just about all you might need to know regarding the man behind the video, and the nature of it's content. Oh, and it's purpose? To SELL YOU the same said newsletter. I guess it's natural for Stansberry to feel as he does. After all if the US gov had just busted me for conning and lying to folks, and fined ME 1.5Mill, I'd be having some pretty intense lurid fantasies about it going down in flames, and trying to hide any money I had left offshore also. A huge amount of his argument hinges on the US no longer being the world's reserve currency. Firstly, while I'll admit I'm none too happy with the way the national debt has been managed for oh, around 30 years how, (which includes I will note going from a pretty much balanced budget, to around an 80% increase in the debt from 2001 through 2008, when 'times were good' and there was little need to spend money we didn't have), when compared to a lot of other countries, we still don't look that bad. You have to ask yourself this first, if not the US, then WHO? are the governments of the world going to trust China? could the Yen handle the load? Is the Euro any better off especially considering problems in Greece, Ireland, etc. Do countries like Switzerland have enough liquidity and available ways to invest there? In order for the US to STOP being the world's reserve currency, you must have something to replace it with, and really, can we realistically think of one country/currency with the capability to become a new 'world reserve currency'??? Secondly, even then should such a shift actually happen, it doesn't mean people will ALL just magically stop buying US debt. Yes the demand would go down, but it would not go to zero. There are after all a worldfull of other countries who's money is right now NOT the world reserve currency, and yet they are able to sell bonds and people and even other countries invest there. (China for example does not invest exclusively in the US), so yeah we might have to start paying more interest to get people to buy US debt, but it's not like the demand will go away. Save your money, save your time, don't buy into this dung.", "title": "" }, { "docid": "65f64df82912de866c806551dee668fe", "text": "\"You are violating the Uncovered Interest Rate Parity. If Country A has interest rate of 4% and Country B has interest rate of 1%, Country B's expected exchange rate must appreciate by 3% compared to spot. The \"\"persistent pressure to further depreciate\"\" doesn't magically occur by decree of the supreme leader. If there is room for risk free profit, the entire Country B would deposit their money at Country A, since Country A has higher interest rate and \"\"appreciates\"\" as you said. The entire Country A will also borrow their money at Country B. The exception is Capital Control. Certain people are given the opportunity to get the risk free profit, and the others are prohibited from making those transactions, making UIP to not hold.\"", "title": "" } ]	fiqa
7ad011a0d4c71a5ba00756e4ff024b55	How dividend payout happens	[ { "docid": "c108138083a80658a002993dfc87ca88", "text": "You will need to buy a stock before the ex-dividend date to receive the dividends. You can sell a stock on the ex-dividend date or after and you will receive the dividends. So if the ex-dividend date is the 5th August, you need to buy before the 5th and you can sell on the 5th or after, to receive the dividends. Definitions from the ASX: Record date The Record Date is 5.00pm on the date a company closes its share register to determine which shareholders are entitled to receive the current dividend. It is the date where all changes to registration details must be finalised. Ex dividend date The ex dividend date occurs two business days before the company's Record Date. To be entitled to a dividend a shareholder must have purchased the shares before the ex dividend date. If you purchase shares on or after that date, the previous owner of the shares (and not you) is entitled to the dividend. A company's share price may move up as the ex dividend date approaches and then fall after the ex dividend date.", "title": "" }, { "docid": "d8b3cdc8f3766cb93bb00036450b813a", "text": "As the record date is 7th August, you need to hold stocks on the 7th August closing. You need not hold it till 2nd Sept. The list as taken on 7th August would be processed and instructions given to Bank and the dividends credited by 1st Sept. Edit: To Clarify Victor's comment Typically from the time one sells the stocks to the time it actually gets transferred has a clearing cycle. Most stock exchanges have 2 or 3 days cycles. i.e. if I sell the stock today, it is still in my name. The money is still with the buyer. On Day 1, the positions are arrived at. On Day 2 the stock gets credited to the buyer and the funds gets credit to seller. As the question was specific whether to hold the stock till 7th or 22nd Sept, my initial answer was simple. The illustration by Victor is more accurate.", "title": "" }, { "docid": "99825cc0512d53c6007815c9a8faf37e", "text": "The ex-dividend date is the first date on which you may sell without losing your dividend. In this case that date is August 5th (thanks, Victor). The price opens on the ex-dividend date lower than it closed on the previous day (by the amount of the dividend). Therefore you may sell any time on August 5th (including during pre-market trading) and still get the dividend. You must be the owner of the stock as of the end of after-hours trading on the 4th (and therefore overnight) in order to get the dividend. Intel's Dividend Dates The record date isn't important to your trading decision.", "title": "" } ]	[ { "docid": "74f1a239bcc0d9bbad7d9f5ed35dbb9c", "text": "Dividends are normally paid in cash, so don't generally affect your portfolio aside from a slight increase to 'cash'. You get a check for them, or your broker would deposit the funds into a money-market account for you. There is sometimes an option to re-invest dividends, See Westyfresh's answer regarding Dividend Re-Investment Plans. As Tom Au described, the dividends are set by the board of directors and announced. Also as he indicated just before the 'record' date, a stock which pays dividends is worth slightly more (reflecting the value of the dividend that will be paid to anyone holding the stock on the record date) and goes down by the dividend amount immediately after that date (since you'd now have to hold the stock till the next record date to get a dividend) In general unless there's a big change in the landscape (such as in late 2008) most companies pay out about the same dividend each time, and changes to this are sometimes seen by some as 'indicators' of company health and such news can result in movement in the stock price. When you look at a basic quote on a ticker symbol there is usually a line for Div/yeild which gives the amount of dividend paid per share, and the relative yeild (as a percentage of the stock price). If a company has been paying dividends, this field will have values in it, if a company does not pay a dividend it will be blank or say NA (depending on where you get the quote). This is the easiest way to see if a company pays a dividend or not. for example if you look at this quote for Google, you can see it pays no dividend Now, in terms of telling when and how much of a dividend has been paid, most financial sites have the option when viewing a stock chart to show the dividend payments. If you expand the chart to show at least a year, you can see when and how much was paid in terms of dividends. For example you can see from this chart that MSFT pays dividends once a quarter, and used to pay out 13 cents, but recently changed to 16 cents. if you were to float your mouse over one of those icons it would also give the date the dividend was paid.", "title": "" }, { "docid": "fa904190368b7911e7240b48486f6ab7", "text": "I know that in the case of cash dividends I will get the dividend as long as I bought the stock before the ex-date but what happens in the case of an stock dividend? This is same as cash dividends. You would receive the additional stock.", "title": "" }, { "docid": "6b197fde811ce81c3d417db1ae47b52d", "text": "Depends on if the stock pays a dividend or not. Some companies in their early years may choose to not pay dividends. Your calculations are off as the dividend stated is annual that you'd have to divide by 4 to get what the quarterly amount would be and there can be variances as Ellison's compensation package may well include options so that the number of shares he owns could fluctuate over the course of a year.", "title": "" }, { "docid": "daba55a220a8abad14c89e14440f6e2a", "text": "Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%.", "title": "" }, { "docid": "5c4a4c3fcdc71141911a2575338dd386", "text": "\"Dividends are paid based on who owns the security on a designated day. If a particular security pays once per year, you hold 364 days and sell on the day before the \"\"critical\"\" day, you get no dividend. This is not special to 401(k) or to DRIP. It's just how the system works. The \"\"critical\"\" day is the day before the posted ex-dividend date for the security. If you own at the end of that day, you get the dividend. If you sell on that day or before, you do not. Your company changing providers is not in itself relevant. The important factor is whether you can still hold your same investments in the new plan. If not, you will not get the dividend on anything that you currently hold but \"\"sell\"\" due to the change in providers. If you can, then you potentially get the dividend so long as there's no glitch in the transition. Incidentally, it works the other way too. You might end up getting a dividend through the new plan for something that you did not hold the full year.\"", "title": "" }, { "docid": "01dc0a97e9737837fc1a151aacdca3fe", "text": "If the period is consistent for company X, but occurs in a different month as Company Y, it might be linked to the release of their annual report, or the payment of their annual dividend. Companies don't have to end their fiscal year near the end of the Calendar year, therefore these end of year events could occur in any month. The annual report could cause investors to react to the hard numbers of the report compared to what wall street experts have been predicting. The payment of an annual dividend will also cause a direct drop in the price of the stock when the payment is made. There will also be some movement in prices as the payment date approaches.", "title": "" }, { "docid": "d80050a6bd73daa905840127c9a38dd5", "text": "For all stocks, expected Dividends are a part of the price it is traded for - consider that originally, the whole idea of stocks was to participate in the earnings of the company = get dividends. The day the dividend is paid, that expectation is of course removed, and thereby the stock value reduced by just the amount of dividend paid. You will see that behavior for all stocks, everywhere. The dividend in your example is just uncommonly high relative to the stock price; but that is a company decision - they can decide whatever amount they want as a dividend. In other words, the day before dividend payments, investors value the stock at ~14 $, plus an expected dividend payment of 12 $, which adds to 26 $. The day after the dividend payment, investors still value the stock at ~14 $, plus no more dividend payment = 0 $. Nothing changed really in the valuation.", "title": "" }, { "docid": "0ae7681cfe1d319898337f727b749fc4", "text": "Imagine you have a bank account with $100 in it. You are thinking about selling this bank account, so ask for some bids on what it's worth. You get quotes of around $100. You decide to sell it, but before you do, you take $50 out of it to have in cash. Would you expect the market to still pay $100 for the account? The dividend is effectively the cash being withdrawn. The stock had on account a large amount of cash (which was factored into it's share price), it moved that cash out of it's account (to its shareholders), and as a result the stock instantly becomes priced lower as this cash is no longer part of it, just as it is in the bank account example.", "title": "" }, { "docid": "4dee3c592c5617743e51286e032199d6", "text": "Ponzi schemes (or pyramid schemes) are based on paying earlier investors from the money invested by the later ones. For Ponzi scheme, the idea is generally to distribute some relateviely high consistent dividend/payout based on the inflow of money from new investors. As long as new investors are coming, the scheme can be sustained for quite some time (see the Madoff's example that spanned over decades). In the mean time the scheme operator can take (some of) the investment money to himself (legally as fees and salary, illegally as embezzling). The scheme operator doesn't actually have to put in any money other than some organizational expenses. However, at some point the new investors' money won't be enough to pay all the existing investors (inevitably, sooner or later, since the dividend payout grows with each new investor and there are no infinite exponential amount of new investors to cover for it). That's when the $#!+ hits the fan and sons of the schemers start ending up hanging from the ceiling. Pyramid scheme is built on similar idea, but the dividend payout varies based on the level of the investor (i.e.: the investor gets paid based on how many new ones he brought in, and how many new ones rooted from them). Thus the incentive to bring new investors is directly shifted to the investors themselves. The schemers here are at the top and get the most payouts from all the rest of the participants. They themselves usually put no or very little investment. However, the end result is the same: couldn't possibly be enough investors to sustain this model forever, and it will inevitably fail at some point. When such a scheme fails - the paying fund ends up being bankrupt, either due to cashflow problems (not enough money in to pay money out) or because all the money dries out (usually - both). How to detect - if the reports are not falsified (which in most cases they are) you'll see clearly that there's no actual investment income in the cash-flow. But, the reports are usually falsified to conceal this exact fact. So, that's where the independent auditors and regulatory oversight come in handy. Generally, if an investment fund doesn't have a reputable independent auditor - stay away.", "title": "" }, { "docid": "cc596ab411b839e7fddc66f3efd63334", "text": "Various types of corporate actions will precipitate a price adjustment. In the case of dividends, the cash that will be paid out as a dividend to share holders forms part of a company's equity. Once the company pays a dividend, that cash is no longer part of the company's equity and the share price is adjusted accordingly. For example, if Apple is trading at $101 per share at the close of business on the day prior to going ex-dividend, and a dividend of $1 per share has been declared, then the closing price will be adjusted by $1 to give a closing quote of $100. Although the dividend is not paid out until the dividend pay date, the share price is adjusted at the close of business on the day prior to the ex-dividend date since any new purchases on or after the ex-dividend date are not entitled to receive the dividend distribution, so in effect new purchases are buying on the basis of a reduced equity. It will be the exchange providing the quote that performs the price adjustment, not Google or Yahoo. The exchange will perform the adjustment at the close prior to each ex-dividend date, so when you are looking at historical data you are looking at price data that includes each adjustment.", "title": "" }, { "docid": "0ccdc6551bab3d553a85e58f297e935e", "text": "A share is more than something that yields dividends, it is part ownership of the company and all of its assets. If the company were to be liquidated immediately the shareholders would get (a proportion of) the net value (assets - liabilities) of the company because they own it. If a firm is doing well then its assets are increasing (i.e. more cash assets from profits) therefore the value of the underlying company has risen and the intrinsic value of the shares has also increased. The price will not reflect the current value of the firms assets and liabilities because it will also include the net present value of expected future flows. Working out the expected future flows is a science on par with palmistry and reading chicken entrails so don't expect to work out why a company is trading at a price so much higher than current assets - liabilities (or so much lower in companies that are expected to fail). This speculation is in addition to price speculation that you mention in the question.", "title": "" }, { "docid": "6d508d155637deec50c60a2ca1ee444b", "text": "\"Dividend paying stocks are not \"\"better\"\" In particular shareholders will get taxed on the distribution while the company can most likely invest the money tax free in their operations. The shareholder then has the opportunity to decide when to pay the taxes when they sell their shares. Companies pay dividends for a couple of reasons.... 1.) To signal the strength of the company. 2.) To reward the shareholders (oftentimes the executives of the firm get rather large rewards without having to sell shares they control.) 3.) If they don't have suitable investment opportunities in their field. IE they don't have anything useful to do with the money.\"", "title": "" }, { "docid": "6767af220ac2a9692b2d8eeef35eaf91", "text": "The answer provide by @mbhunter is correct, however there are contexts, shorting in spot market and carrying the position over settlement usually does not entail payment of dividend to the broker, one of the reason being post ex-date the price of the share downward adjusts to the extent of the dividend, so practically if you have shorted at 100 and post ex-date (assuming a dividend of 2 and no movement of the stock price), the price would slide to 98, the party who longed the stock @ 100 now is sitting on a price of 98 and received a dividend of 2 which equates to 100. The above is also contextual to the law of the country governing the exchange and the security exchange board regulations.", "title": "" }, { "docid": "f197a8d1411990d7156e84dd84116a56", "text": "Why does it take two weeks (from ex-date) for dividends to pay out? For logistical and accounting purposes. This article says on the payment date: This date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled. It is for the same reasons that there is a often a two-week period between the time an employee submits her time sheet and the employee's pay date. The company needs time to set and send the payment while minimizing accounting errors.", "title": "" }, { "docid": "6ebd1e3d7ec751240beb5d60f4ad6a05", "text": "\"In both cases, you have a bunch of assets that pay into a trust, and a set of rules determining how the payments are distributed to bond holders. Typically, the bonds are split up by \"\"Seniority\"\" where any losses from the underlying assets gets recognized by the least senior bond holder first, and the most senior is protected until those below in seniority are wiped out. In the case of mortgage backed securities, you have a lot of early payoffs (sales and refinances), and those payoffs tend to pay off the senior bonds first (though in practice, quite a bit more complicated than that) CDOs tend to have bonds as assets that pay into the trust, and CMOs have mortgages. CDOs used to be more likely to be things like corporate debt, or junk-rated debt. But during the housing bubble you did have CDOs backed by some form of mortgage backed bonds. If you build a CDO out of tranches of CMOs, you are going through multiple stages of tranching, and things 'get weird' when you have highly-correlated loss behavior in your underlying assets. The Equity position or the residual, as it is sometimes called, is whatever money coming from the underlying assets isn't owed to any bond after all of the structuring rules are followed. This would be interest received in excess to interest owed + money required to make up for lost principal. Typically goes back to the issuing bank. There is something called a NIM bond that gets carved out of the residual and pays to the investment bank, I gather. Residuals and NIMs of mortgage bonds are pretty worthless in a high loss environment like this.\"", "title": "" } ]	fiqa
34033a0179ea5cfe3f88438eaba0c765	ISA - intra year profits and switching process	[ { "docid": "46cc17c4ec1ccbf1b920fc7420ab3ade", "text": "You're overthinking it. The ISA limit applies to the amount you invest into the ISA. In your example, £10,000. Whether that then fluctuates with performance is irrelevant. Even if you realise aprofit or a loss, nobody is watching it. You merely count the amount you originally contributed into the ISA wrapper. When they add up to £15,000; that's the limit reached. (And by the way, remember that only money going into the ISA is counted. It doesn't matter if you -let's say - put £15k in, then remove 10k. You've reached the limit. You don't again have the chance to put £10k 'back in'.", "title": "" }, { "docid": "21d0c3dcd64ed588f9aa8af50c2612a9", "text": "An ISA is a much simpler thing than I suspect you think it is. It is a wrapper or envelope, and the point of it is that HMRC does not care what happens inside the envelope, or even about extractions of funds from the envelope; they only care about insertions of funds into the envelope. It is these insertions that are limited to £15k in a tax year; what happens to the funds once they're inside the envelope is your own business. Some diagrams: Initial investment of £10k. This is an insertion into the envelope and so counts against your £15k/tax year limit. +---------ISA-------+ ----- £10k ---------> \| +-------------------+ So now you have this: +---------ISA-------+ \| £10k of cash \| +-------------------+ Buy fund: +---------ISA-------+ \| £10k of ABC \| +-------------------+ Fund appreciates. This happens inside the envelope; HMRC don't care: +---------ISA-------+ \| £12k of ABC \| +-------------------+ Sell fund. This happens inside the envelope; HMRC don't care: +---------ISA-------+ \| £12k of cash \| +-------------------+ Buy another fund. This happens inside the envelope; HMRC don't care: +---------ISA-----------------+ \| £10k of JKL & £2k of cash \| +-----------------------------+ Fund appreciates. This happens inside the envelope; HMRC don't care: +---------ISA-----------------+ \| £11k of JKL & £2k of cash \| +-----------------------------+ Sell fund. This happens inside the envelope; HMRC don't care: +---------ISA-------+ \| £13k of cash \| +-------------------+ Withdraw funds. This is an extraction from the envelope; HMRC don't care. +---------ISA-------+ <---- £13k --------- \| +-------------------+ No capital gains liability, you don't even have to put this on your tax return (if applicable) - your £10k became £13k inside an ISA envelope, so HMRC don't care. Note however that for the rest of that tax year, the most you can insert into an ISA would now be £5k: +---------ISA-------+ ----- £5k ---------> \| +-------------------+ even though the ISA is empty. This is because the limit is to the total inserted during the year.", "title": "" } ]	[ { "docid": "134a2b54f8d2ddefd07691afbcb16bc6", "text": "The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project.", "title": "" }, { "docid": "bfd048aed9cfca9f24089f2a9d05719b", "text": "Not really. Transfer pricing determines where and at what level you should have profits and what level is considered arm's length. Profits are going to follow where the functions, risks and intangibles are borne under the current regulatory framework. Inverting allows a company to shift intangibles and risk to another country. You cannot just say I want 100% of my profits in Ireland and get away with it. You need to have economic support for why your profits are what they are in each of your jurisdictions.", "title": "" }, { "docid": "bc1e558425d3536d26b4dd208926dff9", "text": "You can't actually transfer shares directly unless they were obtained as part of an employee share scheme - see the answers to questions 19 and 20 on this page: http://www.hmrc.gov.uk/isa/faqs.htm#19 Q. Can I put shares from my employee share scheme into my ISA? A. You can transfer any shares you get from into a stocks and shares component of an ISA without having to pay Capital Gains Tax - provided your ISA manager agrees to take them. The value of the shares at the date of transfer counts towards the annual limit. This means you can transfer up to £11,520 worth of shares in the tax year 2013-14 (assuming that you make no other subscriptions to ISAs, in those years). You must transfer the shares within 90 days from the day they cease to be subject to the Plan, or (for approved SAYE share option schemes) 90 days of the exercise of option date. Your employer should be able to tell you more. Q. Can I put windfall or inherited shares in my ISA? A. No. You can only transfer shares you own into an ISA if they have come from an employee share scheme. Otherwise, the ISA manager must purchase shares on the open market. The situation is the same if you have shares that you have inherited. You are not able to transfer them into an ISA.", "title": "" }, { "docid": "ed21990dc3ca608d772f72ebb24699df", "text": "You're creating more liabilities for yourself in the future, although yes this could definitely be a profitable move for you. However, some small mistakes you made, from what I can see using the tools at Hargreaves Lansdown. The first, is that the government relief would only be 20%, not 60%. The second is that the tax relief goes directly into the SIPP, it's not something you get given back to you in cash. In order for this to be worthwhile, you need to be sure that you can make a post-tax gain of more than 3.4% on this money per year - which should be very feasible. It sounds like you have enough security that you could afford to take this risk.", "title": "" }, { "docid": "18ce58c8902a64eca070d530a060fd2a", "text": "From my understanding, only A and B are shareholders, and M is a managing entity that takes commission on the profit. Assuming that's true. At the start of the project, A contributes $500,000. At this point, A is the sole shareholder, owning 100% of the project that's valued at $500,000. The real question is, did the value of the project change when B contributed 3 month later. If the value didn't change, then A owns 33.33%, and B owns 66.66%. Assuming both A and B wants to pay themselves with the $800,000 profit, then A gets a third of that, and B gets the rest. However, if at the time of B's contribution, both parties agreed that the pre-money of the project has changed to $1 million, then B owns half the project valued at 2 million post-money. Then the profit would be split half way.", "title": "" }, { "docid": "2e049953420e0a257e711543060774db", "text": "HMRC calls it: Averaging for creators of literary or artistic works, and it is the averaging of your profits for 2 successive years. It's helpful in situations like you describe, where income can fluctuate wildly from year to year, the linked article has the full detail, but some of the requirements are: You can use averaging if: you’re self-employed or in a partnership, and the business started before 6 April 2014 and didn’t end in the 2015 to 2016 tax year your profits are wholly or mainly from literary, dramatic, musical or artistic works or from designs you or your business partner (if you’re in a partnership) created the works personally. Additionally: Check that your profit for the poorer year, minus any adjusted amounts, is less than 75% of the figure for your better year. If it is, you can use averaging. Then, check if the difference between your profits for the 2 years is more than 30% of your profit for the better year. If it is, work out the average by adding together the profits for the 2 years, and divide the total by 2.", "title": "" }, { "docid": "fdcdb8062f86af0013426fabc52fdf48", "text": "\"You understood it pretty right. Every fiscal year (which runs from April 6 year Y to April 5 year Y+1), you can deposit a total GBP15k (this number is subject to an annual increase by HMRC) into your ISAs. You can open 2 new ISA every year but the amount deposited to those ISAs shall not excess GBP15k in total. From the 2016/17 tax year some ISAs now permit you to replace any funds you have withdrawn, without using up your allowance. It used to be that if you deposited GBP15K and then withdrew GBP5K, you could not pay in to that ISA again within that tax year as you had already used your full allowance. Under new Flexible ISA rules this would be allowed providing you replace the funds in the same ISA account and within the same tax year (strongly recommend that you check the small prints related to your account to make sure this is he case). Any gains and losses on the investments held in the ISA accounts are for you to take. i.e. If you make investment gains of GBP5K this does not reduces your allowance. You will still be able to deposit GBP15k (or whatever HMRC increases that number to) in the following year. You are also allowed to consolidate your ISAs. You can ask bank A to transfer the amount held into an ISA with bank held with bank B. This is usually done by filling a special form with the bank that will held the money post transactions. Again here be very careful. DO NOT withdraw the money to transfer it yourself as this would count against the GBP15K limit. Instead follow the procedures from the bank. Finally if you don't use your allowance for a given year, you cannot use it during the following year. i.e. if you don't deposit the GBP15K this year, then you cannot deposit GBP30K next year. NB: I used the word \"\"deposit\"\". It does not matter to HMRC if the money get invested or not. If you are in a rush on April 4th, just make sure the money is wired into the ISA account by the 5th. No need to rush and make bad investment decision. You can invest it later. Hope it helps\"", "title": "" }, { "docid": "d21c1340705ac92ff3ff9454d231cd7d", "text": "Speaking from stock market point of view, superficially, TA is similarly applicable to day trading, short term, medium term and long term. You may use different indicators in FX compared to the stock market, but I would expect they are largely the same types of things - direction indicators, momentum indicators, spread indicators, divergence indicators. The key thing with TA or even when trading anything, is that when you have developed a system, that you back test it, to prove that it will work in bear, bull and stagnant markets. I have simple systems that are fine in strong bull markets but really poor in stagnant markets. Also have a trading plan. Know when you are going to exit and enter your trades, what criteria and what position size. Understand how much you are risking on each trade and actively manage your risk. I urge caution over your statement ... one weakened by parting the political union but ought to bounce back ... We (my UK based IT business) have already lost two potential clients due to Brexit. These companies are in FinServ and have no idea of what is going to happen, so I would respectfully suggest that you may have less knowledge than professionals, who deal in currency and property ... but one premise of TA is that you let the chart tell you what is happening. In any case trade well, and with a plan!", "title": "" }, { "docid": "d5610e1b3aabcd6667baa0f09dbb5830", "text": "Income and Capital are taxed separately in the uk. You probably can't get dividends paid gross even in ISA's you pay the basic rate of tax on dividends only higher rate tax payers get tax benefit from dividends. What you could do is invest in splits (Spilt capital investment trusts ) in the share class where all the return comes as capital and use up some of your yearly CGT allowance that way.", "title": "" }, { "docid": "3200217e7939b7c9eb0a82e4a1124feb", "text": "Here is the technical guidance from the accounting standard FRS 23 (IAS 21) 'The Effects of Changes in Foreign Exchange Rates' which states: Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognised in profit or loss in the period in which they arise. An example: You agree to sell a product for $100 to a customer at a certain date. You would record the sale of this product on that date at $100, converted at the current FX rate (lets say £1:$1 for ease) in your profit loss account as £100. The customer then pays you several $100 days later, at which point the FX rate has fallen to £0.5:$1 and you only receive £50. You would then have a realised loss of £50 due to exchange differences, and this is charged to your profit and loss account as a cost. Due to double entry bookkeeping the profit/loss on the FX difference is needed to balance the journals of the transaction. I think there is a little confusion as to what constitutes a (realised) profit/loss on exchange difference. In the example in your question, you are not making any loss when you convert the bitcoins to dollars, as there is no difference in the exchange rate between the point you convert them. Therefore you have not made either a profit or a loss. In terms of how this effects your tax position; you only pay tax on your profit and loss account. The example I give above is an instance where an exchange difference is recorded to the P&L. In your example, the value of your cash held is reflected in your balance sheet, as an asset, whatever its value is at the balance sheet date. Unfortunately, the value of the asset can rise/fall, but the only time where you will record a profit/loss on this (and therefore have an impact on tax) is if you sell the asset.", "title": "" }, { "docid": "0bfbb3a0f9d2ac58c9bb99f9390209f7", "text": "\"Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC. Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%. The Income Tax Department of India has a publication titled \"\"How to Compute your Capital Gains,\"\" which goes into more detail about a variety of relevant situations.\"", "title": "" }, { "docid": "73970c7fa19bea8eea826186c9628dc2", "text": "Making or losing income (via selling shares) is the taxable event, not moving the income you made to and from an account. The only exception would be a special account such as an IRA, and then there would be rules specific to that account structure about when you can withdraw money and what the tax consequences are.", "title": "" }, { "docid": "dfd8a1a50537d16df5f1e082ddfefc2d", "text": "I'm answering in a perspective of an End-User within the United Kingdom. Most stockbrokers won't provide Real-time information without 'Level 2' access, however this comes free for most who trade over a certain threshold. If you're like me, who trade within their ISA Holding each year, you need to look elsewhere. I personally use IG.com. They've recently began a stockbroking service, whereas this comes with realtime information etc with a paid account without any 'threshold'. Additionally, you may want to look into CFDs/Spreadbets as these, won't include the heavy 'fees' and tax liabilities that trading with stocks may bring.", "title": "" }, { "docid": "a2d54102c2d480f7adc795284fb66e01", "text": "So if someone would invest 14000 credits on 1st April 2016, he'd get monthly dividend = ((14000 ÷ 14) × 0.0451) × (1 - 1.42 ÷ 100) = 44.459 credits, right? One would get ((14000 ÷ 14) × 0.0451) = 45.1 is what you would get. The expenses are not to be factored. Generally if a scheme has less expense ratio, the yield is more. i.e. this has already got factored in 0.0451. If the expense ratio was less, this would have been 0.05 if expense ration would have been more it would have been 0.040. Can I then consider the bank deposit earning a higher income per month than the mutual fund scheme? As the MIP as classified as Hybrid funds as they invest around 30% in equities, there is no tax on the income. More so if there is a lock-in of 3 years. In Bank FD, there would be tax applicable as per tax brackets.", "title": "" }, { "docid": "e1edf407c3b96a5274a68e07beae9b48", "text": "If you mean the internal rate of return, then the quarterly rate of return which would make the net present value of these cash flows to be zero is 8.0535% (found by goal seek in Excel), or an equivalent compound annual rate of 36.3186% p.a. The net present value of the cash flows is: 10,000 + 4,000/(1+r) - 2,000/(1+r)^2 - 15,125/(1+r)^3, where r is the quarterly rate. If instead you mean Modified Dietz return, then the net gain over the period is: End value - start value - net flow = 15,125 - 10,000 - (4,000 - 2,000) = 3,125 The weighted average capital invested over the period is: 1 x 10,000 + 2/3 x 4,000 - 1/3 x 2,000 = 12,000 so the Modified Dietz return is 3,125 / 12,000 = 26.0417%, or 1.260417^(1/3)-1 = 8.0201% per quarter, or an equivalent compound annual rate of 1.260417^(4/3)-1 = 36.1504%. You are using an inappropriate formula, because we know for a fact that the flows take place at the beginning/end of the period. Instead, you should be combining the returns for the quarters (which have in fact been provided in the question). To calculate this, first calculate the growth factor over each quarter, then link them geometrically to get the overall growth factor. Subtracting 1 gives you the overall return for the 3-quarter period. Then convert the result to a quarterly rate of return. Growth factor in 2012 Q4 is 11,000/10,000 = 1.1 Growth factor in 2013 Q1 is 15,750/15,000 = 1.05 Growth factor in 2013 Q2 is 15,125/13,750 = 1.1 Overall growth factor is 1.1 x 1.05 x 1.1 = 1.2705 Return for the whole period is 27.05% Quarterly rate of return is 1.2705^(1/3)-1 = 8.3074% Equivalent annual rate of return is 1.2705^(4/3)-1 = 37.6046% ========= I'd recommend you to refer to Wikipedia.", "title": "" } ]	fiqa
059c74cd1890f32b2e3d62dec7a152fd	Why does the calculation for IRR use revenue, not profit?	[ { "docid": "134a2b54f8d2ddefd07691afbcb16bc6", "text": "The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project.", "title": "" } ]	[ { "docid": "f313648abe18b604213f4933b8a1916b", "text": "No. Revenue is the company's gross income. The stock price has no contribution to the company's income. The stock price may be affected when the company's income deviates from what it was expected to be.", "title": "" }, { "docid": "432d2b333eb58b124a77e18a87d18bea", "text": "Let's take your argument to its logical conclusion. Let's say there is a company that uses infrastructure of UK, Germany, France, US, Japan, Italy and Spain (because it's a global multinational). Corporate taxes in these countries are 19%, 29.65%, 33% (for large companies), 35%, 32.1%, 27.9% and 25%. Now according to your logic, each of these countries should tax the company's profits. Such a company in your world would pay more in taxes than it makes in profits (tax rate > 100%).", "title": "" }, { "docid": "3796346d54696bfa1a1766980aa57823", "text": "Both of these terms do refer to your profit; they're just different ways of evaluating it. First, your definition of capitalization rate is flipped. As explained here, it should be: On the other hand, as explained here: So cap rate is like a reverse unit cost approach to comparing two investments. If house A costs $1M and you'll make $50K (profit) from it yearly, and house B costs $1.33M and you'll make $65K (profit) from it yearly, then you can compute cap rates to see that A is a more efficient investment from the point of view of income vs. amount-of-money-you-have-stuck-in-this-investment-and-unavailable-for-use-elsewhere. Profit margin, on the other hand, cares more about your ongoing expenses than about your total investment. If it costs less to maintain property B than it does to maintain property A, then you could have something like: So B is a more efficient investment from the point of view of the fraction of your revenue you actually get to keep each year. Certainly you could think of the property's value as an opportunity cost and factor that into the net profit margin equation to get a more robust estimate of exactly how efficient your investment is. You can keep piling more factors into the equation until you've accounted for every possible facet of your investment. This is what accountants and economists spend their days doing. :-)", "title": "" }, { "docid": "1bb77fd32ae8e227ef16984ac4c5b8b9", "text": "\"I'm not an expert, but here is my best hypothesis. On Microsoft's (and most other company's) cash flow statements, they use the so-called \"\"indirect method\"\" of accounting for cash flow from operations. How that works, is they start with net income at the top, and then adjust it with line items for the various non-cash activities that contributed to net income. The key phrase is that these are accounting for the non-cash activities that contribute to net income. If the accounts receivable amount changes from something other than operating activity (e.g., if they have to write off some receivables because they won't be paid), the change didn't contribute to net income in the first place, so doesn't need to be reconciled on the cash flow statement.\"", "title": "" }, { "docid": "c2feb74b8173e7cfcdc17af615e980e0", "text": "The HMRC website would explain it better to you. There is a lot of factors and conditions involved, so refer to the HMRC website for clarification. If your question had more details, it could have been easy to pinpoint the exact answer. Do I declare the value of shares as income Why would you do that ? You haven't generated income from that yet(sold it to make a profit/loss), so how can that be declared as income.", "title": "" }, { "docid": "aa256573e6b5414fab97b4d43a17224c", "text": "Revenue does not equal income. Income is, more or less, synonymous with profit. It is the amount of money earned after expenses. A corporation is taxed on its revenue after its deductible expenses have been removed, the same as a person is. It's kind of double taxation, but it's kind of the same argument as saying that payroll taxes in addition to income taxes are double taxation. Also of note: taxes on dividends are lower than normal taxes because of this double taxation.", "title": "" }, { "docid": "f1816281f79c09983869981674d6ff07", "text": "Dividends and interest are counted under operations for the purpose of this tweet. This is pretty much entirely a non-story. I'm not sure exactly how they're dividing it up, but it looks like they're only counting stock appreciation as capital gains and counting things revenue from sales (from their subsidiaries as well) under operating income. This is just from a quick glance over their statement of earning, but that's what it looks like to me.", "title": "" }, { "docid": "d02bb6df67310819e9dfe2d81a0cfe9c", "text": "The focus of this article isn't on tax revenue. The author is discussing income disparity. The laffer curve doesn't tell the whole story. You are correct, a higher tax rate does not imply higher tax revenue, and a lower tax rate does not imply less revenue. Changing tax rates isn't going to significantly affect tax revenue. However, there are a broad range of other effects when changing tax rates. In evaluating adjustments to tax rates, our focus needs to be on these secondary effects. We are taxed on income not revenue. When I sell you a $10 widget that I paid a worker $2 to produce from $5 of materials, I pay taxes on the $3 net income, not the $10 revenue I received from you. The main way businesses avoid high marginal tax rates is by increasing deductible expenses, such that their net income after these expenses keeps them below their desired tax bracket. It is far better to spend that money on something that can benefit the business than simply give it to the government. Any businessman would rather keep his earnings if possible. If that is not possible, he'd prefer to spend them on something that can help him, rather than squandering it on junk or giving it away to the government. For most businesses, the largest deductible expense is payroll. Any decent employer would prefer to pay out a Christmas bonus instead of giving that same amount to Uncle Sam. Any businessman would prefer to pay for additional advertising, or a charitable donation to a worthy cause, rather than paying the IRS. Run up the top-tier tax rate and suddenly, businessmen feel a compelling need to lower their prices and pay their workers more. Run up the tax rate, and income disparity shrinks. Run up the tax rate, and you put more money in the hands of consumers.", "title": "" }, { "docid": "b41a23be2e99ccd466f0ddb5b967ce6b", "text": "The argument seems to derive from the fact that state law bars cities from taxing net income. Hence the city is arguing it doesn't apply to gross income. Of course the city would also have to argue that income isn’t property. I don't think it's going to work out for them.", "title": "" }, { "docid": "f1c6312f854b5d24df50b88c1b9616a6", "text": "If corporations are people, why do persons have to pay tax on their revenues (personal income) while corporations only pay tax on their profits (operating income). If corporations are people, then everyone should pay taxes the same way - either on their revenues, or their profits. We shouldn't be discriminating. Boy, if a person could only pay taxes on their profits (savings), instead of their revenues (personal income), it'd be a whole new ballgame.", "title": "" }, { "docid": "61de18f1f7c5f12ef51739de5e6f5d9a", "text": "Expenses are where the catch is found. Not all expenditures are considered expenses for tax purposes. Good CPAs make a comfortable living untangling this sort of thing. Advice for both of your family members' businesses...consult with a CPA before making big purchases. They may need to adjust the way they buy, or the timing of it, or simply to set aside capital to pay the taxes for the profit used to purchase those items. CPA can help find the best path. That 10k in unallocated income can be used to redecorate your office, but there's still 3k in taxes due on it. Bottom Line: Can't label business income as profit until the taxes have been paid.", "title": "" }, { "docid": "7ad3460df9b280eb1a6c22c6ecac7c12", "text": "Because interest is tax deductible. I don't know much about the Chevron deal, but I'm an EM debt analyst and typically the issue you have is that dividends are taxed but interest is not. So to move money from a subsidiary instead of putting in equity and getting dividends (tax inefficient), instead you give debt and get interest back. You get a little less flexibility on payment but you more than make up for that (on average) with tax efficiency. Don't think of it as a loan at all. Think of it as a pseudo-equity investment with required dividends. Revenue is not taxed, profit is. Interest comes out of profit, dividends however are issued after profit. This could all be wrong vis-a-vis Chevron. This is just how most of the companies I look at work.", "title": "" }, { "docid": "7aec2e5d1480a09c5e8c8671d32c6e8d", "text": "\"A bit strange but okay. The way I would think about this is again that you need to determine for what purpose you're computing this, in much the same way you would if you were to build out the model. The IPO valuation is not going to be relevant to the accretion/dilution analysis unless you're trying to determine whether the transaction was net accretive at exit. But that's a weird analysis to do. For longer holding periods like that you're more likely to look at IRR, not EPS. EPS is something investors look at over the short to medium term to get a sense of whether the company is making good acquisition decisions. And to do that short-to-medium term analysis, they look at earnings. Damodaran would say this is a shitty way of looking at things and that you should probably be looking at some measure of ROIC instead, and I tend to agree, but I don't get paid to think like an investor, I get paid to sell shit to them (if only in indirect fashion). The short answer to your question is that no, you should not incorporate what you are calling liquidation value when determining accretion/dilution, but only because the market typically computes accretion/dilution on a 3-year basis tops. I've never put together a book or seen a press release in my admittedly short time in finance that says \"\"the transaction is estimated to be X% accretive within 4 years\"\" - that just seems like an absurd timeline. Final point is just that from an accounting perspective, a gain on a sale of an asset is not going to get booked in either EBITDA or OCF, so just mechanically there's no way for the IPO value to flow into your accretion/dilution analysis there, even if you are looking at EBITDA/shares. You could figure the gain on sale into some kind of adjusted EBITDA/shares version of EPS, but this is neither something I've ever seen nor something that really makes sense in the context of using EPS as a standardized metric across the market. Typically we take OUT non-recurring shit in EPS, we don't add it in. Adding something like this in would be much more appropriate to measuring the success of an acquisition/investing vehicle like a private equity fund, not a standalone operating company that reports operational earnings in addition to cash flow from investing. And as I suggest above, that's an analysis for which the IRR metric is more ideally situated. And just a semantic thing - we typically wouldn't call the exit value a \"\"liquidation value\"\". That term is usually reserved for dissolution of a corporate entity and selling off its physical or intangible assets in piecemeal fashion (i.e. not accounting for operational synergies across the business). IPO value is actually just going to be a measure of market value of equity.\"", "title": "" }, { "docid": "1e0b922039ba543428e9db345618ee83", "text": "Straight line in this example should be just the $2MM per year. I don't think the author of the problem intended you to use anything in the actual tax code like MACRS. I think the goal of the problem is to get you to identify the value of the depreciation tax shield and how the depreciation does affect your cash flow by reducing your taxes, even though depreciation itself is not a cash event.", "title": "" }, { "docid": "62f088dba0ac32effa798e86ebec2ba4", "text": "Problem with deciding investments in a company is that you have multiple potential options, each with their projected returns, but each also has some hard-to-estimate risks. A further problem is that these opportunities arrive one-by-one, so you usually cannot compare project A vs. project B to decide which one is better. The internal rate of return is a rule-of-thumb like way to make these decisions. The company board may set an IRR target of e.g. 15%, and each executive will compare their projects against that target. They'll execute only the projects that are projected to give a good return, but some of these projects will end up failing. Thus the real average profit will not be equal to IRR. Important thing is that this target number gives ways to compare projects, and also for the board to control the investments. If the company has a good track record of being successful at projects, the board might set an IRR target of 10% and expect to get e.g. 8% return on their investment. However, if the company has a much larger risk of projects failing, they might demand a predicted IRR of 20% to account for the risk. Ultimately if the IRR target is set too high, the company will find no projects it considers profitable to invest in. In practice if this happens, the company owners are better off taking out the cash as dividends and investing it elsewhere.", "title": "" } ]	fiqa
ce70c8084b485f92b614c300889cb777	Sale of house profit gifted to child	[ { "docid": "460ebdb56d37f72732e2748e258714c7", "text": "1) You parents will have to pay tax on the gain as it wasn't their primary home. You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply: As I look at it, it is your parents are the ones who own the property and they will have to pay on £60000. But as you say you pay part of the mortgage, I would go to a tax advisor/accountant to confirm if they will only pay on the £15000. I couldn't find any guidance on that matter on gov.uk 2) Inheritance tax will not be levied on it as it is below £325000, but tax will be levied on £325000, less £3000 annual gift allowance. Two articles for further information - GOV.UK's Tax when you sell your home Money.co.UK's Gifting money to your children: FAQs", "title": "" } ]	[ { "docid": "2344c287634cb6e22a4b35f37aee3997", "text": "Sale of a stock creates a capital gain. It can be offset with losses, up to $3000 more than the gains. It can be deferred when held within a retirement account. When you gift appreciated stock, the basis follows. So when I gifted my daughter's trust shares, there was still tax due upon sale. The kiddy tax helped reduce but not eliminate it. And there was no quotes around ownership. The money is gone, her account is for college. No 1031 exchange exists for stock.", "title": "" }, { "docid": "cbd1a2097c5aeb76cde239c4c6b9ec34", "text": "Assuming you're in the US, you can buy the house from your parents for $100k with a mortgage, and the excess value (less annual gift limit) will count against your unified federal gift and estate tax exemption. So at $300k value you'd take $172k against your total exemption ($200k value over price paid, less $14k per parent). No gift tax liability on your parents' end, unless the exemption has already been used up.", "title": "" }, { "docid": "233b7834ac5a15ab9d4b9fb522d80bd0", "text": "He doesn't have to follow through on this, but he could tell this sister that he will stop making mortgage payments, which will result in foreclosure and sale at lower price than might be realized by a voluntary sale. Translation: the house will sold, sis. Do you want to maximize your share of the proceeds? And, as I said in a comment above: I hope that he is keeping careful records of mortgage an utility payments, as he might (should) be entitled to a refund from the proceeds of an eventual sale (possibly adjusted by the fair rent value of the time which he spent living there)", "title": "" }, { "docid": "c6c91d59a4fc2f74edce1e2045913676", "text": "Yes, depending on what you're trying to achieve. If its just a symbolic gift - you can use a service like this. There are several companies providing this service, look them up, but the prices are fairly the same. You'll end up getting a real stock certificate, but it will cost a lot of overhead (around $40 to get the certificate, and then another $40 to deposit it into a brokerage account if you want to sell it on a stock exchange). So although the certificate is real and the person whose name on it is a full-blown shareholder, it doesn't actually have much value (unless you buy a Google or Apple stock, where the price is much much higher than the fees). Take into account that it takes around 2 months for the certificate to be issued and mailed to you, so time accordingly. Otherwise, you can open a custodial brokerage account, and use it to buy stocks for the minor. Both ways are secure and legal, each for its own purpose and with its own fees.", "title": "" }, { "docid": "9100a3e1cee41f47fc7d15a0ffe99996", "text": "So I want to sell my 100 shares of AAPL to him at a price of 10 or even 1 US Dollar. Is that legal/allowed? Of course. It's your stocks - do with it what you want. if the two persons are not served by a same broker. You'll have to talk to your broker about the technicalities of the transaction. if the person who sell are US citizen and the person who buy are not, and and vice-versa Since you asked specifically about US citizenship, I'll assume you're in the US or the transaction is taking place in the US. Citizenship has nothing to do with it (except may be for economic sanctions against Russians or Iranians that may come into play). What is important is the tax residency status. Such a transfer is essentially a gift, and if you're a US tax resident (which doesn't correlate to your immigration status necessarily) - you'll have to deal with the gift tax consequences on the discount value. For example - you have 100 shares of AAPL which you sold to your friend for $1 each when the fair market value (FMV) was $501. So essentially, the friend got $50,100 value for $100. I.e.: $50K gift. Since this amount is above the annual $14K exemption - you'll have to deal with the gift tax and file gift tax return. There are also consequences for the capital gains tax for both you and your friend. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) about the specifics given your circumstances. If you (or the recipient) are also a foreign citizen/tax resident - then that country's laws also may affect your situation.", "title": "" }, { "docid": "baebd309ec2e588da4ec6750b375502a", "text": "If the gift was stock that they have owned for years there can be one hitch: The basis of the stock doesn't reset when it is gifted. For example if grandparents have owned stock that is currently worth $10,000 today, but they bought it decades ago when it only cost them $1,000; then if the new owner sells it today they will have a gain of $9,000. The clock to determine short term/long term also doesn't reset; which is good. The basis needs to be determined now so that the gain can be accurately calculated in the future. This information should be stored in a safe place. Gains for dividends are investment income and the rules regarding the kiddie tax need to be followed.", "title": "" }, { "docid": "4d6b8b176414df94cb82c6b650b20647", "text": "To me this sounds like a transaction, where E already owns a company worth 400k and can therefore pocket the money from D and give D 25% of the profits every year. There is nothing objective (like a piece of paper) that states the company is worth 400K. It is all about perceived value. Some investors may think it is worth something because of some knowledge they may have. Heck, the company could be worth nothing but the investor could have some sentimental value associated to it. So is it actually the case that E's company is worth 400k only AFTER the transaction? It is worth what someone pays for it when they pay for it. I repeat- the 400K valuation is subjective. In return the investor is getting 25% ownership of the product or company. The idea is that when someone has ownership, they have a vested interest in it being successful. In that case, the investor will do whatever he/she can to improve the chances of success (in addition to supplying the 100K capital). For instance, the investor will leverage their network or perhaps put more money into it in the future. Is the 100k added to the balance sheet as cash? Perhaps. It is an asset that may later be used to fund inventory (for instance). ... and would the other 300k be listed as an IP asset? No. See what I said about the valuation just being perception. Note that the above analysis doesn't apply to all Dragons Den deals. It only applies to situations where capital is exchanged for ownership in the form of equity.", "title": "" }, { "docid": "b4a9f359372c7bca8b88b5456e089885", "text": "Let's define better the situation and then analyze it: Start with: End with: Process: So B has the same amount of money, just in a different bank account, but A and C changed states. A now doesn't have money, and C does, as the result of the transaction between A, B and C. The gift tax issue I see is the transfer of money from A (you) to C (your brother). If you're a US tax resident then you have $14K exemption from gift tax per person per year. £20K is more than that, so it will be subject to the tax. The fact that a third person was involved as an intermediary is irrelevant - for the purpose of gift tax there's no distinction between using a bank for transfers or a private party. Keep in mind that paying tuition directly to the institution on behalf of your brother may help you mitigate your gift tax liability - tuition payment made on behalf of your brother is exempt from gift tax. But it has to be made directly to the institution, it cannot pass through your brother.", "title": "" }, { "docid": "c679e7d22a1d7b9a4ea8dbe5d55d7452", "text": "In the US, gift tax always falls on the donor, never the recipient, and gifts are not taxable income to the recipient. The IRS could raise questions if there is an employer-employee relationship between donor and recipient; your employer cannot give you money or property (e.g. a Rolex watch) or benefits (e.g. a house to live in rent-free) and claim that it is a gift, so that you do not have to pay income tax on that money. But, your parents need to be careful; that $14K per person is the exemption for the whole year and once they give you that, anything extra (birthday present, Christmas present etc) is subject to gift tax (for them) though you can still enjoy your gifts without any tax issue.", "title": "" }, { "docid": "6bca2d910c31dc208916b2043ea172e7", "text": "Parents are eminently capable of gifting to their children. If it's a gift call it a gift. If it's not a gift, it's either a loan or a landmine for some future interpersonal familial interaction (parent-child or sibling-sibling). I an concerned by some phrasing in the OP that it is partially down this path here. If it's a loan, it should have the full ceremony of a loan: written terms and a payment plan (which could fairly be a 0% interest, single balloon payment in 10 years or conditional on sale of a house or such; it's still not a gift).", "title": "" }, { "docid": "3e4e0889cafa3e615afc8b6cef174d5a", "text": "We have a house here in India worth Rs. 2 Crores. We want to sell it and take money with us. Selling the house in India will attract Capital Gains Tax. Essentially the price at which you sell the property less of the property was purchased [or deemed value when inherited by you]. The difference is Capital Gains. You have to pay tax on this gains. This is currently at 10% without Indexation and 20% with Indexation. Please note if you hold these funds for more than an year, you would additionally be liable for Wealth tax at 1% above Rs 50 lacs. Can I gift this whole amount to my US Citizen Daughter or what is the maximum limit of Gift amount What will be the tax liability on me and on my Daughter in case of Gift Whether I have to show it in my Income Tax Return or in my Daughter's Tax Return. What US Income Tax Laws says. What will be the procedure to send money as Gift to my Daughter. Assuming you are still Indian citizen when to gift the funds; From Indian tax point of you there is no tax to you. As you daughter is US citizen, there is no gift tax to her. There is no limit in India or US. So you can effectively gift the entire amount without any taxes. If you transfer this after you become a US Resident [for tax purposes], then there is a limit of USD 14,000/- per year per recipient. Effective you can gift your daughter and son-in-law 14,000/- ea and your husband can do the same. Net 14,000 * 4 USD per year. Beyond this you either pay tax or declare this and deduct it from life time estate quota. Again there is no tax for your daughter. What are the routes to take money from India to US Will the money will go directly from my Bank Act.to my Daughter's Bank Account. Will there will be wire transfer from bank to bank Can I send money through other money sender Certified Companies also. The best way is via Bank to Bank transfer. A CA Certificate is required to certify that taxes have been paid on this funds being transferred. Under the liberalized remittance scheme in India, there is a limit of USD 1 Million per year for moving funds outside of India. So you can move around Rs 6-7 Crore a year.", "title": "" }, { "docid": "2387abb9aaebd6d9af24c4eb31e8769e", "text": "The house becomes an asset belonging to the estate of Alice. The debt also goes with the estate. The executor of the will should arrange for the debt to be paid off as part of sorting out the estate - they can't just hand out all the assets and leave nothing to pay off the debts. This could be done by selling the house. But in practice, the executor and the mortgage lender may both be happy if Bob takes out a mortgage, uses that to pay the debt, then inherits the house.", "title": "" }, { "docid": "acd51e7de47fc7899fb57bb72255bf7e", "text": "UGMA and UTMA accounts are in the name of a single child(Your daughter), the funds are not transferrable to another beneficiary. There are strict rules governing UTMA/UGMA accounts. As a custodian, you do not own the assets in the accounts; the minor ultimately owns the asset, however, you can make certain withdrawals from the account to cover expenses for the benefit of the child, such as school fees, tutoring, computer equipment, etc. I'm not sure gifting some of the money to her other siblings will actually benefit your daughter who happens to be the real beneficiary.", "title": "" }, { "docid": "98e60e1fe7071d83c46a65c9edaebb62", "text": "When you apply for the mortgage expect that the lender will want your sister to sign a form explaining that that is a gift, otherwise the lender might be concerned that it is a loan. Be careful about the gifting of the money to a minor. You could run into an issue if the money isn't spent on something that benefits the child. The IRS does get concerned about using money transfers between child and parent to get around tax issues. Other than that you don't have a tax issue. If the gifting is done correctly your sister can gift $14,000 to you and your spouse each year. If your child has a large expenses in the near future: tuition, braces... Your sister could transfer funds to the child to pay for those items, thus freeing up some of your funds for the house.", "title": "" }, { "docid": "68f526be13311ca8c94737394ef90a28", "text": "Some banks are bankrupt, or so close to it that they can only pretend to give real dividends in a desperate attempt to keep investors from fleeing and driving their stock price (and thus credit rating) down into a pit of despair. Other banks (like jpmc) are not in bad shape, have cash, and are quite happy to disburse it.", "title": "" } ]	fiqa
f9d9bbc912781b9f4ece126dd4364bd4	On a debt collection agency's letter, what does “balance” refer to?	[ { "docid": "b1623a6843b36d0af9464e4e2d3615f5", "text": "\"Without more info to go on (such as a screenshot of the relevant portion of the statement or what country you're in), I will run with the answer that \"\"balance\"\" is the amount the collection agency is attempting to collect from you, including any and all fees the agency may have added. One important idea to keep in mind is that depending on how old the debt is, the amount involved, and the importance to the agency to collect it, you may be able to negotiate a settlement for less than the full amount. This isn't always possible, but sometimes you get lucky, and it doesn't hurt to try. Collection agencies work in several ways. Some will actually buy the outstanding debt from the original creditor for some percentage of the debt's face value and then take their chances on whether they collect anything at all, while others work on behalf of the creditor and earn some percentage of what they manage to recover. In the latter case, your chance of negotiating a reduced amount is better, because the agency is being evaluated by the creditor on how quickly and efficiently they collect debts. An agency that is slower or less effective than another is less likely to continue earning the creditor's business. I hope this helps. Good luck!\"", "title": "" }, { "docid": "b24927fef77052655e106ffadd076973", "text": "The balance is the amount due.", "title": "" } ]	[ { "docid": "e1d4a964cd3d92ab2f64480a644b9111", "text": "\"The term for money owed to you by a company would be a credit balance. Consider, when an item is credited to your account, it's in your favor. Whereas, money you owe to a company may be referred to simply as a balance, or balance owing, or less frequently a debit balance. A related term balance due would be the payment you owe in the current period, i.e. not representative of the entire amount owed. I don't think the terms \"\"positive balance\"\" or \"\"negative balance\"\" are considered idiomatic in business. Rather, accounting terms like debit and credit have taken hold instead – and are often a source of confusion. But I suggest that if you have a negative balance on a credit card, it's a credit balance in your favor. Unless they mix it up.\"", "title": "" }, { "docid": "05566dc1f7eabf546c872438675b8ce9", "text": "I too was very confused when I tried to be tricky and paid down my balance BEFORE the bill date. I thought this would be a great thing because it would show my utilization near zero percent. The opposite happen, it dropped my credit score from 762 to 708. Here is the best example I can come up with when it comes to utilization. Lets pretend you are an insurance company and you trying to figure out who are the best risk drivers. The people that drive 10% of the day are a better risk than the people that drive 50% of the day. The people that drive 50% of the day are a better risk than the people that drive 90% of the day. Here is the rub when people drive 0%. When you look at the people at 0% they appear to be walking, busing or flying. What they are NOT doing is driving. Since they are not driving (using Credit) they are viewed as POOR drivers since they are not keeping up on their driving skills. (Paying bills, watching how they spend, and managing their debt). So, now before the billing date I pay down my balance to something between 5 to 10% of my utilization. After the bill is issued, I pay it off in FULL. ( I am not going to PAY these crazy interest rates). What shows up on my credit report is a person that is driving his credit between 5 and 10% utilization. It shows I know I how to manage my revolving accounts. I know it's dumb, you would think they reward people that have zero debt, I don't hate banks I hate the game. ( I do love me some reward points =))", "title": "" }, { "docid": "18204c9083646cc9aa4682d0f5d23764", "text": "Collections companies buy debt for a fraction of the face value of the debt (as little as 5-7 cents on the dollar), and you can often settle debt for a fraction of the face amount (perhaps 10-25 cents on the dollar). But there are several considerations. Do you owe the debt (is it a legitimate debt), can you afford to pay the debt, what is the age of the debt (remember, there is a statute of limitations on debt, varies by state), and what are the consequences of non-payment or settlement of the debt. Rather than confirm that you owe the debt, tell the debt collector that you need proof that the debt is yours (you should do this by certified letter). Be careful not to confirm the debt, or agree to pay it, or make any payments (yet). You said that your doctor ordered the product for you. You said the company sent you a product (you have the product). Once you have confirmed that the debt is yours, you should determine the age of the debt (when was the last time you paid on the debt). Each state has statute of limitations on debt, depending upon the age of the debt (this is why it is important not to send the collector money until you have verified the debt). You did not state when the debt was incurred (assume under SoL). Ask yourself whether you can afford to pay the debt. The amount of the debt, and your ability to pay, and whether you want to avoid the time and expense of dealing with the collector (they are trained to be annoying) are all factors to consider. You should also consider the negative consequences (credit score effects), and whether the cost of a derogatory entry is worth fighting the debt. You did not explain your financial situation; paying the $55 may be trivial, or it may be a hardship. Before you settle any debt, you should send a letter (keep a copy and proof you sent it, certified), and demand that the debt collector provide proof that you owe the debt. Often this proof does not exist, or is insufficient to gain a judgement (you would need legal help here). And should a debt collector agree to settle the debt for a lower amount, you need to get that agreement in writing. Be aware that when you settle a debt, the collector can (and will) send you a 1099 for the portion of the debt which has been forgiven, and can report to the credit bureaus that you settled a debt for less than the full amount (negative mark against credit). Derogatory credit items will haunt you for years. Decide whether saving $20, $30 or even $55 is worth the trouble. Probably not. Learn from this. When a company sends you something you did not order, contact them, and send it back or demand they pay shipping, and send them a letter demanding $5/day storage and $20 handling fee to ship it back to them. Disclaimer: Heed the insane ravings of a deranged heretic at your peril... hire a lawyer.", "title": "" }, { "docid": "bc50b9007a2cfad07bb3d5dd53711ee6", "text": "Reading stuff like this makes me want to go into the debt collection business. Just send letters to random people demanding money. Sounds like an easy way to make a living. What's your name and address? Just kidding. If they are sending stuff to a Virginia PO Box, close the box with no forwarding address and consider it case closed. If they are targetting you personally in New Hampshire, the best thing to do is to sue proactively before it goes to collection. New Hampshire has strict anti-debt-collection laws. Basically, what you do is go to small claims court and fill out a one-page form. Sue them for $2000, $3000 or whatever is convenient. Do not hire a lawyer. You can do this in 2 hours of your own time. Your grounds are: (1) Violation of the creditor of NH FDCA laws. According to the laws the creditor has to put all kinds of specific stuff in their threat letters. Since they are not doing this, they have violated NH FDCA. Read the FDCA so you know which specific items they are violating. (2) Extortion. Since you do not owe them any money, demanding money from you is extortion which is both criminally and civilly actionable. You sue them for mental anguish due to extortion. The validity of your claims is irrelevant. You just need to get them in court. There are two possibilities: (A) They fail to show up. In this case you win and they owe you $3000 or whatever. Not only that if they later try to collect from you send a copy of the judgement to the credit bureau or collector or whatever and that is proof you owe them no money. (B) They hire some stooge local lawyer who appears. Accept the court's offer for arbitration. When you go into arbitration with the lawyer tell him you will drop the lawsuit if they send you a check for $500 and a hand-written guarantee from him that you will never hear from his client again. Either way, you come out ahead. By the way, it is absolutely guaranteed that the enemy lawyer will accept your offer in (B) above because the SEO company is already paying him $5000 to show up to answer your lawsuit, and the lawyer does not want to hang around all morning in court waiting for the case to be heard. If he can get out of there in half an hour for only $500 he will do it. -------------------------------UPDATE If all you are getting is calls and the caller refuses to identify themself, then it is definitely an illegal scam. It is illegal in New Hampshire to make collection calls and refuse to full identify who is calling. The phone company has methods for dealing with illegal calls. First you have to file a police report. Then you call Verizon Security at 1-800-518-5507 (or whatever your phone company is). They will trace the call and identify the caller. They you can make a criminal complaint in their jurisdiction unless the call is from Pakistan or something.", "title": "" }, { "docid": "e9a4f8784feb1f2536be8d274bd0fe86", "text": "Run your credit reports for the 3 major agencies to find out which of them have the debt was reported on and initiate the dispute process with each agency that reports the invalid debt. This will cause the person who put it on the report to either prove that it is valid or remove it from your report. Ignoring debt collector calls is not a good option, regardless of whether the debt is valid. They obviously think the debt is yours so their response is naturally to put it on your credit report. In most cases it is a good idea to respond in writing that it is not your debt. I doubt you have much recourse against the creditor. For one thing they DID try to contact you and you dodged them. That is not their fault. Secondly, it is unlikely you would prevail unless you could prove that they maliciously put false information on your credit or through gross incompetence did so. More likely is that they are mismatching you to a debt from someone with a similar name, or there is an accounting error somewhere. Or possibly you owe the debt and no one ever sent you a bill. It happens with medical bills all the time.", "title": "" }, { "docid": "df87670ac7382775987c809f727ed906", "text": "\"A.1 and B.1 are properly balanced, but \"\"Business Expense\"\" is an expense, not an asset. The T entries should be timestamped. The time should be equal to the time on the credit card receipts. This will make audit and balancing easier. A or B can be used, but if the the business is to be reimbursed for personal expenses, the accounts should be renamed to reflect that fact. More explicit account names could be \"\"Business expense - stationary\"\" and \"\"Personal expense - lunch\"\" or even better \"\"Personal expense - cammil - lunch\"\". With a consistent format, the account names can be computer parsed for higher resolution and organization, but when tallying these high resolution accounts, debits & credits should always be used. When it comes time to collect from employees, only accounts with \"\"Personal expense\"\" need be referenced. When it comes time to collect from \"\"cammil\"\", only net accounts of \"\"Personal expense - cammil\"\" need be referenced. An example of higher resolution, to determine what \"\"cammil\"\" owes, would be to copy the main books, reverse any account beginning with \"\"Personal expense - cammil\"\", and then take the balance. Using the entries in the question as an example, here's the account to determine \"\"cammil\"\"'s balance: Now, after all such balancing entries are performed, the net credit \"\"Personal expense - cammil\"\" is what \"\"cammil\"\" owes to the business. The scheme for account names should be from left to right, general to specific.\"", "title": "" }, { "docid": "958adefe530f3b14d55e5dd7a5537ad3", "text": "If one does pay, one should only pay after they get a letter stating such a payment fully satisfies the debt. Then, one should only pay via money order or cashiers check. Never pay by personal check or credit card. Send such a payment via certified mail to ensure delivery. As stated in other answers: There might be an issue of honoring your debts, but that doesn't come into play here. You already didn't pay your debt, and the original owner of the note already took money. Paying this debt is only money in pocket of the debt collector. The scammier they are, and the worse they treat you would factor in.", "title": "" }, { "docid": "3d5daf9cc17e40cfa669930d0cc5de79", "text": "Request verification in writing of the debt. They are required to provide this by law. Keep this for your records. Send them a notice by certified mail stating that this is not your debt and not to contact you again. Indicate that you will take legal action if they continue to try and collect. Keep a log of if/when they continue to call or harass you. Contact counsel about your rights under the fair debt collection laws, but if they keep harassing you after being provided proof of your identity, they are liable. You could win a judgement in court if you have proof of bad behavior. If your identity is stolen, you are not legally responsible for the charges. However it is a mess to clean up, so pull your credit reports and review your accounts to be sure.", "title": "" }, { "docid": "01a391a21426165ab94de05466668be1", "text": "\"> Or just remember how much you spent. The purpose of my comment was to say the online balance isn't a true balance, not that I had trouble balancing a book. Except that you rather obviously don't comprehend what the meaning of \"\"true balance\"\" is. The balance the bank shows on it's online system (or it's statements) is very much a \"\"true balance\"\" of the transactions the BANK is aware of (i.e. the ones that have been processed). That you think the bank should somehow be \"\"magically aware\"\" of the fact that you just signed a credit card transaction -- or that you wrote a check and mailed it off to someone -- demonstrate that you lack a fundamental comprehension of the system. And the \"\"just remember how much you spent\"\" as an excuse for not properly (independently) recording (and mathematically subtracting) what you have spent... Is demonstrative of both ignorance AND laziness.\"", "title": "" }, { "docid": "133383e907a8124467af4d047c235890", "text": "I would keep the letter in a file for follow-up, and I would do what you are already planning to do and wait to see what shows up on the credit report. If this does reflect an identity theft attempt, chances are that others will follow, so vigilance is key here. If there is a hard credit check, then you can dispute that on your credit report. If there is not a hard credit check, there is nothing further this credit card company can do to help you anyway.", "title": "" }, { "docid": "dc96db385e230fadca5d6f5d9516f379", "text": "Never speak to a debt collector. Ask them to stop calling you and STOP talking to them. Communicate only via postal mail. Do not react in an emotional way, do not use foul language, etc. If they call you and attempt to harass or intimidate you, note the date/time, name of the caller and nature of the call. Ask them to cease communications via phone and hang up. You're missing alot of detail here. You need to understand: The key to these things is to fully understand the situation you are in and find out what your legal obligations are.", "title": "" }, { "docid": "e33a9c21f43ea9c539edeef6e961001f", "text": "\"I was amazed to find out that many people think that credit ratings are equivalent across asset classes. Rating agencies DO NOT and CAN NOT rate assets based on market exposure. There ratings represent the assets idiosyncratic risk, obviously assets that are more exposed to the market have higher risk in a market downturn but higher reward in a boom. This is pretty well known and documented. The agencies that are paid by debt issuers are there to establish that the asset meets certain established criteria, often this involves the interest rate. Thus, as most people that are familiar with financial markets know, the major CRA's tend to be reactionary, and a much better gauge of actual credit worthiness is the market interest rate. However these ratings do have a purpose for creating standardized practices for governments and other public organizations. Subscriber based CRAs will almost always give much more accurate and detailed information, just as with everything else, if you want something done right, your gonna have to do it yourself. That said it will be interesting to see how the agencies adapt to Dodd Frank which mandates that their ratings translate across asset classes. Especially since gov debt is in a whole different tax category and thus intrinsically has lower interest rates and thus lower default rates. In the end the rating agencies are just going to have to say... \"\"well since the interest rate is under inflation we know that it is Aaa...\"\" lol Thus they are useless. In addition the rating of government debt has less to do with ability to pay back obligations and more to do with (at least in a democracy) political will. How is this supposed to be quantified?\"", "title": "" }, { "docid": "dffe4e3526f188554fef111ba984ad6f", "text": "A credit on your account generally means that they owe you money. There could be several reasons for this: The pay button is generally always visible, even if you have a credit on your account. This gives you the option of prepaying your bill, if you choose, and also allows you to pay your bill if there is a database problem and the website is showing you the wrong total. However, individual companies design their websites in different ways and use different terminology. I recommend a quick call to the energy company. They can tell you if you owe anything.", "title": "" }, { "docid": "44584ab756614d0853be9a0696ccd7d6", "text": "I cannot speak specifically to the Netherlands or the UK specifically, but my prejudice has me believing that there would be more consumer protection in those two countries than that we have here in the the US, certainly not less. Debt collectors mostly do their job by bullying. Here in the US they are mostly toothless and typically obtain payments when they invoke an emotional reaction. In your case they are attempting to invoke fear. Legal action over €400? Get real. It will cost them 20 times that to bring action, and they are equally likely to get a sympathetic judge to toss out the case. Now you very well know you should have returned the box, please don't be coy. If you still have it, you should attempt to return it. If not you should attempt to settle. Offer them €80, going no higher than €160. Get it in writing, that this satisfies the debt and use either a one time use credit card or a bank check/money order.", "title": "" }, { "docid": "c5a1e02a83ece448b4cfddd099a90eeb", "text": "People who provide services like that are called debt councilors or debt advisors. They help you to organize your debts, advise you in prioritizing them and also help you to negotiate or legally challenge any unreasonable levies.", "title": "" } ]	fiqa
d41e2906dbdd37432eee19e7a3d3c023	How can I borrow in order to improve a home I just bought?	[ { "docid": "5de97a1bc0bbdec7f2e311fbfba9d0bd", "text": "\"Be careful that pride is not getting in the way of making a good decision. As it stands now what difference does it make to have 200K worth of debt and a 200K house or 225K of debt and a 250K house? Sure you would have a 25K higher net worth, but is that really important? Some may even argue that such an increase is not real as equity in primary residence might not be a good indication of wealth. While there is nothing wrong with sitting down with a banker, most are likely to see your scheme as dubious. Home improvements rarely have a 100% ROI and almost never have a 200% ROI, I'd say you'd be pretty lucky to get a 65% ROI. That is not to say they will deny you. The banks are in the business of lending money, and have the goal of taking as much of your hard earned paycheck as possible. They are always looking to \"\"sheer the sheep\"\". Why not take a more systematic approach to improving your home? Save up and pay cash as these don't seem to cause significant discomfort. With that size budget and some elbow grease you can probably get these all done in three years. So in three years you'll have about 192K in debt and a home worth 250K or more.\"", "title": "" }, { "docid": "73caf1383f45af48681d16f3f546b21c", "text": "It depends on your equity(assets - liabilities). If you have a lot of equity, banks will be happy to lend you money because they now they can always seize your assets. If you don't have a lot of equity another option is to go to hard money lenders. They charge high rates and some of them lend-to-own, but is an option. And consider what Pete said, you might be a little optimistic.", "title": "" } ]	[ { "docid": "c65f5765d20d2d5f5c7ef54ce1a55cf1", "text": "Others have covered the usual vehicles for getting money out of a property. There's another category of home loan called a hard money loan. It would take a lot of inquiries to find a hard money loan given your needs, but chances are its doable. The terms can be onerous, and hard money lenders don't mess around when it comes to foreclosing after a few missed payments. It's an off-the-radar industry and the private lenders and specialized trustees operate together with strike-force precision. Trustees normally should be trust-able by borrower and lender, but in the case I describe below, one man owned the small company that lent, and the small company that acted as trustee. Borrower beware. Yet, if your credit score and income are dismal, but your home equity is great, hard money is the only way to borrow against your home. In making hard money loans, lenders don't consider your credit score or income, just how much equity is in the property. I daresay they hope you'll default. They don't always hang onto the loans. If you look like a payer instead of someone they can foreclose on, they might sell the loan to someone who wants a stable monthly income. You don't know a thing about that person. A Cautionary Tale: Check out HankandHelen.blogspot.com for a currently-unfolding saga, in which an elderly couple's grandson convinced them to let him take title to their house, borrow against it, invest the proceeds, and share the profits. It didn't work that way. He went through hard-money lenders. He borrowed $360,000 and then $65,000. Those were mysteriously paid off (total mystery at this point), and he borrowed $47,000. About a year later, he lost the house by defaulting the $47,000 loan. He was only about $2000 behind in payments when the trustee issued a notice of default, followed by a notice of sale. The trustee put the place up for auction, which didn't require a court order: that's the way it is in California and many western states, and a few others. The hard money lender bought the loan at auction for $83,000, and a home worth about $800,000 no longer belonged to the grandson. A fundraiser brought in about $120,000 and the couple bought a mobile home in a mobile home park. The acre of land and swimming pool they used to own will be for sale soon, or possibly demolished for a mansion to be built. (House in the area go for about $2.5M when improved with very large, new houses.) I poke around PropertyShark.com when I see a house bought cheaply at a foreclosure auction. Quite often the (former) borrower had inherited the house, treated it like a piggy bank, defaulted, and boom--no more house. It never makes sense to put a house at risk for a small amount like $5000. If you can't pay those credit card bills, the lenders can hound you and maybe get a court order to extract something from your checking account every month, but they can't take your belongings. When you sign a deed of trust or mortgage, you're giving a third party the right to kick you out of your home and take possession of it. You don't have any say in the matter. You might go to court, and say whatever you feel like saying, but if you owe many payments and can't pay them immediately, you're very likely to be out of luck. Someone mentioned paying off credit card balances with the highest interest rates first. That's done by throwing whatever cash you have at them while paying the minimum on the lower-rate balances. That's financially sound, but there's a technique that turns out to be more motivating for some, which is attacking the lowest balance first. It leads to the quickest reduction in the number payments you're required to make every month, and quickly lets you add the money you were applying to the smallest balance to the payment you make on the next-smallest balance. (Close each card as you pay it off if you don't want to accumulate debt again.) P.S. I don't know what your home's feed is, so I didn't address that. If it's some kind of rental income, every lender I have encountered credits 75% of the current monthly rent toward your gross income. They assume there will be vacancies and other costs.", "title": "" }, { "docid": "b93a5d77409254fa60210ce84930525a", "text": "\"The first red-flag here is that an appraisal was not performed on an as-is basis - and if it could not be done, you should be told why. Getting an appraisal on an after-improvement basis only makes sense if you are proposing to perform such improvements and want that factored in as a basis of the loan. It seems very bizarre to me that a mortgage lender would do this without any explanation at all. The only way this makes sense is if the lender is only offering you a loan with specific underwriting guidelines on house quality (common with for instance VA-loans and how they require the roof be of a certain maximum age - among dozens of other requirements, and many loan products have their own standards). This should have been disclosed to you during the process, but one can certainly never assume anyone will do their job properly - or it may have only mentioned in some small print as part of pounds of paper products you may have been offered or made to sign already. The bank criteria is \"\"reasonable\"\" to the extent that generally mortgage companies are allowed to set underwriting criteria about the current condition of the house. It doesn't need to be reasonable to you personally, or any of us - it's to protect lender profits by aiding their risk models. Your plans and preferences don't even factor in to their guidelines. Not all criteria are on a a sliding scale, so it doesn't necessarily matter how well you meet their other standards. You are of course correct that paying for thousands of dollars in improvements on a house you don't own is lunacy, and the fact that this was suggested may on it's own suggest you should cut your losses now and seek out a different lender. Given the lender being uncooperative, the only reason to stick with it seems to be the sunk cost of the appraisal you've already paid for. I'd suggest you specifically ask them why they did not perform an as-is appraisal, and listen to the answer (if you can get one). You can try to contact the appraiser directly as well with this question, and ask if you can have the appraisal strictly as-is without having a new appraisal. They might be helpful, they might not. As for taking the appraisal with you to a new bank, you might be able to do this - or you might not. It is strictly up to each lender to set criteria for appraisals they accept, but I've certainly known of people re-using an appraisal done sufficiently recently in this way. It's a possibility that you will need to write off the $800 as an \"\"education expense\"\", but it's certainly worth trying to see if you can salvage it and take it with you - you'll just have to ask each potential lender, as I've heard it go both ways. It's not a crazy or super-rare request - lenders backing out based on appraisal results should be absolutely normal to anyone in the finance business. To do this, you can just state plainly the situation. You paid for an appraisal and the previous lender fell through, and so you would like to know if they would be able to accept that and provide you with a loan without having to buy a whole new appraisal. This would also be a good time to talk about condition requirements, in that you want a loan on an as-is basic for a house that is inhabitable but needs cosmetic repair, and you plan to do this in cash on your own time after the purchase closes. Some lenders will be happy to do this at below 75%-80% LTV, and some absolutely do not want to make this type of loan because the house isn't in perfect condition and that's just what their lending criteria is right now. Based on description alone, I don't think you really should need to go into alternate plans like buy cash and then get a home equity loan to get cash out, special rehab packages, etc. So I'd encourage you to try a more straight-forward option of a different lender, as well as trying to get a straight answer on their odd choice of appraisal order that you paid for, before trying anything more exotic or totally changing your purchase/finance plans.\"", "title": "" }, { "docid": "8604c06699e97cc1cb620fd3f660efac", "text": "I don't know any clever way to do what you're describing. And, in a sense, you can see why there might not be one. A mortgage isn't just a magical way to reduce your housing expenses; it's a tradeoff in which you agree to a long-term commitment in exchange for fixed costs (or at least costs with a prearranged structure) over that long term. If you're unwilling to accept the obligation of paying for and maintaining the property over a long period, you can't really expect to reap the benefits of lowered costs. Part of the reason people say buying is better is because people often do live in the same place for a long time, in which case, if they rent, they might miss out on savings they could have had if they bought instead. If you're not going to live in the same place for a long time, buying may not actually be better for you.", "title": "" }, { "docid": "828d65f2a6078dcbc1e404f18aebdec2", "text": "It may be possible to get more cash than you currently have. For example, If you have $200,000, you could buy a distressed property for $150,000, spend $50,000 on renovations, get it appraised for $300,000 and then cash out refi $240,000 (keeping 20% equity to avoid MIPs) to invest. This would be analogous to flipping a house for yourself. Normally flippers buy a house for cheap, then sell it to someone else for way more than their total outlay in purchase + improvements. The only difference here is there's no 3rd party - you stay in the house and essentially buy it from yourself with the mortgage.", "title": "" }, { "docid": "4d2dca01d9cfa77aa73046505321e972", "text": "\"I see two important things missing from your ongoing costs: maintenance and equipment. I also don't see the one-time costs of buying and moving. Maintenance involves doing some boring math like \"\"roofs go every 20 years or so and a new roof would cost $20k, so I need $1000 a year in the roof fund. Furnaces go every 20 years and cost $5k, so I need $250 a year in the furnace fund.\"\" etc etc. Use your own local numbers for both how long things last and how much they cost to replace. One rule of thumb is a percentage of the house (not house and land) price each year keeping in mind that while roof, furnace, carpet, stove, toilets etc all need to get replaced eventually, not everything does - the walls for example cost a lot to build but don't wear out - and not all at a 20 year pace. Some is more often, some is less often. I've heard 5% but think that's too high. Try 3% maybe? So if you paid $200,000 for a $100,000 house sitting on $100,000 of land, you put $3000 a year or about $250 a month into a repair fund. Then ignore it until something needs to be repaired. When that happens, fund the repair from the savings. If you're lucky, there will always be enough in there. If the house is kind of old and on its last legs, you might need to start with a 10 or 20k infusion into that repair fund. Equipment means a lawnmower and trimmer, a snow shovel, tools for fixing things (screwdriver, hammer, glue, pliers, that sort of thing.) Maybe tools for gardening or other hobbies that house-owners are likely to have. You might need to prune back some trees or bushes if nothing else. Eventually you get tools for your tools such as a doo-dad for sharpening your lawnmower. Well, lots of doo-dads for sharpening lots of things. One time expenses include moving, new curtains, appliances if they don't come with the house, possibly new furniture if you would otherwise have a lot of empty rooms, paint and painting equipment, and your housewarming party. There are also closing costs associated with buying a house, and you might need to give deposits for some of your utilities, or pay to have something (eg internet) installed. Be sure to research these since you have to pay them right when you have the least money, as you move in.\"", "title": "" }, { "docid": "b22c2489d586e3c1cfc01bb3f21219c3", "text": "If you intend to flip this property, you might consider either a construction loan or private money. A construction loan allows you to borrow from a bank against the value of the finished house a little at a time. As each stage of the construction/repairs are completed, the bank releases more funds to you. Interest accrues during the construction, but no payments need to be made until the construction/repairs are complete. Private money works in a similar manner, but the full amount can be released to you at once so you can get the repairs done more quickly. The interest rate will be higher. If you are flipping, then this higher interest rate is simply a cost of doing business. Since it's a private loan, you ca structure the deal any way you want. Perhaps accruing interest until the property is sold and then paying it back as a single balloon payment on sale of the property. To find private money, contact a mortgage broker and tell them what you have in mind. If you're intending to keep the property for yourself, private money is still an option. Once the repairs are complete, have the bank reassess the property value and refinance based on the new amount. Pay back the private loan with equity pulled from the house and all the shiny new repairs.", "title": "" }, { "docid": "9eba7b4b42d5fbc2ded2082e426640d5", "text": "\"That is called \"\"substitution of collateral.\"\" And yes, it can be done, but only with consent of the lender. The \"\"best case\"\" for this kind of maneuver is if the second house is larger and more valuable than the first. Another possibility is that you have two mortgages on the first house and none on the second, and you want to move the second mortgage on the first house to the second one, effectively making it a \"\"first\"\" mortgage. In these instances, the lender has a clear incentive to allow a substitution of collateral, because the second one is actually better than the first one. The potential problem in your case, is if the second house were more expensive than the first house, you could not use the sale proceeds of the first house as to buy the second house without borrowing additional money. In that case, a possible solution would be to go back to the lender on your first house for a larger mortgage, with the proceeds of that mortgage being used to retire the earlier mortgage. Depending on your credit, payment record, etc. they might be willing to do this.\"", "title": "" }, { "docid": "4e6b3c3d49316238ac8a589d1dd171d9", "text": "\"The problem here can be boiled down to that fact you are attempting to obtain a loan without collateral. There are times it can be done, but you have to have a really good relationship with a banker. Your question suggests that avenue has been exhausted. You are looking for an investor, but you are offering something very speculative. Suppose an investor gives you 20K, what recourse does he have if you do not pay the terms of the loan? From what income will this be paid from? What event will trigger the capability to make a balloon payment? Now if you can find a really handy guy that really needs a place to live could you swap rent for repairs? Maybe. Perhaps you buy the materials, and he does the roof in exchange for 6 months worth of rent or whatever. If you approached me with this \"\"investment\"\", the thing that would raise a red flag is why don't you have 20K to do this yourself? If you don't how will you be able to make payments? For example of the items you mentioned: That is a weekend worth of work and some pretty inexpensive materials. Why does money need to be borrowed for this? A weekend worth of demo, and $500 worth of material and another weekend to build something serviceable for a rental. Why does money need to be borrowed for this? 2K? Why does money need to be borrowed for this? This can be expensive, but most roofing companies offer financing. Also doing some of the work yourself can save a ton of money. Demoing an old roof is typically about 1/3 of the roofing cost and is technically simple, but physically difficult. So besides the new roof, you could have a lot of your list solved for less than 3K and three weekends worth of work. You are attempting to change this into a rental, not the Taj Mahal.\"", "title": "" }, { "docid": "f14c3907637f2847cbce41ab113c7f96", "text": "You'd probably need to prove you can run the business if you want a loan. The best proof you can have is to run the business. Unfortunately that also means that the price of the alley could go up. OP needs to start thinking about a negotiation strategy soon.", "title": "" }, { "docid": "c88ee364042d1c14d29ca70d01b5b03e", "text": "\"If I have a house that its market value went from $100k to $140k can I get HELOC $40K? Maybe - the amount that you can borrow depends on the market value of the house, so if you already have $100k borrowed against it, it will be tough to borrow another $40k without paying a higher interest rate, since there is a real risk that the value will decrease and you will be underwater. Can I again ask for HELOC after I finish the renovation in order to do more renovation and maybe try to end up renovating the house so its value raises up to $500k? I doubt you can just \"\"renovate\"\" a house and increase its market value from $140k to $500K. Much of a house's value is determined by its location, and you can quickly outgrow a neighborhood. If you put $360k in improvements in a neighborhood where other homes are selling for $140k you will not realize nearly that amount in actual market value. People that buy $500k houses generally want to be in an area where other homes are worth around the same amount. If you want to to a major renovation (such as an addition) I would instead shop around for a Home Improvement Loan. The main difference is that you can use the expected value of the house after improvements to determine the loan balance, instead of using the current value. Once the renovations are complete, you roll it and the existing mortgage into a new mortgage, which will likely be cheaper than a mortgage + HELOC. The problem is that the cost of the improvements is generally more than the increase in market value. It also helps you make a wise decision, versus taking out a $40k HELOC and spending it all on renovations, only to find out that the increase in market value is only $10k and you're now underwater. So in your case, talk to a contractor to plan out what you want to do, which will tell you how much it will cost. Then talk to a realtor to determine what the market value with those improvements will be, which will tell you how much you can borrow. It's highly likely that you will need to pay some out-of-pocket to make up the difference, but it depends on what the improvements are and what comparable homes sell for.\"", "title": "" }, { "docid": "f8d5c327ce6e719e6a82fda9724475de", "text": "While I agree with the existing bulk of comments and answers that you can't tell the lender the $7k is a gift, I do think you might have luck finding a mortgage broker who can help you get a loan as a group. (You might consider as an LLC or other form of corporation if no one will take you otherwise.) That is, each of you will be an owner of the house and appear on the mortgage. IIRC, as long as the downpayment only comes from the collective group, and the income-to-debt ratio of the group as a whole is acceptable, and the strongest credit rating of the group is good, you should be able to find a loan. (You may need a formal ownership agreement to get this accepted by the lender.) That said, I don't know if your income will trump your brother's situation (presumably high debt ratio or lower than 100% multiplier on his income dues to its source), but it will certainly help. As to how to structure the deal for fairness, I think whatever the two of you agree to and put down in writing is fine. If you each think you're helping the other, than a 50/50 split on profits at the sale of the property seems reasonable to me. I'd recommend that you actually include in your write up a defined maximum period for ownership (e.g. 5yr, or 10yr, etc,) and explain how things will be resolved if one side doesn't want to sell at that point but the other side does. Just remember that whatever percentages you agree to as ownership won't effect the lender's view of payment requirements. The lender will consider each member of the group fully and independently responsible for the loan. That is, if something happens to your brother, or he just flakes out on you, you will be on the hook for 100% of the loan. And vice-versa. Your write up ought to document what happens if one of you flakes out on paying agreed upon amounts, but still expects there ownership share at the time of sale. That said, if you're trying to be mathematically fair about apportioning ownership, you could do something like the below to try and factor in the various issues into the money flow: The above has the benefit that you can start with a different ownership split (34/66, 25/75, etc.) if one of you wants to own more of the property.", "title": "" }, { "docid": "c138391e73776ca0eda4e01fa2c3c5ac", "text": "\"No you should not borrow money at 44.9%. I would recommend not borrowing money except for a home with a healthy deposit (called down payment outside UK). in December 2016, i had financial crisis So that was like 12 days ago. You make it sound like the crisis was a total random event, that you did nothing to cause it. Financial crises are rarely without fault. Common causes are failure to understand risk, borrowing too much, insuring too little, improper maintenance, improper reserves, improper planning, etc... Taking a good step or two back and really understanding the cause of your financial crisis and how it could be avoided in the future is very useful. Talk to someone who is actually wealthy about how you could have behaved differently to avoid the \"\"crisis\"\". There are some small set of crises that are no fault of your own. However in those cases the recipe to recovery is patience. Attempting to recover in 12 days is a recipe for further disaster. Your willingness to consider borrowing at 44% suggests this crisis was self-inflicted. It also indicates you need a whole lot more education in personal finance. This is reinforced by your insatiable desire for a high credit score. Credit score is no indication of wealth, and is meaningless until you desire to borrow money. From what I read, you should not be borrowing money. When the time comes for you to buy a home with a mortgage, its fairly easy to have a high enough credit score to borrow at a good rate. You get there by paying your bills on time and having a sufficient deposit. Don't chase a high credit score at the expense of building real wealth.\"", "title": "" }, { "docid": "ace0449e9eb6c8462ea87b7445e3b729", "text": "As noted above but with sources An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. You must add the cost of any improvements to the basis of your home. You cannot deduct these costs. Source Page 11, Adjusted Basis, Improvements Second, A repair keeps your home in an ordinary, efficient operating condition. It does not add to the value of your home or prolong its life. Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. You cannot deduct repair costs and generally cannot add them to the basis of your home. Source Page 12, Adjusted Basis, Repairs versus improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. You must capitalize any expense you pay to improve your rental property. An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Source Page 5, Repairs and Improvements Good Luck,", "title": "" }, { "docid": "7ad87a90c0c9695b48710dafc42e7a3b", "text": "I recognize you are probably somewhere in the middle of various steps here... but I'd start and go through one-by-one in a disciplined way. That helps to cut through the overwhelming torrent of information that's out there. Here is my start at a general checklist: others can feel free to edit it or add their input. How 'much' house would you like to buy in terms of $$$ and bedrooms/sq ft. You can start pretty general here, but the idea is to figure out if you can actually afford a brand new 4bd/3ba 2,500 sq ft house (upwards of $500K in your neck of the woods according to trulia.com). Or maybe with your current resources you'll be looking at something like a townhome that is more entry-level but still yours. Some might recommend that this is a good time to talk to any significant others/whomevers and understand/manage expectations. My wife usually cares a lot about schools at this stage, but I think it's too early. Just ballpark whether you're looking at a $500K house, a $300K house, or a $200K townhome. How much house can you afford in terms of monthly payments only... (not considering other costs like utilities yet). Looking around at calculators like this one from bankrate.com can help you figure this out. Set the interest rate @ 5%, 30-year loan, and change the 'mortgage amount' until you have something that is about 80%-90% of what you currently pay in rent each month. I'll get to 'why' to undershoot your rent payment later. Crap... can't afford my dream house... If you don't have the down payment to make the numbers work (remember that this doesn't even include closing costs yet), there are other loan options like FHA loans that can go as low as about 5% down payment. The math would be the same but you replace 0.8 with 0.95. Then, look at your personal budget. Come up with general estimates of what you currently bring in and spend each month overall. Just ballpark it... Next, figure what you currently spend towards housing in particular. Whether you are paying for it or your landlord is paying for it, someone pays for a lot of different things for housing. For now, my list would include (1) Rent, (2) Mortgage Payment, (3) Electricity, (4) Gas, (5) Sewer, (6) Water, (7) Trash, (8) Other utilities... TV/Internet/Phone, (9) Property Insurance, (10) Renter's Insurance, and (11) Property Taxes. I would put it into a table in Excel somewhere that has 3 columns... The first has the labels, the second will have what you spend now, and the third will have what you might spend on each one as a homeowner. If you pay it now, put it in the second column. If your landlord pays it right now, leave it out as that's included in your rent payment. Obviously each cell won't be filled in. Fill in the rest of the third column. You won't pay rent anymore, but you will have a mortgage payment. You probably have a good estimate of any electricity bills, etc that you currently pay, but those may be slightly higher in a house vs. a condo or an apartment. As for things like sewer, water, trash or other 'community' utilities, my bet would be that your landlord pays for those. If you need a good estimate ask around with some co-workers or friends that own their own places. They would also be a good resource for property insurance estimates... shooting from the hip I would say about $100/month based on this website. (I'm not affiliated). The real 'ouch' is going to be property tax rates. Based on the data from this website, your county is about 9% of property value. So add that into the third column as well. Can you really afford a house? round 2 Now... add up the third column and see how that monthly expense amount on housing compares against your current monthly budget. If it's over, you don't have to give up, but you should just understand how much your decision to purchase a house will strain your budget. Also, you should use this information to look again at 'how much house can you afford.' Now, do some more research. If you need to get a revised loan amount based on the FHA loan decision, then use the bankrate calculator to find out what the monthly payment is for a 95% loan against your target price. But remember that an FHA loan will also carry PMI that is extra on top of your monthly payment. Or, if you need to revise your mortgage payment downwards (or upwards) change the loan amount accordingly. Once you've got the numbers set, look for properties that fit. This way you can have a meaningful discussion with yourself or other stakeholders about what you can afford. As far as arranging financing... a realtor will be able and willing to point you in the right direction for obtaining funding, etc. And at that point you can just check anything you're offered by shopping interest rates, etc against what the internet has to say. Feel free to ask us, too... it's hard to give much better direction without more specifics.", "title": "" }, { "docid": "ce7cd4b7a28ed0a8824de67842ffcca0", "text": "\"Sell 200 at 142. What does that mean? I haven't seen the movie, so I won't try to put anything in story context. \"\"Sell 200 at 142\"\" means to sell 200 units (usually shares, but in this case it would likely be gallons or barrels of orange juice or pounds or tons of frozen juice). In general, this could mean that you have 200 units and want to sell what you have. Or you could borrow 200 units from someone and sell those--this is called a naked short. In this case, it seems that what they are selling is a futures contract. With a futures contract, you are promising to obtain orange juice by some future date and sell it for the agreed price. You could own an orange grove and plan to turn your oranges into juice. Or you could buy a futures contract of oranges to turn into juice. Or you could arbitrage two futures contracts such that one supplies the other, what they're doing here. In general people make profits by buying low and selling high. In this case they did so in reverse order. They took the risk of selling before they had a supply. Then they covered their position by purchasing the supply. They profited because the price at which they bought was lower than the price at which they sold. The reason why this is necessary is that before buying the oranges, the orange juice makers need to know that they can make a profit. So they sell orange juice on the futures market. Then they know how much they can afford to pay for oranges on a different market. And the growers know how much they can get for oranges, so they can pay people to water and pick them. Without the futures markets, growers and orange juice makers would have to take all the risk themselves. This way, they can share risks with each other and financiers. Combined with insurance, this allows for predictable finances. Without it, growers would have to be wealthy to afford the variation in crop yields and prices.\"", "title": "" } ]	fiqa
e061d4689a664aef8dfd7738b7758fd9	What are pros and cons of UK Building Societies compared to banks?	[ { "docid": "5858d724464112478caac78f9f0816bd", "text": "they may be willing to issue mortgages with smaller deposits, but may take longer to make a decision That cannot be farther from the truth. If you are getting a mortgage on a smaller deposit, you will be paying a higher interest rate. Time to take a decision depends very much on your credit situation, earnings, spending and the amount of loan you want to avail of. advantages and disadvantages compared to banks today Nothing specifically that is obvious. You deposits are guaranteed by FSCS, which is primarily everybody's biggest concern. One thing I did observe was they generally have saving accounts which pay better than the big banks, but that is for one to compare and find out. In ownership structure you own a part of the building society because you are a member by having an account(bank/mortgage) with them. Not the case with a big bank though unless you own any shares. You can make a case for the difference of the big bank's multiple business as compared to a building society.", "title": "" } ]	[ { "docid": "f1c7b17f903fcaa32a8475fdd1d9c1bc", "text": "\"Read the prospectus carefully. In the case of Prosper, you're really making a loan to Prosper, which is in turn linked to the borrower's payments. Also, the rates are really high. If I was looking for money, I'm not sure why someone with \"\"AA\"\" credit would ever go with a Prosper loan.\"", "title": "" }, { "docid": "b65bae7fed9652724ef5ee2590cb7cf7", "text": "This is a very good question! The biggest difference is that when you put money in a savings bank you are a lender that is protected by the government, and when you buy stocks you become an owner. As a lender, whether the bank makes or loses money on the loans it makes, they still maintain your balance and pay you interest, and your principal balance is guaranteed by the government (in the USA). The bank is the party that is primarily at risk if their business does not perform well. As an owner, you participate fully in the company's gains and losses, but you also put your money at risk, since if the company loses money, you do too. Because of this, many people prefer to buy funds made up of many stocks, so they are not at risk of one company performing very poorly or going bankrupt. When you buy stock you become a part owner and share in the profitability of the company, often through a dividend. You should also be aware that stocks often have years where they do very poorly as well as years when they do very well. However, over a long period of time (10 years or more), they have historically done better in outpacing inflation than any other type of investment. For this reason, I would recommend that you only invest in the stock market if you expect to be able to leave the money there for 10 years or more, ideally, and for 5 years at the very least. Otherwise, you may need to take the money out at a bad time. I would also recommend that you only invest in stocks if you already have an emergency fund, and don't have consumer debt. There isn't much point in putting your money at risk to get a return if you can get a risk-free return by paying off debt, or if you would have to pull your money back out if your car broke down or you lost your job.", "title": "" }, { "docid": "a32103579ed3ba3b8902f81d055cf3ca", "text": "There are two impacts: First, if the pound is dropping, then buying houses becomes cheaper for foreign investors, so they will tend to buy more houses as investments, which will drive house prices up. Second, in theory you might be able to get a mortgage in a foreign country, let's say in Euro, and you might hope that over the next few years the pound would go up again, and the Euros that you owe the foreign bank become worth less.", "title": "" }, { "docid": "235f063b15ea8d58511488c38c8316ab", "text": "Looks more like an idea for a business rather than an actual business -- especially since it hasn't even launched. That said, it does have its merits. What bank actually holds the deposit funds becomes irrelevant, and may actaully change from time to time as they forge better partnerships with different banks. Think of it like a mutual fund -- the individual stocks (if there are stocks) in the fund are less important than the balance of risk vs. income and the leveling of change over the course of time. It offers services banks offer, without fees (at least that is the proposal) with the addition of budgetting capability as well. It does have downsides as well There is an increased level of indirection between you and your money. They propose to simplify the banking business model, but in fact are only hiding it from you. The same complexity that was there before is still there, with the added complexity of their service on top of it. It's just a matter of how much of that complexity you would have to deal with directly. With that in mind, I would reiterate that they are not a business yet -- just a proposed business model. Even the sign up process is a red flag for me. I understand they need to gauge interest in order to forge initial relationships with various banks, but I don't see the need for the 'invitation only' sign up method. It just sounds like a way to increase interest (who doesn't like feeling exclusively invited), and is a bit too 'gimmicky' for my taste. But, like I said, the idea has merit -- I have my reservations, but will reserve full judgement until they are an actual operating business.", "title": "" }, { "docid": "2cd11f8d10fca96e0b515190f11ccc66", "text": "I wouldn't go into a stock market related investment if you plan on buying a house in 4-5 years, you really need to tie money up in stocks for 10 years plus to be confident of a good return. Of course, you might do well in stocks over 4-5 years but historically it's unlikely. I'd look for a safe place to save some money for the deposit, the more deposit you can get the better as this will lower your loan to valuation (LTV) and therefore you may find you get a better interest rate for your mortgage. Regards the pension, are you paying the maximum you can into the company scheme? If not then top that up as much as you can, company schemes tend to be good as they have low charges, but check the documentation about that and make sure that is the case. Failing that stakeholder pension schemes can also have very low charges, have a look at what's available.", "title": "" }, { "docid": "e30c1a9481ded4a26c6feb5502718faa", "text": "My understanding is you can create a company 0 value. Then you need to either loan the company the money to buy the building (it will still have 0 value as it will have a debt equal to it's assets) or sell share to investors at any price you like to raise the money to buy the building. Once shares have value (as valued by a chartered accountant - not anyone can do this) then anyone recieving shares will have to pay income tax. This is why keeping the shares as no value for as long as possible can be preferable. Also a benefit of using share options. talk to your investors, see what they require.", "title": "" }, { "docid": "030f333f695729064b103a9fbb7dd4f3", "text": "Aggressively paying of Mortgage is better. If you have more cash available [assuming you have covered all other aspects i.e. emergency funds, retirement etc], the only question you need to ask is where will you invest and what returns would you get. So if your mortgage is say at 5%, if the spare money can get you more than this, its beneficial, if its in Bank CD with say near zero interest, its not worth it. However if you are sure you can make 10% returns on the investments, then go ahead and don't pay the mortgage aggressively.", "title": "" }, { "docid": "2e43e02d84c8a9e61a23e3cd4dc8d3f8", "text": "Everyone understands the necessity of those bailouts today. But I still contest that they were a net negative for the common man and a HUUUUUUUUUGE positive for the bank executives. In fact, the fallout from it - the conceptualisation of TBTF and GSIB etc - is basically a blank check for these banks. Oh yes, so many stringent regulations that we know for a fact that these banks will flout at the first opportunity available to them. And then, assuming it doesn't bring the global economy to its knees, someone will slap a billion dollar fine on them and let them go on their merry way.", "title": "" }, { "docid": "caa105e3bf45ddb7580f6e40644e52e2", "text": "Depends on how urgent your need for the emergency savings might be. If the money market account allows you to get your money in the same amount of time as the savings account then there is no real downside, but if the account takes a few days for you to access and you need your money sooner then you probably shouldn't. Also money market accounts DO give more interest than most savings accounts, but the interest rates are generally still pretty low, so it might be an improvement, but probably not a huge one", "title": "" }, { "docid": "d12272c61a7a535aa124ab8936cba9f1", "text": "\"The purpose of taking a \"\"secured loan\"\" is to build credit. This might be done by someone who had a bad stain on their credit history such as a bankruptcy or foreclosure, or possibly by someone just out of school (presumably with few or no student loans),and no credit history. Not everyone needs to, or should do this, however. The advantage for a borrower is that s/he gets to create a record of repaying a loan that will partly mitigate the bad credit history. The advantage for the bank is that it is \"\"no risk,\"\" because the savings account is the security for the loan. That would make it willing to \"\"lend\"\" to a bad credit risk.\"", "title": "" }, { "docid": "3c485eaa1085308c52c33fa99829142c", "text": "\"To answer your first part, its not an opposition to profit. It's an opposition to usury - the practice of charging excessive interest on loans. There are extensive passages in the Qur'an condemning the practice, and in many cases \"\"excessive interest\"\" is any interest. To the second part of the question, these may well be more risky investments. But if you're trying to build a strong and thriving community financial spirit, one might expect there to be significant social pressures to use the loaned money responsibly. Additionally, while it removes some of the penalty for failure, it doesn't remove the rewards for success. The incentive is still there to succeed. It's merely the penalty for failure is no longer financial ruination. It may also temper the incentive for banks to give money to riskier borrowers, but rather to prudently invest in ventures with an acceptable amount of risk. The question as to whether or not this is a \"\"house of cards\"\" likely depends on the questioner. Whether or not this is also true for the western banking system likely remains to be seen, but it hasn't exactly been doing a sterling job of convincing me it isn't true for the past decade.\"", "title": "" }, { "docid": "d42d3a0dc200cd5cfe6956bd4b2fceaf", "text": "There are two answers to this (excluding central banks which are really just a banks to private banks): Please note: This is an oversimplification and not accounting for the fact that banks operate in both categories now. Banks are either depository institutions or financial service/transaction providers. * Depository institutions are your typical retail bank (regions, boa retail, wells fargo retail, etc). They accept deposits from account holders and lend out via reserve lending to mortgages and business loans for their revenue generation. * Financial service/transaction providers are better known as IBanks. You have your Goldman Sachs, Deutsche Bank, JP Morgan, Morgan Stanley, etc. These have traditionally been banks that do not accept deposit accounts but revenue generation comes from financial services such as asset management and research or from financial transaction facilitation such as market making (offering both buy/sell quotes in capital markets). This is generally the role that banks have played historically from the medieval ages on... They started out as being entities that provided access to connecting buyers and sellers of markets.", "title": "" }, { "docid": "349a3561ddf1d2e33e7b2cc439bb17e1", "text": "\"Depending on where you live in the UK, buying a house sooner might be a better option. I would echo the advice about putting some money away into a \"\"rainy day\"\" fund etc. above but I know that in my area house prices are going up by around 7% per year. I bought a house two years ago and I'm paying 4% interest on my mortgage so I'm effectively making money by owning my house. Given that you want to buy a house soonish, if your money sits in an account somewhere making no interest, you're effectively losing 7% of your cash each year by not keeping up with house prices, meaning you'll be able to afford a smaller house with the same money. Do bear in mind though that buying a house costs around £4k in lawyers fees, surveys, mortgage setup fees etc. and selling a house can be more since estate agents will take a % of the sale cost. If you live somewhere where house prices are not increasing as quickly then this will not be as good an option than if you live in e.g. London where house prices are currently skyrocketing. If you don't want to live in the house, you may be able to do a buy-to-let as an investment. Generally the rent will cover the mortgage payments and probably a letting agent/property management company's fees, so while you won't see any actual net income, the people renting will be paying the mortgage off and you'll be building equity on the home. It's not entirely without risk though as tenants can trash homes etc.\"", "title": "" }, { "docid": "e51ea023afbbb4165211ed5eb8127b9e", "text": "If you havent yet maxed out your ISA, then its a no-brainer. You get excellent tax rebates and its silly not to take advantage of these before considering self investing in shares. Note that even if your ISA is maxed out, the economic turbulence means that investing in individual stocks is an intimidating place for beginners right now. The FSA is also looking at revising the average percentages used for pension, from 7% for adventurous investments, down to 5% or 6%, so there is industry wide recognition that on average the stock market is going to be a little less lucrative than it was a few years ago. Thats not to say you cant still make a whopping profit, but the chances of you doing so as a first time investor are remote to say the least. My advice would be to look seriously into some of the social lending sites, where you can still easily get a 7% return with minimal risk. Whilst I do have a portfolio which is performing well overall (I am a very speculative investor), I am moving a lot of funds into Zopa.com, as I am averaging 7% return with a lot less time, effort and risk than the stockmarket. Whatever you decide, I think its time you thought about consulting an IFA. They can help you understand what sort of risk you are willing to tolerate, which is a very important aspect of investing.", "title": "" }, { "docid": "cb5267a5ab8b8a9d964c1dd3304b4480", "text": "My motivation was to see what other people thought. I know I have my own bias so I would rather see what other people thought. One of the points I took from Ferguson was that money not being used is less valuable than money being used. In that sense a bank creates real value in an economy by allocating money to people who need it at a specific moment from those who do not need it at that moment. I see so many threads and comments on reddit about how banks are purely evil institutions that have no benefit to society so I guess I just hoped to see some insight from the finance community, but also to see a discussion about banking from people with opposing opinions. Thanks!", "title": "" } ]	fiqa
23fb049d44d7addf957dd049745abeb3	Why does my checking/savings account offer a higher interest rate than a standalone savings account?	[ { "docid": "25c24377f1738666a0983f2ecea7887a", "text": "The key is that you need to use your debit card to earn the higher interest rate. The bank can offer a higher interest rate on accounts connected with a debit card because: They earn additional income through debit card fees charged towards account holders, among other things. They offer the higher interest rate specifically to encourage people to use their debit cards. By offering a joint checking/savings account that requires you to use your debit card, the bank is assuming that you'll keep more money in your account than you would in a standard checking-only account. Your higher balance translates into more money the bank can loan out or invest, which usually leads to higher profit for them. Businesses pay fees to the bank to accept debit cards. These fees represent another source of profit for the bank. The more you use your debit card, the more the bank earns in fees, so the bank encourages you to use your debit card more frequently through incentives like a higher interest rate or waiving fees on your account if you use your card enough. Plus, since it's likely that an individual who maintains a fairly high balance in an account linked to a debit card is going to spend more (simply because they can spend more), banks will sometimes waive fees on the consumer side for balances over a certain amount.", "title": "" } ]	[ { "docid": "33580f0327e95b794853dd6c811a609b", "text": "Generally, if you watch for the detail in the fine print, and stay away from non-FDIC insured investments, there is little difference, so yes, pick the highest you can get. The offered interest rate is influenced by what the banks are trying to accomplish, and how their current and desired customer base thinks. Some banks have customer bases with very conservative behavior, which will stick with them because they trust them no matter what, so a low interest rate is good enough. The disadvantage for the bank is that such customers prefer brick-and-mortar contact, which is expensive for the bank. Or maybe the bank has already more cash than they need, and has no good way to invest it. Other banks might need more cash flow to be able to get stronger in the mortgage market, and their way of getting that is to offer higher interest rates, so new customers come and invest new money (which the bank in turn can then mortgage out). They also may offer higher rates for online handling only. Overall, there are many different ways to make money as a bank, and they diversify into different niches with other focuses, and that comes with offering quite different interest rates.", "title": "" }, { "docid": "834161fd81c5a093c0ceb941342f316b", "text": "\"Current is another word for Checking, as it is called in the US. Savings account is an interest-bearing account with certain limitations. For example, in the US you cannot withdraw money from it more than 6 times a month. Here is the explanation why. Current account is a \"\"general-use\"\" account on which you can write checks, use ATM/Debit cards and have unlimited transactions. It can also have negative balance (if your bank agrees to let you overdraft, they usually charge huge fees for that though). Checking accounts can have interest as well, but they usually don't, and if they do - it's much lower than the savings account interest.\"", "title": "" }, { "docid": "99ba9b662935c0f5ee939be74027fe04", "text": "Checking accounts can't pay interest, according to the bizarre and outdated Regulation Q. Under the even more bizarre and outdated Regulation D, you can only transfer money out of savings accounts six times per 4 weeks. Your HSA account is probably set up the way it is because the bank wants to be able to tell people they'll earn interest on their savings (although I'll betcha the current rate is something like 0.000000000001%). As far as I know, there's no reason an HSA couldn't be a straight checking account. You wouldn't get interest but you would get more than 6 withdrawals per month. Or, you could do the transfers yourself from savings to checking just keep enough money in the checking part of the account so that the automatic transfer doesn't kick in.", "title": "" }, { "docid": "04e842868aedd126c380fc327b7cea78", "text": "\"It would be incredibly unusual for the same institution to offer checking and savings accounts with exactly the same features/benefits (including interest, etc). The reason is that (in the USA, anyways) the Fed makes banks keep a certain percentage of their total assets (called the reserve requirement) \"\"in house.\"\" Checking account deposits cannot be re-loaned 100%--some of the money you put in your checking account must be held by the bank in its vaults. Savings accounts are not limited in this way. So logic dictates that if depositing into one type of account is better for the bank than the other (ie, they can use more of the money to make money), they will reward people for using the one that is more beneficial to their bottom line. I'm recalling this from college finance 101, so I may be slightly mis-remembering things, but I'm 99.99% sure that this is the primary reason you see checking accounts with lower interest rates--banks would prefer you to use savings accounts, and set up incentives so that you will. Sorry, I know this doesn't really answer your question, but I think it may help you understand your options a little better (I hope!)\"", "title": "" }, { "docid": "cfb1d579fa57cc2707585d49c1d08d17", "text": "The Livret A is a very specific product. It's tax-exempt and would historically not be available through regular banks. Commercial banks can now offer it but they only collect the money on behalf of the Caisse des dépôts (CDC). The CDC then pays interest to the savers and a commission for the bank. The commission is baked into the system, not charged to the customer directly but since the interest rate is set centrally, banks cannot compete on that. So this is risk-free money for them (but on the flip side it does not help them meet capital adequacy requirements). Other savings account or products have different rules. Another angle to consider is that a livret A was historically very attractive for consumers (and was certainly perceived as such) so that many people would have a checking account at a regular bank and another account at the Caisse d'épargne or the Banque postale just to open a livret A. For commercial banks, the alternative therefore isn't having your money on your checking account vs. your livret A or another savings account, it was having your money on a livret A they administer vs. seeing you run away to another institution. There is also a cap on the livret A and you're not allowed to save more money by opening several of them at different banks. At the same time banks have been complaining that the decrease of the interest rate (and consequently of their commission) makes the whole scheme a lot less interesting for them. For what it's worth, I recently (re)opened a bank account in France after living abroad for a long time and the customer advisor did not seem particularly interested in pushing a livret A.", "title": "" }, { "docid": "7fb04bb2fa978a172aa3069d185e839f", "text": "There is no difference in safety form the perspective of the bank failing, due to FDIC/NCUA insurance. However, there is a practical issue that should be considered, if you allow payments to be automatically withdrawn from your checking account In the case of an error, all of you money may be unavailable until the error is resolved, which could be days or weeks. By having two accounts, this possibility may be reduced. It isn't a difference between checking and savings, but a benefit of having two accounts. Note that if both accounts are at the same bank, hey make take money from other accounts to cover the shortfall. That said, I've done this for years and have never had a problem. Also, I have two accounts, one at a local credit union with just enough kept in it to cover any payments, and another online account that has the rest of my savings. I can easily transfer funds between the two accounts in a couple days.", "title": "" }, { "docid": "06da1a02f4be05b0bd45a099ebcfa5e0", "text": "There is very little difference these days between account types. The fee structure and interest paid is different, but the actual mechanics, and as noted by others, the coverage by deposit insurance is identical. So look at how much money you have in the account(s) you have; are you maximizing the interest that you could be receiving, even from the small amounts that the banks will pay? If you could get more interest from the savings account, and only write one or two cheques per month, you might be better off with that account only; but given common fee structures, you likely would not want that as your primary account. Another reason for separate accounts is more psychological. You might be able to train yourself to not dip in to your savings if you don't have a chequebook.", "title": "" }, { "docid": "da7ca13310fe4d4a7607b6123f0a1b8a", "text": "I would suggest a high interest checking account if you qualify, or if you don't, an Investor's Deposit Account (IDA).", "title": "" }, { "docid": "d5e5e9132730459384f7e230754c00f4", "text": "\"this is purely psychological. most people are absolutely terrible at keeping track of their finances. to the point where they will use multiple separate accounts for different types of spending or savings goals. when the average person tells the banker they want an account for the money they are saving, they get handed a \"\"savings account\"\" and don't bother to question how it is different from a checking account.\"", "title": "" }, { "docid": "c13eba07f2fd4614e44c02219fb55b0d", "text": "Someone I know had an idea to open a savings account as an LLC or corporation to receive better interest rates on savings, and set up a system where anyone can pool money in and receive a larger cut through savings interest than with a personal account. Is this legal/feasible in any way?", "title": "" }, { "docid": "9fcb0916b771c014dd0b67e38a05971b", "text": "I just graduated from college and I am already planning my retirement. ... in terms of money sitting in my bank account post retirement, assuming Ii have $250,000 what is the highest interest that I can earn with it? Assuming you are 22, and will retire in 45 years at age 67. There is no way to predict interest rates. When I was 22 and just out of college I started putting money into a bank account to save for a down payment. The rate for a savings account was 6%. That means that every month I made 1/2 of one percent. Today that same credit union offers a money maker account with a minimum balance of $100,000 that pays 0.25% for the year. What I made in a month would take two years to make today. Keep in mind we also can't estimate your pay in the last year before retirement, or the inflation rate for the next 45 years, or the mortgage rate, or the availability of Social Security, or the returns of the S&P for 45 years. It is great you are starting to think about this today. But you will have to keep adjusting parts of your plan as the years go by: You may have to factor in children, your medical situation... Even if the interest rates recover you may not want to put all your post retirement money in the bank. Most people can't sustain the required flow of money for their 30 years of retirement from savings accounts. As for today. FDIC (or similar accounts from credit unions) will not have rates approaching 3%. It can't even approach that 3% rate via multi-year CDs. My credit union has a 6 year CD for almost 2%. If the goal of the money is safety then don't expect to find those high rates now. Some institutions may offer high rates without that FDIC protection, but that is risky.", "title": "" }, { "docid": "20dc539a135756f98e0ce0645b6b30bc", "text": "The bond will rank below depositors, so it's riskier than the savings account. The savings account is very safe if you have less than £75,000 in accounts with the bank, as then it would be covered by the deposit guarantee Financial Services Compensation Scheme. Also note that bonds tend to have a fixed maturity whereas savings accounts usually let you get your money out at any time, perhaps with some notice.", "title": "" }, { "docid": "e5063253b5d1a21cb017664c69671eb0", "text": "Credit Unions are structured such that the account holders are in fact the owners of the institution. Thus, the money invested in your savings account is in fact a share of ownership, and the interest paid to you is dividend. Tax-wise, these dividends are usually treated as interest income.", "title": "" }, { "docid": "4207706b7befff87a3e630d6454003ed", "text": "\"The reason \"\"on-line\"\" savings accounts (Ally, CapitalOne, American Express, and many others) provide much higher rates than brick-and-mortar banks is because they're not brick-and-mortar. They do not need to pay for a huge amount of real estate, utilities, public-facing employees, inter-office mail, security, etc etc. All that - allows them to pay more for your money. The back office of these banks is the same as that of Chase, BOA or Wells Fargo. Its just that they don't have the enormous expense of having a branch in every neighborhood, while still reaching all the same population of depositors. So no, its not a scam, these are reputable banks. Some have physical offices (for example, I know that CapitalOne has some branches in New York), some don't (IIRC neither Ally nor American Express Federal Saving Bank have physical branches). But they're banks nonetheless, insured as required by FDIC (or NCUA, in case of credit unions), and provide all the same services for less (or all the same savings for more, if you will). IMHO, giving 0.01% APR is a scam. Not the other way around. The old-style banks want your money for free, and you're worried why would someone else treat you better... Well, that's why the US has one of the most retarded financial systems in the Western world...\"", "title": "" }, { "docid": "99d140993e72032226919ac7ef175059", "text": "A checking account is one that permits the account holder to write demand drafts (checks), which can be given to other people as payment and processed by the banks to transfer those funds. (Think of a check as a non-electronic equivalent of a debit card transaction, if that makes more sense to you.) Outside of the ability to write checks, and the slightly lower interest rate usually offered to trade off against that convenience, there really is no significant difference between savings and checking accounts. The software needs to be designed to handle checking accounts if it's to be sold in the US, since many of us do still use checks for some transactions. Adding support for other currencies doesn't change that. If you don't need the ability to track which checks have or haven't been fully processed, I'd suggest that you either simply ignore the checking account feature, or use this category separation in whatever manner makes sense for the way you want to manage your money.", "title": "" } ]	fiqa
ca1d5f2e851b2f95ad342b7aba117980	Do I need to file taxes jointly with my girlfriend if we live together?	[ { "docid": "701e8af5fd8da73baf91d54053149cb0", "text": "In Ontario, common law marriage requires 3 years of cohabitation, and doesn't give rights to property (which remains separate). I'd say in your situation you can still file as single, but I'd suggest asking your tax accountant to be sure.", "title": "" }, { "docid": "d7c29e9c4ebb6e172ec8547493df051c", "text": "\"If you pay her rent, how do you differ from a tenant in the eyes of the law? I ask this to show that you are in a business relationship first and foremost. If you don't want to file jointly, there is nothing compelling about your situation to force it. (Grant you, in most countries, there is a benefit to filing jointly) but here, I would argue it would be difficult to make the case. There are, to the best of my knowledge, no laws barring opposite sex landlord-tenant rental situations. Furthermore, there are no laws barring romantic relationships amongst landlords and tenants. Indeed, you would need to prove your relationship in some fashion for it to even be considered. In establishing a date of separation from my soon-to-be-ex-wife, for example, I merely needed to prove that we were not \"\"presenting ourselves as husband and wife.\"\" Once I showed that we didn't sit together at church and that she was attending parties I wasn't, that was sufficient. Proving you are in a relationship is actually a lot harder than proving you're not.\"", "title": "" } ]	[ { "docid": "78d14bc8caa8db04ea078cca3001630b", "text": "You only need to report INCOME to the IRS. Money which you are paying to a landlord on behalf of someone else is not income.", "title": "" }, { "docid": "397748f68b544c3b55c447c04788f31c", "text": "\"This might get closed as an \"\"opinion\"\" question. Tough to say up front. You are kind to be willing to do this, and if just you and GF, it would be simple, split the costs the same as the ratios of your incomes. Say you have twice her income. You pay 2/3 of bills and she pays 1/3. In effect, you are subsidizing her, but this is often the case for working married couples, one earning more than another. But, this will mean subsidizing the friend as well. In theory, he has 1BR, and should pay 1/2 rent, 1/3 utilities and common food, etc. If he makes 1/2 your income, and so does GF, for simple math, he'll pay 1/4 of rent and utilities. That's an emotional issue, will you be ok with that? You'll be subsidizing a friend, instead of having a stranger pull their own weight.\"", "title": "" }, { "docid": "a5408e30c2d6c43f2afb3f4f8abe26f3", "text": "Why would the IRS be coming after you if you reported the income? If you reported everything, then the IRS will use the 1099 to cross-check, see that everything is in order, be happy and done with it. The lady was supposed to give you the 1099 by the end of January, and she may be penalized by the IRS for being late, but as long as you/wifey reported all the income - you're fine. It was supposed to be reported on Schedule C or as miscellaneous income on line 21 (schedule C sounds more suitable as it seems that your wifey is in a cleaning business). But there's no difference in how you report whether you got 1099 or not, so if you reported - you should be fine.", "title": "" }, { "docid": "30c3fa9ee32741f71ad214987a63e3a0", "text": "If you keep the account in your name only and your girlfriend is depositing money into it, then she is in effect making gifts of money to you. If the total amount of such gifts exceeds $14K in 2014, she will need to file a gift tax return (IRS Form 709, due April 15 of the following year, but not included with her Federal tax return; it has to be sent to a specific IRS office as detailed in the Instructions for Form 709). She would need to pay gift tax (as computed on Form 709) unless she opts to have the excess over $14K count towards her Federal lifetime combined gift and estate tax exclusion of $5M+ and so no gift tax is due. Most estates in the US are far smaller than $5 million and pay no Federal estate tax at all and for most people, the reduction of the lifetime combined... is of no consequence. Another point (for your girlfriend to think about): if you two should break up and go your separate ways at a later time, you are under no obligation to return her money to her, and if you do choose to do so, you will need to file a gift tax return at that time. If you will be returning her contributions together with all the earnings attributable to her contributions, then keep in mind that you will have paid income taxes on those earnings all along since the account is in your name only. Finally, keep in mind that the I in IRA stands for Individual and your girlfriend is not entitled to put her contributions into your IRA account. Summary: don't do this (or open a joint account as tenants in common) no matter how much you love each other. She should open accounts in her name only and make contributions to those accounts.", "title": "" }, { "docid": "1d298504aedaf9c53964353fee7c3c41", "text": "\"Personally I would advise only buying what you can afford without borrowing money, even if it means living in a tent. Financially, that is the best move. If you are determined to borrow money to buy a house, the person with income should buy it as sole owner. Split ownership will create a nightmare if any problems develop in the relationship. Split ownership has the advantage that it doubles the tax-free appreciation deduction from $250,000 to $500,000, but in your case my sense is that that is not a sufficient reason to risk dual ownership. Do not charge your \"\"partner\"\" rent. That is crazy.\"", "title": "" }, { "docid": "d6d3f0bae54bc7bb48d5eec5145d69a5", "text": "If you are splitting rent, it is not income because you are reducing the amount of space you have available to you and reducing your rent, it's the same as if you moved to a smaller apartment. You can't claim a deduction for rent paid, so there really are no tax implications in this arrangement. If you own a house and someone helps pay the mortgage, that does become a rental situation if the other party has no ownership stake in the house. Could you find other ways to disguise it, like having your brother pay utilities or buy groceries? Sure, but I think it's technically taxable income by the letter of the law. I also don't think the IRS is going to come after you for trading a place to sleep for groceries/cable.", "title": "" }, { "docid": "c3146e19c2e6320686c78830040535e9", "text": "If you have an actual legal entity (legal partnership) that is jointly owned by you and your partner, then the partnership receives the money, and the partnership then sends money to you and your partner. Each of you will pay tax on your share. It's possible that the partnership itself may have to pay taxes. If you are not following that procedure in terms of actual money flow - for example if the royalties are paid into your personal account instead of a partnership account - then you may have trouble convincing the tax authorities that this is the legal situation. If this is a small amount of money then you may be better off just paying the taxes.", "title": "" }, { "docid": "70cf8d23890f8f5e17526f378a4ec318", "text": "\"In a word, no. If your income is high enough to have to file a return, you have to file a return. My accountant has a nice mindset for making it more palatable. I'll paraphrase: \"\"Our tax system is ludicrously complicated. As a result, it is your duty as an American to seek out and take advantage of every deduction and credit available to you. If our politicians and leaders put it into the tax code, use it to your advantage.\"\" A friend of mine got a free golf cart that way. It was a crazy combination of credits and loopholes for electric vehicles. That loophole has been closed, and some would say it's a great example of him exercising his patriotic duty.\"", "title": "" }, { "docid": "f8e5fa5551a4727b2f7b90a0813e49de", "text": "\"Yes, you will have to file taxes. Each peson gets a standard deduction. By \"\"claiming you\"\", your parents are applying your standard deduction to their taxes, meaning that you cannot use that same deduction on your taxes. You still must pay taxes on your income. This generally works out best overall, assuming that your parents are in a higher tax bracket (have a higher income) than you.\"", "title": "" }, { "docid": "5b287fe3e5c18c67590e241a102689ff", "text": "\"1 - in most cases, the difference between filing joint or married filing single is close to zero. When there is a difference you're better off filing joint. 2 - The way the W4 works is based on how many allowances you claim. Unfortunately, even in the day of computers, it does not allow for a simple \"\"well my deduction are $xxx, don't tax that money.\"\" Each allowance is equal to one exemption, same as you get for being you, same as the wife gets, same as each kid. 3 people X $3800 = $11,400 you are telling the employer to take off the top before calculating your tax. She does this by using Circular E and is able to calculate your tax as you request. If one is in the 15% bracket, one more exemption changes the tax withheld by $570. So if you were going to owe $400 in April, one few exemption will have you overpay $170. i.e. in this 15% bracket, each exemption changes annual withholding by that $570. For most people, running the W4 numbers will get them very close, and only if they are getting back or owing over $500, will they even think of adjusting. 3 - My recently published Last Minute Tax Moves offers a number of interesting ideas to address this. The concept of grouping deductions in odd years is worth noting. 4 - I'm not sure what this means, 2 accounts each worth $5000 should grow at the same rate if invested the same. The time it makes sense to load one person's account first is if they have better matching. You say you are not sure what percent your wife's company matches. You need to change this. For both of your retirement plans you need to know every detail, exact way to maximize matching, expense ratios for the investments you choose, any other fees, etc. Knowledge is power, and all that. In What is an appropriate level of 401k fees or expenses in a typical plan? I go on to preach about how fees can wipe out any tax benefit over time. For any new investor, my first warning is always to understand what you are getting into. If you can't explain it to a friend, you shouldn't be in it. Edit - you first need to understand what choices are within the accounts. The 4% and 6% are in hindsight, right? These are not fixed returns. You should look at the choices and more heavily fund the account with the better selection. Deposit to her account at least to grab the match. As far as the longer term goals, see how the house purchase goes. Life has a way of sending you two kids and forcing you to tighten the budget. You may have other ideas in three years. (I have no P2P lending experience, by the way.) Last - many advise that separate finances are a bad path for a couple. It depends. Jane and I have separate check books, and every paycheck just keep enough to write small checks without worry, most of the money goes to the house account. Whatever works for you is what you should do. We've been happily married for most of the 17 years we've been married.\"", "title": "" }, { "docid": "d1ff3cee0decc25182c465a797af4a69", "text": "\"If you are living together 'casually' (no formal partnership agreement) then my option would be to ask her politely to as she has offered make a contribution by buying the groceries or some such which you share. A 'voluntary contribution' not an enforceable one. Just as between flat mates where only one is the actual tenant of the flat but the tenancy allows 'sharing' . Check your tenancy allows you to share lodgings. PS An old Scots saying is \"\"never do business with close family\"\". I.e do not charge your wife or living in partner rent. It mixes emotional domestic life with a formal business life which can set feuds going in case of a break up or dispute. If you enter into child bearing relationship or parent hood or formal partnership or marriage then all this changes at some time in the future.\"", "title": "" }, { "docid": "24f0a45be776167a3a06ee7f40b0aa6c", "text": "It's fine - if you are an employee, you will normally have all taxes deducted by the employer, and won't even need to complete a tax return. Even if you do, all the figures will be on the P60 you get at the end of the year. If that's your only income, it's pretty easy to do. Remember, your taxes and your girlfriends are totally separate. It also doesnt matter where the money goes - you could be paid in cash or into any account, it's the fact that you earn it makes it taxable.", "title": "" }, { "docid": "364b20bda72056b70460263d8e3e0193", "text": "Publication 17 Your Income Tax top of page 14 If the direct deposit cannot be done, the IRS will send a check instead. When your girlfriend gets the check, she can endorse it over to you for deposit into your account.", "title": "" }, { "docid": "3965ebcc47d710ff6853b5136b318382", "text": "\"The seriousness of your situation depends on whether your girlfriend was owed a refund for each tax return she failed to file, or whether she owed additional money. If she owed money on one or more of the tax returns she failed to file, stop! It is time to consult a lawyer. At the very least, you need to contact an accountant who specialises in this sort of thing. She will owe interest and penalties, and may be liable for criminal prosecution. There are options available and lawyers who specialise in this sort of thing (e.g. this one, from a simple google search). If she is in this position, you need professional help and you need it soon, so you can make a voluntary disclosure and head off criminal prosecution. Assuming the taxes are fairly simple, you are likely looking at a few thousand dollars, but probably less than $7,500, for professional help. There will be substantial penalties assessed as well, for any taxes owing. If you wait until the CRA starts proceedings, you are most likely looking at $10,000 to $50,000, assuming the matter is not too complicated, and would be facing the possibility of a jail term not exceeding five years. If she was due a refund on every single one of the tax returns she failed to file, or at least if she did not owe additional money, you are probably in a situation you can deal with yourself. She will want to file all of the tax returns as soon as possible, but will not be assessed a penalty. I have personally filed taxes several months late a number of times, when I was owed a refund. You may still want to consider professional help, but it is probably not necessary. Under no circumstances should she allow her father near her finances again, ever. You should also be careful to trust any responses to this question, including my response, because we are unlikely to be professional accountants (I certainly am not). You are well outside the abilities of an H&R Block \"\"accountant\"\" in this matter and need a real certified accountant and/or a lawyer who specialises in Failure To File cases.\"", "title": "" }, { "docid": "5d30f301760755861621e5260d05e183", "text": "\"As a Canadian resident, the simple answer to your question is \"\"yes\"\" Having worked as a tax auditor and as a Certified Financial Planner, you are required to file an income tax return because you have taxable employment income. All the employer is doing is deducting it at source and remitting it on your behalf. That does not alleviate your need to file. In fact, if you don't file you will be subject to a no filing penalty. The one aspect you are missing is that taxpayers may be entitled to tax credits that may result in a refund to you depending on your personal situation (e.g spousal or minor dependents). I hope this helps.\"", "title": "" } ]	fiqa
b988b6bb93b2ceae58ace5af30fc1efb	How do credit card payments work? What ensures the retailer charges the right amount?	[ { "docid": "c5d5523842c31bc0949236014e496797", "text": "When you give your credit card number and authorize a merchant to charge your credit card, the merchant then gives the information to their merchant processor which in turns bills the bank that issued the card (it's a little more complex and it all happens instantly unless the merchant is using the very old fasion imprinting gizmos). It is possible for a merchant to attempt to charge you more than you authorized but if they do they risk a fine ($25-$50 for a chargeback) from their processor, the legitimate portion of the charge as well as increasing the processing fees charged by their processor or even the possibility of loosing their merchant account entirely and being permanently blacklisted by Visa/Mastercard. In short no legitimate business is going to intentionally over charge your credit card. There really isn't significant risk in using a reputable online retailer's order forms. There is the possibility that their database could be compromised but that risk is lower than the risk of having an employee steal your credit number when you give it to them in person. Besides in the US at least the most you can legally be held liable for is $50 assuming you notice the discrepancy within 60 days of statement the charge appears on and most banks limit liability to $0. Over the years I have had a number of different credit card numbers stolen and used fraudulently and I have never had to pay any fraudulent charges.", "title": "" }, { "docid": "d95ff0530073eeb874ecfe7edb13e1c5", "text": "\"Your credit card limit is nothing more than a simple number. When you purchase something, the merchant receives a number (i.e. the amount of the transaction) from your card company (e.g. Visa) in their bank account, and that number is subtracted from your limit (added to your balance). The amount is recorded, and isn't changed, so that's how they get the \"\"exact\"\" amount you paid. Transferring a number is easier than the retailer having to wait for cash to get from you to your card company to them. Moving numbers around is the basis of the modern financial system. And yes, it is always a risk to let someone else have your credit card number. An untrustworthy company/person may use it to charge you without your permission, or if they have your full details they could use it as if they were you. With a reputable retailer like Amazon, the main risk is data theft: If a security hole is found in Amazon's system, someone could steal your credit card info and misuse it.\"", "title": "" } ]	[ { "docid": "20b641f7a2a56ad95867db10dc9c2bc6", "text": "Intellectually and logically, it shouldn't bother me for a second to charge something for a buck. It's a losing proposition for the merchant, but their immediate business costs should be of little concern to me. (They're making a choice to sell that item to me at that price and by accepting that means of payment, right?) but the more I charge as opposed to paying cash, the more cash back I get. In my old-ish age, I've gotten a little softer and will pay cash more often for smaller amounts because I understand the business costs, but it's not a matter of caring what other people think. Accepting credit cards, or not, is a business decision. It's usually a good one. But with that decision come the rules, which up until about a year ago, meant that merchants couldn't set a minimum charge amount. Now that's not the case; merchant account providers can no longer demand that their merchant clients accept all charges, though they are allowed to set a minimum amount that is no lower than $10.00. In the end, it's a matter of how much you're willing to pay in order to influence people's thinking of you, because the business/financial benefits of doing one or the other are pretty clear.", "title": "" }, { "docid": "6f04c572febf901d91fa7fbf164c5f1f", "text": "Your chief problem seems to be that you're mixing Visa (credit cards) and Step2 (a European Automated Clearing House). Credit cards are primarily an American concept, but do work worldwide especially in travel&tourism industry. The Credit Card companies are financial institutions themselves and operate similar to international banks They're typically acting as intermediaries between the customer's bank and the retailer's bank, so this works even if those two banks have no existing agreements. This is expensive, though. Step2 is a cheaper European system which eliminates the middle man. It allows the consumer's bank to directly pay the retailer's bank. VISA is not a member of Step2.", "title": "" }, { "docid": "dbb3ec715d8b422ce3e1ee805b3c85dc", "text": "Interchange fees. Every time a customer buys something on credit, the seller pays a fee. They're not allowed to itemize that fee and pass it on to the buyer, but they can offer a cash payment discount. In short, rewards cards are a system of collective bargaining for buyers versus sellers. Some argue it drives prices up for everyone who isn't a cardholder, but I think the evidence is mixed.", "title": "" }, { "docid": "59ffc40b4113b4fcee9b4be04039d9c9", "text": "As a general premise: In most of the online transactions in case of dispute the benefit of doubt is given to the customer. IE if the customer refuses to pay and claims that its not his transaction, the card company reverses the charges and does not pay the merchant (or recovers if its already paid). There are many types of online vendors who use a variety of methods to ensure that they are not at loss. Some of these are:", "title": "" }, { "docid": "08fb943439e601512e5c1a0665e38377", "text": "\"recently there has been an increase in Companies charging a Credit Card surcharge, the current law does not fix the amount so therefore company's can set there own surcharges, which means you can pay different surcharges at different places. In the \"\"Money\"\" magazine a couple of months ago there was an interesting article that discussed a possible cap that was going to be introduced to cut down on the fluctuations of Credit Card surcharges as some places are generating revenue by abusing the Credit Card surcharge. Something to keep in mind is to ensure when using a Debit card you are not charged the surcharge. some businesses will treat the Debit card the same as a Credit Card.\"", "title": "" }, { "docid": "6362a784887a6fe47d38548576f5afa3", "text": "They charge merchants a transaction fee, typically between 1% and 3%, for processing every credit card transaction. And of course they make money on interest charged to customers even if they pay on time, as long as the customers don't pay off their balance in full every month.", "title": "" }, { "docid": "2b853421a575ea6105a8dea6baec6e29", "text": "From experience, Mastercard and Visa charge vendors about the same (around 2%-5%) while American Express and Diners Club are astonishingly expensive (6%-10%) and you'll find that few small retailers are very comfortable accepting these. The variation comes from the volume of trade that vendors provide. A big retailer will negotiate a very low rate while smaller businesses will be hit with higher charges.", "title": "" }, { "docid": "8bb67dbef75bc0e21447b957487b2d92", "text": "You can split payments, and nobody judges you because most prepaid cards are actually gift cards. They just think you have generous friends. When you use Visa/MC at a vendor, they get dinged around 2-3% plus 35 cents flat-rate. So when you ask them to charge 77 cents to the card, you're essentially asking they give half of it to Visa/MC. Which is unfair. A charity won't turn it down, but it's wasted. So how do you solve this problem? If you see a small merchant using Square or PayPal Here, their merchant agreements charge a flat rate (2.75% and 2.70% respectively) with no flat rate per transaction. If you see they are on PayPal/Square, go for it. Obviously PayPal itself doesn't have that problem, because they have a really, really good deal with Visa and Mastercard. So feel free to buy yourself credit on your PayPal account with these residual values. Amazon probably has a similar deal. You are getting these small amounts because you aim to pay a $22.69 bill with a card that has $25 on it. Reasonable, but it causes this. Flip it around: pay a $22.69 bill with a card that has $20 on it, consume the $20 value, and pay the $2.69 in cash. You may need to tell the cashier exactly the amount to charge (e.g. $20.00) especially if it is a Visa/MC card. It will certainly go faster if you do. The cashier may be able to pull up the balance, but it's an extra procedure, and an inexperienced cashier may struggle with it / have to call the manager etc. - not worth it in my book.", "title": "" }, { "docid": "dac5b86f380989b690c52d2169211410", "text": "Some large merchants do not give discounts for cash payments as this does not work out any cheaper for them, vs Credit Card payments. In Credit Card typically fees given to all the 3 parties (Merchant bank, Issuer Bank and Visa) would be around 3%. If cash payment is made, and the amounts are large (say at Walmart / K-Mart they have to deposit such cash at Banks, Have a provision to Storing Cash at Stores, People to count the cash. So essentially they will have to pay for Cash Officer to count, Bigger Safe to store, Transport & Security & Insurance to take Cash to Bank Plus Banks charge around 1% charge for counting the large cash being deposited. This cash would be in local branch where as the operations are centralized and Walmart/K-Mart would need the money in central account, it takes time to get it transferred to a central account, and there is a fee charged by Bank to do this automatically. On the other hand, smaller merchants would like cash as they are operated stand-alone and most of their purchases are also cash. Hence they would tend to give a discount for cash payment if any.", "title": "" }, { "docid": "bc7685ecec082bcae6aa5d12e0fb7397", "text": "Wow, I had never heard of this before but I looked into it a bit and Mikey was spot on. It seems that if you don't pay attention to the fine print when making credit card purchases (as most of us tend to skip) many companies have stipulations that allow continued charges if they are recurring fees (monthly, yearly, etc.) even after you have cancelled the card.", "title": "" }, { "docid": "206fcc394cd42047e135996b36db0866", "text": "\"The service processors are providing is absorbing the risk. The flow goes, roughly (and I say roughly because it's a complicated process): 1. You swipe/insert your card at Bob's House of Eatery and get charged $10 for a bucket of ramen or something. 2. The device you swipe your card in, (\"\"a terminal\"\") encodes the card number, amount, and some other transaction details and contacts a \"\"Payment Gateway\"\". 3. The gateway decodes the blob of data, and is responsible for determining the issuing financial institution (\"\"Chase\"\", \"\"US Bank\"\", etc.). 4. The gateway contacts the above and asks, \"\"Can card # 555.. charge $10?\"\" 5. The gateway also sends this answer to the processor. 5. The processor _immediately_ proxies that yes/no back to the merchant's terminal. 6. The processor, having a transaction ID, and a yes/no, sends the response to the merchant's systems so your receipt can be printed or order processed, and so on. 7. Meanwhile, the processor has a transaction ID and is busy figuring out things like interchange fees. The amount depends on a whole host of things, and almost everyone involved in the process wants their cut -- the bank, the gateway, the processor, and it all depends on the type of card, customer, rewards, and so on. 8. At the end of the day, week, whatever, the processor collects money from the issuing financial institution and is responsible for giving the right amount -- less fees -- to the merchant. The processor here also absorbs the risk and costs for things like chargebacks, as almost everyone in that chain (gateway, issuing bank) want their pound of flesh for a chargeback, and often the processor doesn't pass that full cost on to the merchant and instead does some risk analysis to determine if they think this merchant is going to be okay to do business with. That's what you're paying for.\"", "title": "" }, { "docid": "5b341f79c0872469203a249e72a7f18f", "text": "\"These are two different ways of processing payments. They go through different systems many times, and are treated differently by the banks, credit card issuers and the stores. Merchants pay different fees on transactions paid by debit cards and by credit cards. Debit transactions require PIN, and are deducted from your bank account directly. In order to achieve that, the transaction has to reach the bank in real time, otherwise it will be declined. This means, that the merchant has to have a line of communications open to the relevant processor, that in turn has to be able to connect to the bank and get the authorization - all that while on-line. The bank verifies the PIN, authorizes the transaction, and deducts the amount from your account, while you're still at the counter. Many times these transactions cannot be reversed, and the fraud protections and warranties are different from credit transactions. Credit transactions don't have to go to your card issuer at all. The merchant can accept credit payment without calling anyone, and without getting prior authorizations. Even if the merchant sends the transaction for authorization with its processor, if the processor cannot reach the issuing bank - they can still approve the transaction under certain conditions. This is, however, never true with debit cards (even if used as \"\"credit\"\"). They're not deducted from your bank account, but accumulated on your credit card account. They're posted there when the actual transaction reaches the card issuer, which may be many days (and even many months) after the transaction took place. Credit transactions can be reversed (in some cases very easily), and enjoy from a higher level of fraud protection. In some countries (and most, if not all, of the EU) fraudulent credit transactions are never the consumer's problem, always the bank's. Not so with debit transactions. Banks may be encouraging you to use debit for several reasons: Merchants will probably prefer credit because: Consumers will probably be better off with credit because:\"", "title": "" }, { "docid": "c8565ba420e8972644864e83bfcd33f2", "text": "The statement in Wikipedia is generic. Whether a particular Bank would charge as per above example or not would be in the card holder's agreement. So if you do not have any dues, and on 10th April you charge $1000, and on 13th April you charge $500. Statement date is 18th April. Grace Period to pay is say 10th May. If you do not pay in full by 10th May, and say you only pay $500, Bank would charge interest from 19th April to 10th May for $1500, post 10th may they would charge interest for $1000 balance. Further all fresh purchases would be charged interest from day 1. Net Net Morale of the story is do not carry / revolve money on Credit Card. For all practial purposes use a credit card as a convenience card.", "title": "" }, { "docid": "2ba2c626ca84ace787e7a478a3acbf83", "text": "There generally isn't much in the way of real identity verification, at least in the US and online. The protection you get is that with most credit cards you can report your card stolen (within some amount of time) and the fraudulent charges dropped. The merchant is the one that usually ends up paying for it if it gets charged back so it's usually in the merchant's best interest to do verification. However the cost of doing so (inconvenience to the customer, or if it's an impulse buy, giving them more time to change their mind, etc) is often greater than the occasional fraudulent charge so they usually don't do too much about it unless they're in a business where it's a frequent problem.", "title": "" }, { "docid": "e1a4f130b83a8bdee77abead5dfbb1fa", "text": "When I put it on the credit card, I haven't paid for the product or service yet. If there is a dispute, then I have the upper hand because the cash is still in my pocket.", "title": "" } ]	fiqa
65ef3e7baab84db89ca03dee2327c05a	What's the general principle behind choosing saving vs. paying off debt?	[ { "docid": "8f08d6c1787b0d0596cfff5c0642ddfa", "text": "It has to do with return. I don't know if Canada has a matching feature on retirement accounts, but in the US many companies will match the first X% you put in. So for me, my first $5000 or so is matched 100%. I'll take that match over paying down any debt. Beyond that, of course it's a simple matter of rate of return. Why save in the bank at 2% when you owe at 10-18%? One can make this as simple or convoluted as they like. My mortgage is a tax deduction so my 5% mortgage costs me 3.6%. I've continued to invest rather than pay the mortgage too early, as my retirement account is with pre-tax dollars. So $72 will put $100 in that account. Even in this last decade, bad as it was, I got more than 3.6% return.", "title": "" }, { "docid": "ca4f5579dafd832b5e6bda1451cdf111", "text": "Debt creates risk. Plain and simple. Comparing interest rates of debt vs. possible investing. To me, it is all meaningless. When you are in debt, you options are limited. If you are not in debt, you have more freedom. To me, it is a no brainer. Become debt free ASAP.", "title": "" }, { "docid": "35b2f05eeda5be63272d56c44265f40e", "text": "\"Think of yourself as a business with two accounts, \"\"cash\"\" and \"\"net worth\"\". Your goal is to make money. \"\"Cash\"\" is what you need to meet your obligations. You need to pay your rent/mortgage, utilities, buy food, pay for transportation, service debt, etc. If you make $100 a month, and your obligations are $90, you're clearing $10. \"\"Net worth\"\" are assets that you own, including cash, retirement savings, investments, or even tangible goods like real property or items you collect with value. The \"\"pay off debt\"\" versus \"\"save money\"\" debate, in my opinion, is driven by two things, in this order: If you start saving too soon, you'll have a hard time getting by when your car suddenly needs a $500 repair or you need a new furnace. You need to improve your cash flow so that you actually have discretionary income. Pay off those credit cards, then start directing those old payments into savings and investments.\"", "title": "" }, { "docid": "704eec7c676961ec1790bd188c8b0292", "text": "Depends upon the debt cost. Assuming it is consumer debt or credit card debt, it is better to pay that off first, it is the best investment you can make. Let's say it is credit card debt. If you pay 18% interst and have for example a $1,000 amount. If you pay it off you save $180 in interest ($1,000 times 18%). You would have to earn 18% on 1,000 to generate $180 if it was in aninvestment. Here is a link discussing ways of reducing debt Once you have debt paid off you have the cashflow to begin building wealth. The key is in the cashflow.", "title": "" } ]	[ { "docid": "d39986d50b0e63031806e14e0e0c04a4", "text": "\"Wow, you guys get really cheap finance. here a mortage is 5.5 - 9% and car loans about 15 - 20%. Anyway back to the question. The rule is reduce the largest interest rate first (\"\"the most expensive money\"\"). For 0% loans, you should try to never pay it off, it's literally \"\"free money\"\" so just pay only the absolute minimum on 0% loans. Pass it to your estate, and try to get your kids to do the same. In fact if you have 11,000 and a $20,000 @ 0% loan and you have the option, you're better to put the 11,000 into a safe investment system that returns > 0% and just use the interest to pay off the $20k. The method of paying off the numerically smallest debt first, called \"\"snowballing\"\", is generally aimed at the general public, and for when you can't make much progress wekk to week. Thus it is best to get the lowest hanging fruit that shows progress, than to try and have years worth of hard discipline just to make a tiny progress. It's called snowballing, because after paying off that first debt, you keep your lifestyle the same and put the freed up money on as extra payments to the next target. Generally this is only worth while if (1) you have poor discipline, (2) the interest gap isn't too disparate (eg 5% and 25%, it is far better to pay off the 25%, (3) you don't go out and immediately renew the lower debt. Also as mentioned, snowballing is aimed at small regular payments. You can do it with a lump sum, but honestly for a lump sum you can get better return taking it off the most expensive interest rate first (as the discipline issue doesn't apply). Another consideration is put it off the most renewable finance. Paying off your car... so your car's paid off. If you have an emergency, redrawing on that asset means a new loan. But if you put it off the house (conditional on interest rates not being to dissimilar) it means you can often redraw some or all of the money if you have an emergency. This can often be better than paying down the car, and then having to pay application fees to get a new unsecured loan. Many modern banks actually use \"\"mortgage offsetting\"\" which allows them to do this - you can keep your lump sum in a standard (or even fixed term) and the value of it is deducted \"\"as if\"\" you'd paid it off your mortgage. So you get the benefit without the commitment. The bank is contracted for the length of the mortgage to a third party financier, so they really don't want you to change your end of the arrangement. And there is the hope you might spend it to ;) giving them a few more dollars. But this can be very helpful arragement, especially if you're financing stuff, because it keeps the mortgage costs down, but makes you look liquid for your investment borrowing.\"", "title": "" }, { "docid": "bc3fac15e2f8646c244551e0b846d17b", "text": "\"Your main reason to not pay off your debts right now seems to be: Enjoy life while \"\"I am young\"\" and not miss opportunities to have fun? I think the good news is that having fun usually does not require spending a lot of money. I would propose that most of the times when we considered something fun it had more to do with who we were with than what we were actually doing. Of course there are many fun things that are expensive, but there are even more fun things that require little money at all. My suggestion to you would be to prioritize your debt in a responsible way such that you have a plan to pay it off quickly, but if something comes along that does require extra money, don't be afraid to make an adjustment. For example, you can try to put 2000€ towards your debt every month, but if some exciting adventure comes along that you really want to do and it costs 1000€ one month, you shouldn't feel like you absolutely must turn it down. That month you could put 1000€ towards debt and the other 1000€ towards the adventure. I wouldn't recommend taking an adventure every month, but I wouldn't always turn one down either. Besides, I think most of the time you can have lots of fun for free.\"", "title": "" }, { "docid": "3efd6b04f4c411da91108e1ba6a83ead", "text": "\"Debt cripples you, it weighs you down and keeps you from living your life the way you want. Debt prevents you from accomplishing your goals, limits your ability to \"\"Do\"\" what you want, \"\"Have\"\" what you want, and \"\"Be\"\" who you want to be, it constricts your opportunities, and constrains your charity. As you said, Graduated in May from school. Student loans are coming due here in January. Bought a new car recently. The added monthly expenses have me concerned that I am budgeting my money correctly. Awesome! Congratulations. You need to develop a plan to repay the student loans. Buying a (new) car before you have planned you budget may have been premature. I currently am spending around 45-50% of my monthly (net)income to cover all my expenses and living. The left over is pretty discretionary, but things like eating dinner outside the house and expenses that are abnormal would come out of this. My question is what percentage is a safe amount to be committing to expenses on a monthly basis? Great! Plan 40-50% for essentials, and decide to spend under 20-30% for lifestyle. Be frugal here and you could allocate 30-40% for financial priorities. Budget - create a budget divided into three broad categories, control your spending and your life. Goals - a Goal is a dream with a plan. Organize your goals into specific items with timelines, and steps to progress to your goals. You should have three classes of goals, what you want to \"\"Have\"\", what you want to \"\"Do\"\", and who you want to \"\"Be\"\"; Ask yourself, what is important to you. Then establish a timeline to achieve each goal. You should place specific goals or steps into three time blocks, Near (under 3-6 months), medium (under 12 months), and Long (under 24 months). It is ok to have longer term plans, but establish steps to get to those goals, and place those steps under one of these three timeframes. Example, Good advice I have heard includes keeping housing costs under 25%, keeping vehicle costs under 10%, and paying off debt quickly. Some advise 10-20% for financial priorities, but I prefer 30-40%. If you put 10% toward retirement (for now), save 10-20%, and pay 10-20% toward debt, you should make good progress on your student loans.\"", "title": "" }, { "docid": "673ef9d7a042b643fa2d062c000f88ed", "text": "I believe this argument is most often used when considering which debts to pay back first, or when there are other options available such as investment options, building up an emergency fund, or saving for a large purchase. In that case, it's simply justifying making minimum payments and paying more over the life of the loan in exchange for larger liquidity in the present. Unfortunately, when it comes to choosing between which debts to pay (e.g. My mom pays more than the minimum on her car because she can't deduct auto loan interest, despite her mortgage carrying a higher interest rate), it's only beneficial if the tax savings offsets the interest savings difference. The formula for that is: tax bracket > (1 - (target loan interest rate / mortgage interest rate)) That said, most people don't think in the long term, either by natural shortsightedness, or by necessity (need to have an emergency fund).", "title": "" }, { "docid": "0e82dc8fadcfa9887733a3d37adfb011", "text": "Incredible article, tons of data. Thank you! It does answer the above posters question if you're willing to read through. It provides data with and without 'revolving debt'. Side note; interesting to see how age and income trend. Debt increasing during the family-middle aged years, and during the peak income earning years. I'd say you want these credit card debt lower overall and on average; but with the distribution it may be sustainable.", "title": "" }, { "docid": "4b27fe4787eb6e07ed71131bc7357766", "text": "\"There are other good answers to the general point that the essence of what you're describing exists already, but I'd like to point out a separate flaw in your logic: Why add more complications so that \"\"should I call this principal or interest\"\" actually makes a difference? Why's the point (incentive) for this? The incentive is that using excess payments to credit payments due in the future rather than applying it to outstanding principal is more lucrative for the lender. Since it's more lucrative and there's no law against it most (all) lenders use it as the default setting.\"", "title": "" }, { "docid": "8a5910dfd7a8290d95d7df43662ed349", "text": "\"Good debt is very close to an oxymoron. People say student loans are \"\"good debt,\"\" but I beg to differ. The very same \"\"good debt\"\" that allowed me to get an education is the very same \"\"bad debt\"\" that doesn't allow me to take chances in my career - meaning, I would prefer to have a 'steady' job over starting a business. (That's my perogative, of course, but I am not willing to take that 'risk.' /endtangent @Harmanjd provided the two really good reason for using cash over borrowing. We have a tendency in this culture to find reasons to borrow. It is better for you to make a budget, based on what you want, and save up for it. Make a \"\"dream list\"\" for what you want, then add up the costs for everything. If that number makes your head hurt, start paring down on things you 'want.' Maybe you install just a wine cooler instead of a wine cooler and a beer tap, or vice-versa. And besides, if something comes up - you can always stop saving money for this project and deal with whatever came up and then resume saving when you're done. Or in the case of the kitchen, maybe you do it in stages: cabinets one year, countertops the next, flooring the year after that, and then the appliances last. You don't have to do it all at once. As someone who is working toward debt freedom, it feels nice whenever we have one less payment to budget for every month. Don't burden yourself to impress other people. Take your time, get bids for the things you can't (or won't) do yourself, and then make a decision that's best for your money.\"", "title": "" }, { "docid": "720ab8974a63a63d5ee67a35c090a259", "text": "Liquidity Say you have $50k in student loan debt. You come into a large amount of money and throw $10k at it. Yes, it's now down to $40k, saving you a lot of money in interest over the long run, but it's money you can no longer 'use'. Now if you invest that same $10k instead, you still potentially have access to it if needed. Paying $10k towards a debt at a 5% interest rate has essentially the same rate of return as investing the $10k at a 5% return. You're 'making' the same amount of money either way. But if you say, get laid off or need money for medical expenses or a down payment on a house, you can tap into that $10k investment if needed. It is a liquid asset.", "title": "" }, { "docid": "c0042f9f7a2a4549157ed3849889c584", "text": "You would have to do the specific math with your specific situation to be certain, but - generally speaking it would be smarter to use extra money to pay down the principle faster on the original loan. Your ability to refinance in the future at a more favorable rate is an unknowable uncertainty, subject to a number of conditions (only some of which you can control). But what is almost always a complete certainty is that paying off a debt is, on net, better than putting the same money into a low-yield savings account.", "title": "" }, { "docid": "3e1626a8841ae03410334dd28d884510", "text": "\"If one takes a slightly more expansive view of the word \"\"saving\"\" to include most forms of durable asset accumulation, I think the reason some do and most don't is a matter of a few factors, I will include the three that seem obvious to me: Education Most schools in the US where I live do not offer personal finance courses, and even when they do, there is no opportunity for a student to practice good financial habits in that classroom setting. I think a simple assignment that required students to track every penny that they spend over the period of a few months would help them open their eyes to how much money is spent on trivial things that they don't need. Perhaps this would be more effective in a university setting where the students are usually away from home and therefore more responsible for the spending that occurs on their own behalf. Beyond simple education about personal finances, most people have no clue how the various financial markets work. If they understood, they would not allow inflation to eat away at their savings, but that's a separate topic from why people do not save. Culture Since much of the education above isn't happening, children get their primary financial education from their parents. This means that those who are wealthy teach their children how to be wealthy, and those who are poor pass on their habits to children who often also end up poor. Erroneous ideas about consumption vs. investment and its economic effects also causes some bad policy encouraging people to live beyond their means and use credit unwisely, but if you live in a country where the average person expects to eat out regularly and trade in their automobiles as soon as they experienced their highest rate of depreciation, it can be hard to recognize bad financial behavior for what it is. Collective savings rates reflect a lot of individuals who are emulating each other's bad behavior. Discipline Even when someone is educated about finances, they may not establish good habits of budgeting regularly, tracking spending, and setting financial goals. For me, it helps to be married to someone who has similar financial goals, because we budget monthly and any major purchases (over $100 or so) must be agreed upon at the beginning of the month (with obvious exceptions for emergencies). This eliminates any impulsive spending, which is probably 90% of the battle for me. Some people do not need to account to someone else in order to spend wisely, but everyone should find a system that works for them and helps them to maintain some financial discipline.\"", "title": "" }, { "docid": "ce8d6d5b04f5a41cc1c92d8503bc7181", "text": "\"All of the provided advice is great, but a slightly different viewpoint on debt is worth mentioning. Here are the areas that you should concentrate your efforts and the (rough) order you should proceed. Much of the following is predicated upon your having a situation where you need to get out of debt, and learn to better budget and control your spending. You may already have accomplished some of these steps, or you may prioritize differently. Many people advise prioritizing contributing to a 401(k) savings plan. But with the assumption that you need advise because you have debt trouble, you are probably paying absurd interest rates, and any savings you might have will be earning much lower rates than you are paying on consumer debt. If you are already contributing, continue the plan. But remember, you are looking for advice because your financial situation is in trouble, so you need to put out the fire (your present problem), and learn how to manage your money and plan for the future. Compose a budget, comprised of the following three areas (the exact percentages are fungible, fit them to your circumstances). Here is where planning can get fun, when you have freed yourself from debt, and you can make choices that resonate with your individual goals. Once you have \"\"put out the fire\"\" of debt, then you should do two things at the same time. As you pay off debt (and avoid further debt), you will find that saving for both independence and retirement become easier. The average American household may have $8000+ credit card debt, and at 20-30%, the interest payments are $150-200/month, and the average car payment is nearly $500/month. Eliminate debt and you will have $500-800/month that you can comfortably allocate towards retirement. But you also need to learn (educate yourself) how to invest your money to grow your money, and earn income from your savings. This is an area where many struggle, because we are taught to save, but we are not taught how to invest, choose investments wisely and carefully, and how to decide our goals. Investing needs to be addressed separately, but you need to learn how. Live in an affordable house, and pay off your mortgage. Consider that the payment on a mortgage on even a modest $200K house is over $1000/month. Combine saving the money you would have paid towards a mortgage payment with the money you would have paid towards credit card debt or a car loan. Saving becomes easy when you are freed from these large debts.\"", "title": "" }, { "docid": "4d117fa1cc11e115832fee5e4fb4bbb1", "text": "\"Good debt and \"\"Bad debt\"\" are just judgement calls. Each person has their own opinion on when it is acceptable to borrow money for something, and when it is not. For some, it is never acceptable to borrow money for something; they won't even borrow money to buy a house. Others, of course, are in debt up to their eyeballs. All debt costs money in interest. So when evaluating whether to borrow or not, you need to ask yourself, \"\"Is the benefit I am getting by borrowing this money worth the cost?\"\" Home ownership has a lot of advantages: For many, these advantages, coupled with the facts that home mortgages are available at extremely low interest rates and that home mortgage interest is tax-deductible (in the U.S.), make home mortgages \"\"worth it\"\" in the eyes of many. Contrast that with car ownership: For these reasons, there are many people who consider the idea of borrowing money to purchase a car a bad idea. I have written an answer on another question which outlines a few reasons why it is better to pay cash for a car.\"", "title": "" }, { "docid": "8e437a2c62972a44657f449075e12786", "text": "\"Debt is nominal, which means when inflation happens, the value of the money owed goes down. This is great for the borrower and bad for the lender. \"\"Investing\"\" can mean a lot of different things. Frequently it is used to describe buying common stock, which is an ownership claim on a company. A company is not a nominally fixed asset, by which I mean if there was a bunch of inflation and nothing else happened (i.e., the inflation was not the cause or result of some other economic change) then the nominal value of the company will go up along with the prices of other things. Based on the above, I'd say you are incorrect to treat debt and investment returns the same way with respect to inflation. When we say equity returns 9%, we mean it returns a real 7% plus 2% inflation or whatever. If the rate of inflation increased to 10% and nothing else happened in the economy, the same equity would be expected to return 17%. In fact, the company's (nominally fixed) debts would be worth less, increasing the real value of the company at the expense of their debt-holders. On the other hand, if we entered a period of high inflation, your debt liability would go way down and you would have benefited greatly from borrowing and investing at the same time. If you are expecting inflation in the abstract sense, then borrowing and investing in common stock is a great idea. Inflation is frequently the result (or cause) of a period of economic trouble, so please be aware that the above makes sense if we treat inflation as the only thing that changed. If inflation came about because OPEC makes oil crazy expensive, millennials just stop working, all of our factories got bombed to hades, or trade wars have shut down international commerce, then the value of stocks would most definitely be affected. In that case it's not really \"\"inflation\"\" that affected the stock returns, though.\"", "title": "" }, { "docid": "447e36756a611039b1bd682cce45a182", "text": "As others mentioned, the only clear reason to remain in debt is if you can find an investment that yields more than what you're paying to maintain the debt. This can happen if a debt was established during low-rate period and you're in a high-rate period (not what is happening now.) A speculative reason to keep debt is as an inflation bet. If you believe money will shortly lose value, you are better off postponing repayment until the drop occurs. However you're not likely to be able to make these bets successfully. Hope this helps", "title": "" }, { "docid": "0094fbb946b03bcaaa95bac03b2c69af", "text": "\"Pay off the highest rate debt. Interest on both are charged on the balance owed, nothing more complicated than that. There are those who would call a mortgage \"\"front loaded\"\" but that's nonsense. Of course most of the payment is interest at the beginning because the debt is higher and you start with a 30 year term. The fastest way to pay off multiple debts is always from highest rate first and then the next and so on.\"", "title": "" } ]	fiqa
625eb3d790ea2bad676c671ec79d7528	Can used books bought off Amazon be claimed as a tax deduction in Australia?	[ { "docid": "5624d284f2d14f8e932fc4406555d98f", "text": "\"VAT = Value Added Tax (as an Aussie think \"\"GST\"\") This is applicable in Britain. Basically, if you were in Britain, and if you could claim VAT as a deduction, that invoice is not sufficient proof to make the claim. But you're in Oz so it doesn't apply to you in any case. For work-related deductions like book purchases, see http://www.ato.gov.au/individuals/content.asp?doc=/content/00216829.htm&pc=001/002/068/001/002&mnu=&mfp=&st=&cy=1 Issues such as the books being second hand or purchased online are not cited in the instructions as relevant/limiting factors. In fact, if you really want to get into the nitty gritty, you could claim the work-related proportion of your internet access fees as a deduction (question D5 instructions, above, cover that as well).\"", "title": "" }, { "docid": "5bbb5414747ce9d5812c9eb7c8af0030", "text": "Yes, you can. That the books were purchased from abroad is irrelevant: you incurred an expense in the course of earning your income. If the books are expensive (>$300 per set iirc) you will need to deprecate them over a reasonable life time rather than claiming the entire amount up front. It doesn't matter whether what you got was a VAT Invoice; as long as you have some reasonable documentation of the expense you're ok.", "title": "" }, { "docid": "fe6de11870b7339c3adcb7bc5630624f", "text": "Yes, if they meet the ATO's criteria. Books, periodicals and digital information If the item cost less than $300 you can claim an immediate deduction where it satisfies all of the following requirements: http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Books,-periodicals-and-digital-information/ Alternatively They may be a self-education expense http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Self-education-expenses/ A Further Alternative They could fall into the tool, equipment or other asset category if they are for a professional library (this can include a home office). http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Tools,-equipment-and-other-assets/ I understand this is an old question although given the dead link in the above answer and the new resources this answer might prove helpful for others coming across this question.", "title": "" } ]	[ { "docid": "8cb4e274c228cb0a2282d036447a0de5", "text": "\"Books would be considered Personal-Use Property according to Canada's income tax laws. The most detailed IT I was able to find is IT-332R, which says: GAINS AND LOSSES 3. A gain on the disposition of personal-use property is normally a capital gain within the meaning of paragraph 39(1)(a). Where the property is a principal residence, the gain > is computed under paragraph 40(2)(b) or (c). 4. Under subparagraph 40(2)(g)(iii), a loss on a disposition of personal-use property, other than listed personal property, is deemed to be nil. [...] This part of the bulletin indicates that a gain might be considered a capital gain - not income. However, you don't get to book a loss as a capital loss. This is the first hint that your book sale - which is actually an exempt capital loss - shouldn't go on your tax return unless it's one of the \"\"listed\"\" items: LISTED PERSONAL PROPERTY 7. Listed personal property is defined in paragraph 54(e) to mean personal-use property that is all or any portion of, or any interest in or right to, any (a) print, etching, drawing, painting, sculpture, or other similar work of art, (b) jewellery, (c) rare folio, rare manuscript, or rare book, (d) stamp, or (e) coin. So unless you're selling rare books, the disposition (sale) of them is essentially exempt as income, regardless of whether you sold it at a profit or at a loss. If it is rare, then you might be able to consider it a capital loss, which doesn't help you much unless you had other capital gains, but you can carry over capital losses to future years. There's also a newer IT related to hobbies and \"\"collecting\"\" items, IT-334R2. This one says: 11. In order for any activity or pursuit to be regarded as a source of income, there must be a reasonable expectation of profit. Where such an expectation does not exist (as is the case with most hobbies), neither amounts received nor expenses incurred are included in the income computation for tax purposes and any excess of expenses over receipts is a personal or living expense, the deduction of which is denied by paragraph 18(1)(h). On the other hand, if the hobby or pastime results in receipts of revenue in excess of expenses, that fact is a strong indication that the hobby is a venture with an expectation of profit; if so, the net income may be taxable as income from a business. The current version of IT-504, Visual Artists and Writers, discusses the concept of \"\"a reasonable expectation of profit\"\" in greater detail. Where a hobby consists of collecting personal-use property or listed personal property, dispositions should be accounted for as described in the current version of IT-332, Personal-Use Property. (emphasis mine) In other words, if it's not the type of thing where you'd make a tax deduction when you bought it in the first place, then you clearly don't need to report it as income when you sell it. Just to be absolutely clear here: The fact that you are selling them at a loss is not actually what's important here. What's important is that, if the books aren't collectibles, then you would have had no expectation of profit. If you did have that expectation then you could have made a tax deduction when you first purchased them. So in this case, it is probably not necessary for you to report the income; however, for the benefit of other readers, in some cases you might need to report it under \"\"other income\"\" or book it as a capital gain/loss, depending on what those personal items are and whether or not you made a net profit.\"", "title": "" }, { "docid": "9b32420ecf5c9c2653bd76ceb712f999", "text": "\"Give the type of books I usually read (science fiction) I don't care about the loss of \"\"independent\"\" book stores or the big box book stores. Some of the best books I read are by small time authors that probably don't have time to shop their books around or tried and can't get their works published by a big name. Instead they can sell their books on Amazon for a few bucks. They get some money, I get something to read, and Amazon gets a cut for bringing us together. It is fucking fantastic. If Amazon starts to screw either the reader or the author too much we simply move our business elsewhere. As a bonus I don't end up with piles of novels that nobody wants.\"", "title": "" }, { "docid": "7f87075f1e043582b0fc0951329708af", "text": "The article mentions it briefly, but this is likely a defensive patent. So much of Amazon's business comes from cross-checking or reading reviews in retail stores. I bet they just want to make sure people can still do that.", "title": "" }, { "docid": "938244c4d2b7616a503f8be322873695", "text": "Apparently Amazon's legal team that is battling to prevent online retailers from getting taxed was not consulted as to whether an idea like this would look really bad for their case. It's brilliant, but a wee bit diabolical. Brick and mortar retailers really have no recourse against something like this.", "title": "" }, { "docid": "6aadff1d9c87cbfb8ec281b7b9301aa5", "text": "But maybe smaller shops are able to offer something else to differentiate, to make up for their inability to match Amazon's return policy? For example, maybe it lets them charge less or provide custom goods. Amazon is taking away that avenue for differentiation. I get Amazon's point: they want to provide a consistent experience. But it's pretty convenient in that it hurts smaller sellers more than bigger sellers and Amazon is the biggest seller of all.", "title": "" }, { "docid": "f395c55d7f9fd1f519a973966956ddbe", "text": "The relevant IRS publication is pub 463. Note that there are various conditions and exceptions, but it all starts with business necessity. Is it necessary for you to work from the UK? If you're working from the UK because you wanted to take a vacation, but still have to work, and would do the same work without being in the UK - then you cannot deduct travel expenses. It sounds to me like this is the case here.", "title": "" }, { "docid": "aa831d64b6ce98632cf7a569efbab6f6", "text": "Unfortunately this is something that should have been determined prior to the book tour. Your tax advisor or accountant could have assisted you in making sure you collected the documentation you needed. You are going to have to sit down with your advisor with the documentation you have and determine what you can prove.", "title": "" }, { "docid": "822a038af1b54479938fd5f5aff91661", "text": "It is not a limitation of ebooks. Limitations are imposed by Amazon (and others). The large publishers likely tell Amazon they won't let Amazon sell their e-content without draconian policies. However, I beleive Amazon includes draconian policies even on ebooks without such customer hostile publisher demands so that makes it difficult for Amazon to claim they are not choosing the draconian policies. I sell my ebook through leanpub http://leanpub.com/managementmatters You buy it, you own it. Leanpub doesn't go around deleting it from your device. The draconian policies are choices by publishers and retailers, not some condition of ebooks, in the way the articles states.", "title": "" }, { "docid": "5b41ddbdb3345219916d36921bb2aeb3", "text": "What Amazon is doing is called the Grey Market and normal bricks and mortar retailers do this as well. For example, buying Irish Whiskey might be expensive at all the shops in Australia because the licensed distribution companies set a high price for Australia. One retailer may simply buy Irish Whiskey off the retail shelf in South America, ship to Australia, pay import duties, and undercut all the competition. This happens for all sorts of products all the time. It destroys the channel distribution control that consumer goods companies have where they control distribution and set the prices consumers have to pay.", "title": "" }, { "docid": "6ebb80e56d6fa2c763af9c19fca46b16", "text": "\"If it's work you'd be producing specifically for this organization, that would not be deductable. Per Publication 526, Charitable Deductions, \"\"You can't deduct the value of your time or services, including: … The value of income lost while you work as an unpaid volunteer for a qualified organization.\"\" On the other hand, if you were say an author of a published book or something (not specifically written for this organization), you could donate a copy of the book and probably deduct its fair market value (or perhaps only your basis, if it's your business's inventory).\"", "title": "" }, { "docid": "8a24030f7d2965aba4b9fc552d7aa5c3", "text": "For larger items such as cars this is certainly possible; I've donated a car before (in Canada) and got a tax receipt that was probably worth more than I would have got from a dealer for the car. However with donations of this kind there are two obstacles: Two other options for you to consider. Most medium towns have used book shops which you can sell them to. If the used book shops don't want them then your books really aren't worth enough to be worrying about, in which case see option two: give the books to a charity or thrift shop and don't worry about the receipt. Sometimes a nice feeling is the best return you will get.", "title": "" }, { "docid": "b6142904211a069630ec65e91a718b8b", "text": "\"Wait a second, I can't be the first to notice this, near the top of the article: The internal contents, however, were often the exact same English words being read by their classmates buying high-priced US editions. but later farther down: In cases where goods were actually produced abroad— this brings up the very definition of produced for \"\"intellectual property\"\", to my mind the mere fact that it is printed outside of the country is simply a logistical convenience. If in fact it was written by a U.S. author living in the U.S. then it wasn't actually produced abroad. Same goes for U.S. produced software in foreign manufactured goods.\"", "title": "" }, { "docid": "27d9e24ac779e2b2ae49ec352be8120e", "text": "\"I doubt it. In the States you would only owe tax if you sold such an item at a profit. \"\"garage sales\"\" aren't taxable as they are nearly always common household items and sale is more about clearing out one's attic/garage than about profit. Keep in mind, if I pay for a book, and immediately sell it for the same price, there's no tax due, why would tax be due if I sell for a loss?\"", "title": "" }, { "docid": "e67c7f1b68ee6dab8144c35a5441fed9", "text": "\"Answering a more general question: are financial services firms worth the money? It really depends on the person. Some can contribute regularly to index funds, and do the asset allocation on their own. They are comfortable buying and selling various funds and there is really not that much management to do a Bogle like \"\"3 fund portfolio\"\". All that is needed is an occasional re-balance. This person probably does not need a firm like UBS or many of the others out there. Some do some active picking of funds and stocks, and also some indexing. Again they are comfortable in doing the right thing and probably don't need a manager. There are others, however, that need a manager. A friend of mine pulled all of his money out of the market when Trump was elected. He missed out on some nice growth. The extra percentage point that he paid to have an adviser would have been well worth it. For people who get spooked easily by the market and need things explained over and over, an advisory service is great. My mom falls in that category. I thank God every day for her service as she would otherwise call me with the same investment questions every other quarter.\"", "title": "" }, { "docid": "aff8e17440380d920b44d463b54b40a0", "text": "This question is largely opinion based but I wanted to balance out the people jumping on you. There are lots of factors that go into salary/pay, such as what you contribute to the company and whather you go above or beyond whats expected of you. I would say seniority is one factor, or at least there is a case to be made that it is important. If someone has worked 5 years for me, that is five years that I have not had to search, interview, and train a replacement. I am not a business owner but I do employ people and when someone quits its an extremely stressful process. Not having to go through that, again in my opinion, is worth a small bump in pay. I cant comment on if its fair or not. That is opinion. What is fact is that whenever a broad group of people are given a pay raise for arbitrary reasons and other employees arent, its creates discontent, it hurts morale, employees leave, and in severe cases the business becomes crippled. So Im not sure if its fair, but is it a bad idea? Generally. See here and I highly recommend going here for anyone who thinks dramatically raising pay 'because its the right thing to do' is a good idea", "title": "" } ]	fiqa
8761d341c220a15c75d9260eb5d13f09	privacy concerns when receiving money from paypal from strangers?	[ { "docid": "752ffd243ddfd5b14f02b00fee98e516", "text": "You'll need to check PayPal's terms of service for that first question. I would imagine you could, as my wife and I both have personal PayPal accounts listed at the same address. When you receive money, the senders will only see the (full) name on your account, the amount, and the transaction ID. If you set up a business account, the name on your account will be replaced with the company name. Your mailing address will not be made visible. Yes, PayPal provides an export option of your transaction history. For reference: If your volume greater than $20,000 across 200 or more transactions, then they'll be issuing a 1099-K form, anyway. That depends on the payment method. Bank transfers are instant, where cards require a settlement delay. PayPal provides buyer protection, so I'd be very dutiful in logging all of your work done to provide proof of completion, in case someone disputes a payment. Disputes can take place up to 45 days from the date of the transaction. Chargebacks can take place 120 days or more after the transaction (depends on the card network).", "title": "" } ]	[ { "docid": "1d04f02096790013dad061e7c858f67f", "text": "Paypal UK has a page here: https://www.paypal.com/uk/webapps/mpp/seller-protection Basically they don't just take the seller's word for it, there is a resolution process. The biggest thing you can do is make sure that you deliver it in a way that requires signature.", "title": "" }, { "docid": "7aa8f1f8a428385791c57a0123eed623", "text": "All the items listed are required for International Wire transfer. In wrong hands this info along with other info can cause issues. Most of the times you trust the person with this info and hence is less cause to worry. So the key is if you don't trust, don't give the details. Use alternatives like; Best open an account for receiving funds. Share the details, once the funds are received move it to an account where the details have not been shared. Alternatively paypal or other such services can help.", "title": "" }, { "docid": "13bc1a71b250ccd3127a7a48c1bb41a9", "text": "Another reason to think it's a scam: fake paypal email notifications are a thing. I've seen one that was quite convincing (but it wasn't mine to properly analyse or report), so the intial payment may be a fake from another account belonging to the scammer, and you've just transferred money to the scammer. The fake email can include links to log in to a fake paypal website, which can be quite convincing as the mark will give the login details which can be used to scrape data. Links not going to where they say is the giveaway here.", "title": "" }, { "docid": "aaa7691ca4e8a234d85989b338da4378", "text": "\"It can be a money laundering scheme. The stranger gives you cash for free at first, then proposes to give you more but this time asks you to \"\"spend\"\" a fraction of it (like 80%). So on his side the money comes from a legitimate source. So you do it because after all you get to keep the rest of it and it is \"\"free\"\" money. But you are now involved in something illegal. Having money for which you cannot tell the origin is also something highly suspicious. You will not pay tax on it, and the fiscal administration of your country might give you a fine. Customs might also be able to confiscate the money if they suspect it comes from an illegal source.\"", "title": "" }, { "docid": "9e4942351948b231b0070e833378482c", "text": "The simplest way to handle this would be to buy money orders, make them out to the charities, and leave your name off them. Money orders don't require you to put your name on them, just the name of whoever they're being paid to. You can mail them with no return address as well if you're sure you have the charity's proper mailing address. This way you can still feel good about giving and leave no trace of who you are for anyone to use for future marketing. I hope this helps. Good luck!", "title": "" }, { "docid": "2bcbba69dc95ba484ba7590c0959ba45", "text": "You have not indicate your country of residence or that of your friend. The fees would depend on this. Normally within US transfer of funds between paypal acounts is free. Transfering Outside there is a small charge. Further if when you withdraw the money to your bank account there would be a small fee. Refer to When it's free and when there's a fee on Paypal for more details.", "title": "" }, { "docid": "0ef23be84a2aa2a68bc4af656c4f0f7e", "text": "Yes, I've done this. Just added the borderless account into Paypal as a new bank account and the money has now showed up in my borderless account. I used the ACH Routing Number for my USD account.", "title": "" }, { "docid": "944f3a35fe9aee89e71d1f28ddc67cd3", "text": "This sounds like a scam. Did they email you out of the blue to offer you this 'job', by any chance, and you'd never heard of them before? That's an incredibly large red flag in and of itself. While I don't know quite what the scam is likely to be, here's how I would suggest it might work: Other variants are possible - say using a cheque rather than PayPal, or having Person A be the scammer as well. But this being a legitimate transaction is very unlikely.", "title": "" }, { "docid": "abccce67ea544a8d046a838a129ac919", "text": "\"I haven't seen anything specifically about how PayPal operates, but my guess is that they maintain relationships with banks in many countries via affiliates, and they settle the money transfers internally within the PayPal system. You basically have two types of bank transfers (there are others as well that I'm not getting into): I think PayPal is a hybrid -- they send and receive money using drafts to keep costs down, and manage the international stuff by operating a proprietary network. So if you send money from Indonesia to the US, you pay \"\"PayPal Indonesia\"\", who then tells \"\"PayPal USA\"\" to issue funds to your recipient. So they are cheaper than a wire, faster than a check, but limited in terms of transaction size and some other factors.\"", "title": "" }, { "docid": "b7d9a5849f2f445daea08fec938a24c5", "text": "\"You're potentially in very deep water here. You don't know who this person is that you're dealing with. Before you'd even met him, he just gave you his banking info, seemingly without a second thought. You have no idea what the sources of his money are, so what happens if the money is stolen or otherwise illegal? If it is determined that you used any of that money, you'll be on the hook to return it, at the very least. Who knows what the legal ramifications are either? So it sounds like you began spending his money before you had any kind of written agreement in place? Doesn't that seem odd to you to have someone just so trusting as to not even ask for that? Was the source of the email about the $2500 from PayPal, or from him or his advisor? PayPal always sends you a notice directly when funds are received into your account, and even if they were going to put a temporary hold on them for whatever reason (sometimes they do that), it would still show up in your account. I would HIGHLY (can I be more emphatic?) advise you not to go anywhere NEAR his bank account until or unless you can absolutely verify who he is, where his money comes from, and what the situation is. If you start dipping into his account, whether you think you're somehow entitled to the money or not, he could cry foul and have you arrested for theft. This is a very odd situation, and for someone who says he's normally cautious and skeptical, you sure let your guard down here when you started spending his money without making any serious effort to confirm his bona fides. Just because he passes himself off as smart and the \"\"doctor type\"\" doesn't mean squat. The very best scammers can do that (ever see the movie \"\"Catch Me If You Can\"\", based on a true story?), so you have no basis for knowing he's anything at all. I am thoroughly confused as to why you'd just willfully start using his money without knowing anything about him. That's deeply disconcerting, because you've opened yourself up to a world of potential criminal and civil liability if this situation goes south. If this guy was giving you money as an investment in your business and you instead used some of that money for your own personal expenses then you could land in very serious trouble for co-mingling of funds. Even if he told you it was okay, it doesn't sound like there's anything in writing, so he could just as easily deny giving you permission to use the money that way and have you charged with embezzlement. You need to step back, take a deep breath, stop using his money, and contact a lawyer for advice. Every attorney will give you a free consultation, and you need to protect yourself here. Be careful, my friend. If this makes you suspicious then you need to listen to that voice in your head and find a way to get out of this situation.\"", "title": "" }, { "docid": "3e987107dbb4125793c6317940aa88a4", "text": "\"It's anonymous/automated. They don't know who you are, just that customer x1a bought y. If your name isnt given to employees \"\"your\"\" privacy isnt being volated because the dont know its \"\"you.\"\" I imagine the government justifies their intrusions on our digital privacy the same way.\"", "title": "" }, { "docid": "11c080592426edb765b2bbb6e1a28c84", "text": "\"From personal experience of having been abroad for a while for work, I found the simplest method to be to Paypal it to myself from one country to the other. Yes, you incur a transaction fee - but it was always less expensive than \"\"real\"\" bank fees for me. Also - if you use a bank that has offices in both countries, adding an authorized user with a debit card and having them visit the bank every X often and making a withdrawal is a viable route.\"", "title": "" }, { "docid": "681489e97842e3ce37a0159511a631ab", "text": "I don't see a way that this would make matters worse than just giving them the credit card info... Except that it would make abusing the card easier at some other site (or the bank) if they have a similar (unreasonably weak) security-by-photo test. Still, I'd strongly recommend you use a separate card for this so you can cancel it without disrupting your other credit card uses. (Actually I'd strongly recommend not doing business with folks who have already demonstrated questionable ethics, but you seem to have made that decision.)", "title": "" }, { "docid": "95f2f611920c54d8dff0a27016ba995b", "text": "Can a third party deposit to my account? (Say I'm selling something and I ask him/her to just deposit the payment to my account? No, but PayPal.", "title": "" }, { "docid": "3935b99b72731729fc7d8b53d7836adb", "text": "Remember that shares represent votes at the shareholders' meeting. If share price drops too far below the value of that percentage of the company, the company gets bought out and taken over. This tends to set a minimum share price derived from the company's current value. The share price may rise above that baseline if people expect it to be worth more in the future, or drop s bit below if people expect awful news. That's why investment is called speculation. If the price asked is too high to be justified by current guesses, nobody buys. That sets the upper limit at any given time. Since some of this is guesswork, the market is not completely rational. Prices can drop after good news if they'd been inflated by the expectation of better news, for example. In general, businesses which don't crash tend to grow. Hence the market as a whole generally trends upward if viewed on a long timescale. But there's a lot of noise on that curve; short term or single stocks are much harder to predict.", "title": "" } ]	fiqa
1969f3e4744a60d14c5d322f5627b4ad	Health insurance lapsed due to employer fraud. How to get medications while in transition?	[ { "docid": "7fb3c99064697f766dfa526863355ee0", "text": "Check with the manufacturer of the name brand medication. Most of them have programs to help people who need their medication but can not afford it. They may be able to send you coupons for discounted or free medication. You can go to a free clinic. If your income is low enough the free clinic will provide medicine until you can get back on insurance. You can do what alot of people who work hard and do not have insurance do and pay for it outof pocket. You can talk to your doctor and see if there is an alternative to the expensive medicine that your insurance used to pay for. It may not be as effective or may have other side affects but many people are forced to go with these alternatives. You situation is certianly unfortunate but also not terribly uncommon. You probably also have recourse against the former employer but if they commited fraud, and faked your insurance there probably is not alot of money to recoup. If it was a person who commited fraud then you may be able to get a judgement against them that would survive bankruptcy and the business but it will probably be at least 5 years before you can recoup anything possibly much longer and your attorney will probably not take it on contingency.", "title": "" }, { "docid": "ba01a3217db7adef7c82bf71260e32d7", "text": "Your doctor may also have free samples available. You could call, explain your situtation and ask to see if they have any free samples.", "title": "" } ]	[ { "docid": "3eca7d9af683c9fc97f8fd180a29d566", "text": "The article briefly mentioned Martin Shkreli and Daraprim, which is an excellent extreme example of the underlying flaws in the American medical market. Hide the true costs of various necessary medications behind multiple walls of insurance pools and government subsidy and pretty soon the sky's the limit for these companies: https://rebelnews.com/willparke/the-drama-of-daraprim-and-the-for-profit-medicine-industry/", "title": "" }, { "docid": "d33c498b193dc8a5641c37ffc2be7c78", "text": "\"For the person being hired this is a tricky situation. Specially with the new laws. There is no real magic number that can be applied as a lot will depend on what benefits you want, and what is actually available. This will really shift the spectrum quite a bit. Under the affordibal care act, everyone has to have insurance or pay a ?fine? (were really not sure what to call this yet) but there are two provisions that really mess with the numbers you look at as an employee. First, the cost of heath care has skyrocketed. So the same benefits that you had 5 years ago now cost maybe 10-15 times as much as they used to. This gets swept under the rug a bit because the \"\"main costs\"\" of insurance has only increased a tiny amount. What this actually comes down to is does your new ACA approved heath plan cover exactly the benefits you need, or does it cut corners. Sorry this is complicated, and I don't mean it to come off as a speech against the ACA so I will give an example. My wife has RA, she really has it under control with the help of her RA doctor. This is not something she ever wants to change. Because she has had RA from the age of 15, and because it's degenerative, she doesn't want to spend 5 years working with a new doctor to get to the same place she is with her current doctor. In addition, the main drugs she takes for RA are not covered under any ACA plan, nor are the \"\"substitutions\"\" that her doctor makes (we are trying to have kids so she has to be off the main meds, and a couple of the things this doctor has tried has been meds that reduce inflammation, are pregnancy safe, but are not for the treatment of RA) You now have to take into effect rather the cost of health insurance + the cost of the things now not covered by the heath insurance + the out of pocket expenses is worth the insurance. Second the ACA has set up provisions to straight up trick those people that have lower income and are not paying close attention. When shopping for insurance, they get quotes like \"\"$50 a month\"\" or \"\"$100 a month\"\". The truth is that the remainder of the actual cost is deducted from their tax returns. This takes consideration, because if you thing your paying $50 a month for insurance but your really paying $650 then you need to make sure your doing your math right. Finally, you need to understand how messed up things are right now in the US with heath care. Largely this goes unreported. I'm not really sure why. But in order to do this I will have to give examples. For my wife to see a specialist (her RA doctor) the co-pay is $75. So she goes to the doctor, he charges her $75 and bills the insurance $200. The insurance pays the doctor $50. With out insurance, the visit costs $50. At first you want to blame the doctor for cheating the system, but the doctor has to pay for hours of labor to get the $50 back from the insurance company. From the doctors perspective it's cheaper to take the $50 then it is to charge the insurance company. And by charging the insurance company he has no control over the cost of the co pay. He essentially has to charge more to make the same money and the patient gets the shaft in the process. Another example, I got strep throat last year. I went to the walk in clinic, paid $75, saw the doctor got my Z-Pack for $15, went home crawled in bed and got better. My wife (who still had separate insurance from before the marriage) got strep throat (imagen that) went to the same clinic, they charged her $200 for the visit ($50 co-pay) and $250 for the z-pack ($3 co-pay). The insurance paid the clinic $90 for the visit and $3 for the drugs. Again the patient is left out in this scenario. In this case it worked better for my wife, unless you account for the fact that to get that coverage she had to pay $650/month. My point is that when comparing costs of heathcare with insurance, and without out insurance, its often times much cheaper for the practices to have you self pay then it is for them to go through the loops of trying to insurance to make them whole. This creates two rates. Self pay rates and Insured rates. When your trying to figure out the cost of not having insurance then you need to use the self pay rates. These can be vastly different. So as an employee you need to figure out your cost of heath care with insurance, and your cost of heath care without insurance. Then user those numbers when your trying to negotiate a salary. The problem is that there is no magic number to use for this because the cost will very a lot. For us, it was cheaper to not have insurance. Even with a pre-existing condition that takes constant attention, it's just better if we set aside $500 a month then it is to try to pay $750 a month. That might not hold true for everyone. For some people or conditions it may be better to pay the $750 then to try to handle it themselves. So for my negotiations I would go with x+$6,000 without insurance or x+$4,500 with insurance. Now as an employer it's a lot simpler. Usually you have a \"\"group plan\"\" that offers you a pretty straight $x per year per person or $y per year per family. So you can offer exactly that. Salary - $x or Salary - $y. AS a starting point. However this is where negotiations start. If your offering me $50,500 and insurance, I would rather just have $57,000 and no insurance. Of course your real cost is only $55,000 cause you don't care about my heath care costs only about insurance costs. So you try to negotiate down towards $55,000 and no insurance. But that's not good enough for me. So I either go else where and you loose talent, or I accept $50,500 and insurance (or somewhere in between).\"", "title": "" }, { "docid": "cc8d8fb90a153bfe7fc2841389b13a8a", "text": "\"Like most forms of insurance, health insurance is regulated at the state level. So what is available to you will depend greatly upon which state you live in. You can probably find a list of insurance companies from your state's official website. Many states now provide \"\"insurance of last resort\"\" for individuals who can't get insurance through private insurance companies. You can try looking into professional and trade associations. Some offer group insurance plans comparable with COBRA coverage, meaning you'd get a group discount and benefits but without the benefit of an employer paying 30-80% of your premiums. As a software developer you may qualify for membership in the IEEE or ACM, which both offer several forms of insurance to members. The ASP also offers insurance, though they don't provide much information about it on the public portions of their website. These organization offer other benefits besides insurance so you may want to take that in to consideration. The National Federation of Independent Business also offers insurance to members. You may find other associations in your specific area. Credit Unions, Coops and the local chamber of commerce are all possible avenues of finding lower cost insurance options. If you are religious there are even some faith based non-insurance organizations that provide medical cost sharing services. They depend upon the generosity and sense of fairness and obligation of their members to share the burden of medical expenses so their definitely not for everyone.\"", "title": "" }, { "docid": "d7a3ead3aa854f67c46428f1bdba2380", "text": "Your situation may be different if your employer contracts with a different company to manage these benefits (or manages them themselves), but I'll give you my experience. My employer contracts with WageWorks. I log on to the WageWorks site, select commuter options from a predefined list, e.g. public transit passes, gas debit cards, parking passes, etc. and the cost of my choices is automatically deducted from my paycheck each month, up to the limit. WageWorks either sends me whatever I purchased in the mail or reloads the card automatically, and the process continues each month. In my case, I couldn't use this to purchase a ticket for someone else, but I could choose the subway option for myself and let another person use it.", "title": "" }, { "docid": "75757c057aec701c482c7727477475f4", "text": "Historically the advice was to buy the best policy possible (not cheapest), at the lowest price, with the highest benefit. The cost relative to the benefit is very cheap, and your much more likely to use disability than life insurance (for instance). It is usually cheaper to pay for it with after tax dollars than to buy more insurance. In theory, you want to buy enough disability to replace 100% of your after tax income -- or more since there is no inflation protection built into most policies. Insurance companies often will not sell this due to moral hazard -- although you may be able to combine policies to reach 80% or so. Keep in mind that you will need to continue to save / invest if you are on long term disability, since most policies cease payment at 65 or when your eligible for Social Security. In addition, your expenses often rise due to the increased medical expenditures, possibly needing COBRA / private health insurance, etc.", "title": "" }, { "docid": "c3c0944e9e65e420b692ee0e47cded0d", "text": "As others have pointed out, post-tax dollars are what you'll use. Just as a quick note, as you'll be using post-tax dollars; in the past, I've refused to take contractor plans because they almost always are inferior to what I've been able to get off the private exchange ehealthinsurance. A few people have written excellent articles on Get Rich Slowly here and here about them in detail if you want more information. Generally, contractors (and sometimes employees) are offered a few plans (3-4), and this health exchange gives you a little more freedom to pick your plan, which in your situation may help. It isn't always cheaper, but depending on your needs, you may obtain a better deal. Forgot to add this: this option has also made switching jobs easy as well since I don't have to pay COBRA. While it depends on the situation, this can sometimes come out significantly cheaper. For instance, if I were to take the employer health plan next year, I would lose ~$450 a month, whereas the private exchange option is ~$300. But, if I were to switch jobs, decide to opt for self-employment, or a layoff, the COBRA would be even higher than ~$450.", "title": "" }, { "docid": "3ff7148e192db7fe47dfe1f25883aeec", "text": "Another source of insurance can be through the working spouses employment. Some companies do provide free or low cost coverage for spouses without a need for a physical exam. The risk is that it might not be available at the amount you want, and that if the main spouse switches companies it might not be available with the new employer. A plus is that if there is a cost it is only a one year commitment. Term insurance is the way to go. It is simple to purchase, and not complex to understand. Sizing is key. You may need to provide some level of coverage until the youngest child is in high school or college. Of course the youngest child might not have been born yet. The longer the term, the higher the cost to account for the inflation during the period of the insurance. If the term expires, but the need still exists, it is possible to get another policy but the cost of the new term policy will be higher because the insured is older. If there are special needs children involved the amount and length may need to be increased due to the increased costs and duration of need. Don't forget to periodically review the insurance situation to make sure your need haven't changed so much a new level of insurance would be needed.", "title": "" }, { "docid": "9cc5592131287813f5a0567b2fff8c9a", "text": "I don't have preexisting conditions. I am only speaking of how my own personal healthcare situation got worse because of the ACA. I did used to use the dental and vision portions of my company-provided insurance regularly but I don't have that as part of my ACA insurance because again, it is unaffordable.", "title": "" }, { "docid": "63309a9b0948785f9f5d96857b4dde78", "text": "Look for discounts from a health insurance provider, price club, professional memberships or credit cards. That goes for a lot of things besides health memberships. My wife is in a professional woman's association for networking at work. A side benefit is an affiliate network they offer for discounts of lots of things, including gym memberships.", "title": "" }, { "docid": "0d5f1455758d9b22e82fe037b6ccc6f3", "text": "The insurance company is must assume you do have a preexisting condition you are unaware of. The reason for that is that Affordable Care Act precludes the Insurance company from denying coverage of them if you do. Insurance companies are businesses. They are in business to make money(unless you have a nonprofit insurer). They can not do that if you can buy insurance only when you need for them to pay out. So even though you may not have a preexisting condition, they are precluded from requiring an examination that would detect the most expensive preexisting conditions (hidden cancers, neurological, autoimmune disorders). So the companies must do what takes business sense and either deny you coverage or charge a rate that covers the risk they would be forced to take. In your question on travel there was a response that suggested you get international health insurance instead of travel health insurance that would be considered credible coverage. You are trying to save money which on a personal level is a good idea. However that is against the societal and business need that you maintain health coverage during your healthy times to cover the costs of those who need expensive treatment. So you will be monetarily penalized should you choose to reenter the society of insured people. Once you have paid the higher rate for up to 18 months you should be able to get a better policy for people who have had continuous coverage. Alternately you may be lucky enough to start working for a company that provides health insurance with out requiring continuous coverage.", "title": "" }, { "docid": "84df1ff5a295b2ef66de394faab2a96a", "text": "\"I was in the health insurance game for 10 years and never heard of this until the Affordable Care Act came about. To my knowledge, there is no rule or regulation prohibiting it, however trying to get an insurer underwrite that risk is extremely unlikely. It's the same reason why you don't see AAA offering health insurance. There isn't a contractual relationship between the church and their constituents, so no underwriter worth their salt would put a reasonable price on that risk. Members can easily come and go, and since insurance through your employer is still the dominant distribution channel for health insurance, it would be seen as an adverse risk, meaning that people who couldn't get it through \"\"normal\"\" channels must be getting it through the church, which it would then be assumed that this person applying for coverage is an \"\"adverse risk\"\" or someone who is abnormally unhealthy. There are faith-based healthcare reimbursement programs that are NOT health insurance and do not satisfy the ACA required minimum coverages. From what I've seen and read, it's basically members of the religion or faith that pay money into the system (like paying an insurance premium) and they elect a board that basically evaluates each claim and pays or doesn't pay it, either partially or in full. While this is a nice way to get your bills paid, odds are it won't cover your $300,000 cancer treatment or your $50,000 cesarean section birth.\"", "title": "" }, { "docid": "9f7c899664f92746c2220106a33963f9", "text": "You have several options: If they refuse the second option, and the incident has already happened look on the HSA website for the form and procedure to return a mistaken distribution. I have used the two options with all our medical providers for the last 3 years. Some preferred option1, some preferred option 2, but none refused both. One almost did, but then reconsidered when they realized I was serious. While there is an April 15th deadline to resolve the mistake, I have found that by requesting the provider accept one of the two options the number of mistakes is greatly reduced.", "title": "" }, { "docid": "fcf2aa6547274bb1b8176dd5ab4a2613", "text": "Co-Pays. I know, with good medical, that's just $10-$20. Acupuncture, Chiropractic Care (if not paid by your plan) Eye Exam, often not covered so well. Eye Glasses. Often far higher than the plan pays. Over the counter drugs (update - starting 2011 these can only be reimbursed if they are prescribed, probably more trouble than it's worth), cold medicine, band-aids, ace bandages, heating pad. Birth control (condoms, foam, sponges, if you are worthy) Any of those work for you? Note, regulations permit the FSA administrator to allow up to $500 to rollover to the next year, check if your plan permits this.", "title": "" }, { "docid": "5f76893321e950109c4e9f146204b9ba", "text": "\"Following up on this, here is what I did. First, I called my benefits provider. They had documentation of my election over the phone, which then allowed them to retroactively fix the problem. Had they not had this documentation, I would have been out of luck. Second, the next step for \"\"fixing\"\" occurred when I received my W-2 for this position. This W-2 mistakenly showed the amount for my medical FSA in box-10 of my W-2 as the same dependent care FSA. This requires calling/emailing my benefits and payroll department to get an updated W-2...\"", "title": "" }, { "docid": "e10362aa518b56c4c33dea719b974a9a", "text": "An important risk is that the government may decide to change the rules. For example, prior to 2011, over the counter drugs like aspirin, Tylenol, Nyquil, etc. were eligible expenses. You could use your HSA money to buy as much as you wanted. Beginning in 2011, those rules changed. Now, if you want to spend your HSA money on Tylenol, you need a prescription for it. The value of HSA dollars was diminished in the sense that the universe of eligible expenses was diminished. No one knows what the HSA rules will be in the future. What will be eligible expenses? Who will be eligible providers? What kind of compliance paperwork will be required? What kind of fees will be imposed? Personally, I'm a great believer in HSAs. I've saved in one for years. But remember that the government makes the rules regarding their use. They've changed the rules to the detriment of HSA owners at least once; I won't be surprised if it continues.", "title": "" } ]	fiqa
ee961be652bac76a218211ec2dbffebe	In what circumstances will a bank waive the annual credit card fee?	[ { "docid": "4e305ff507936645db116a265d935c3f", "text": "See if the bank has other credit cards they offer. Many banks have multiple ones: some cards have great benefits, others do not; some cards have high rates, some do not; some cards are secured, some do not. If they have a card that you like ask them to switch you to the card you want. They should be able to do so very easily. Your card number will change, but they will treat it is a replacement so that your credit score will not take a hit during the switch. It may be possible to get them to waive the annual fee, but most won't because each card type they offer are separate products so they only allow you to pick one of their options. If they don't have a card to your liking apply for a card from anther bank that has the benefits and annual fees (zero) that you are looking for. It may be that the new card will start with a lower limit, but it will increase over time, especially as you shift more of your business to the new card. When you cancel the old card before the next year rolls around you will take a small short hit to your credit score, but that is ok.", "title": "" } ]	[ { "docid": "fd4e136401631719b477bcecbdb36789", "text": "\"Yes and No. There's always a \"\"fee\"\". The difference in credit vs debit usually determines how much that fee is and how it's paid. Each vendor who accepts the major credit card is under contract to pay for equipment and meet certain standards. The same is true for debt card transactions. How much the \"\"fee\"\" is can vary based on the contract the vendor has with MasterCard/Visa/AMEX. But in general most debt transactions go back to the bank who distributed the card.\"", "title": "" }, { "docid": "fa70890a59cb856eb8e66c48a3ef4e05", "text": "I was forced to give my bank permission to cover any overdrafts out of my savings accounts. Or pay the bank a fee. After 6 months I discovered they were still taking out a fee, when I confronted them they said it wasn't the overdraft fee it was just an administrative fee. Banks need to burn in hell.", "title": "" }, { "docid": "2c5147bfa6a3aafee6dce338a7345b10", "text": "How would you respond to these cases: Limited card options - If someone has a bad credit record the cards available may only be those with an annual fee. Not everyone will have your credit record and thus access to the cards you have. Some annual fees may be waived in some cases - Thus, someone may have a card with a fee that could be waived if enough transactions are done on the card. Thus, if someone gives enough business to the credit card company, they will waive the fee. On the point of the rewards, if the card is from a specific retailer, there could be a 10% discount for using that card and if the person purchases more than a couple thousand dollars' worth from that store this is a savings of $200 from the retail prices compared to what would happen in other cases that more than offsets the annual fee. If someone likes to be a handyman and visits Home Depot often there may be programs to give rewards in this case. Credit cards can be useful for doing on-line purchases, flight reservations, rental cars and a few other purchases that to with cash or debit can be difficult if not close to impossible. Some airline cards have a fee, but presumably the perks provide a benefit that outweigh that fee over the year. I'm thinking of the Citibank cards tied to American Airlines, first year free, then an $85 fee.", "title": "" }, { "docid": "288aee3cde90d68f08dfb90dda778a6b", "text": "\"You are correct. Credit card companies charge the merchant for every transaction. But the merchant isn't necessarily going to give you discount for paying in cash. The idea is that by providing more payment options, they increase sales, covering the cost of the transaction fee. That said, some merchants require a minimum purchase for using a credit card, though this may be against the policies of some issuers in the U.S. (I have no idea about India.) Also correct. They hope that you'll carry a balance so that they can charge you interest on it. Some credit cards are setup to charge as many fees as they possibly can. These are typically those low limit cards that are marketed as \"\"good\"\" ways to build up your credit. Most are basically scams, in the fact that the fees are outrageous. Update regarding minimum purchases: Apparently, Visa is allowing minimum purchase requirements in the U.S. of $10 or less. However, it seems that MasterCard still does not allow them, for the most part. Moral of the story: research the credit card issuers' policies. A further update regarding minimum purchases: In the US, merchants will be allowed to require a minimum purchase of up to $10 for credit card transactions. (I am guessing that prompted the Visa rule change mentioned above.) More detail can be found here in this answer, along with a link to the text of the bill itself.\"", "title": "" }, { "docid": "c8565ba420e8972644864e83bfcd33f2", "text": "The statement in Wikipedia is generic. Whether a particular Bank would charge as per above example or not would be in the card holder's agreement. So if you do not have any dues, and on 10th April you charge $1000, and on 13th April you charge $500. Statement date is 18th April. Grace Period to pay is say 10th May. If you do not pay in full by 10th May, and say you only pay $500, Bank would charge interest from 19th April to 10th May for $1500, post 10th may they would charge interest for $1000 balance. Further all fresh purchases would be charged interest from day 1. Net Net Morale of the story is do not carry / revolve money on Credit Card. For all practial purposes use a credit card as a convenience card.", "title": "" }, { "docid": "34b428b4393f4ea8ffddd550e0bb6792", "text": "I would like to offer a different perspective here. The standard fee for a credit card transaction is typically on the order of 30 cents + 2.5% of the amount (the actual numbers vary, but this is the ballpark). This makes small charges frequently unprofitable for small merchants. Because of this they will often have minimum purchase requirements for credit/debit card payments. The situation changes for large retailers (think Wal-mart, Target, Safeway, Home Depot). I cannot find a citation for this right now, but large retailers are able to negotiate volume discounts from credit card companies (a guy who used to work in finance at Home Depot told me this once). Their transaction fees are MUCH lower than 30 cents + 2.5%. But you get the same reward points on your credit card/debit card regardless of where you swipe it. So my personal philosophy is: large chain - swipe away without guilt for any amount. Small merchant - use cash unless it's hundreds of dollars (and then they may give you a cash discount in that case). And make sure to carry enough cash for such situations. When I was a student, that was about $20 (enough for coffee or lunch at a small place).", "title": "" }, { "docid": "777609ebf107f439f7d88abfd8f47406", "text": "\"In the end, all these fees hurt the average consumer, since the merchant ultimately passes cost to consumer. Savvy consumers can stay at par or get ahead, if they put in the effort. It's a pain, but I rotate between 4 cards depending on time of year and type of purchase, to optimize cash back. My cards are: 1. 5% rewards card on certain categories, rotates each quarter 2. 2% travel/dining card (fee card, but I travel a bunch so it's worth it, no foreign transaction fees) 3. 1.5% rewards card for everything else 4. Debit card (swiped as a CC) for small purchases (i.e. lunches) at credit union for \"\"enhanced\"\" high interest checking account, requiring certain # swipes/month. This alone returns to me ~$800/yr.\"", "title": "" }, { "docid": "5decb6a6d267bdd7e47d67861b736515", "text": "The only card I've seen offer this on credit card purchases is Discover. I think they have a special deal with the stores so that the cash-over amount is not included in the percentage-fee the merchant pays. (The cash part shows up broken-out from the purchase amount on the statement--if this was purely something the store did on its own without some collaboration with Discover that would not happen). The first few times I've seen the offer, I assumed it would be treated like a cash-advance (high APR, immediate interest with no grace period, etc.), but it is not. It is treated like a purchase. You have no interest charge if you pay in full during the grace period, and no transaction fee. Now I very rarely go to the ATM. What is in it for Discover? They have a higher balance to charge you interest on if you ever fail to pay in full before the grace period. And Discover doesn't have any debit/pin option that I know of, so no concern of cannibalizing their other business. And happier customers. What is in it for the grocer? Happier customers, and they need to have the armored car come around less often and spend less time counting drawers internally.", "title": "" }, { "docid": "8751321bca0cdc9b78979f64f7c8f2b7", "text": "Unfortunately, this is a customer service issue. The bank has a set of term and conditions (Ts and Cs) which you received with the card or when you applied. It included your limit, and what happens when you go over, likely, a penalty for going over the limit. At the very least, they expect you to pay the overage or you'll see an over-limit charge next cycle too. In the future, I'd suggest checking your account on line to monitor your balance. Some accounts offer an alert email, mine will let me set an alert for when my balance goes over $xxx, which is helpful, as I can send in an early payment to bring that balance down. It still never hurts to ask. They might waive fees if any, if this is your first time. You can still try calling them, explain the odd timing, and see if you can get a temporary increase in credit line. In the end, you need to review your finances. Carrying balances month to month at 12-18% is no way to have a successful financial future. It's one of the first things to getting your situation under control. After that, a small savings account, an emergency fund, is the next step. One month of charges should never put you in this bad situation.", "title": "" }, { "docid": "1e4de5ee34553d4e9d81d02d02bd3b5c", "text": "My card keeps a separate 'cash advance' limit, that's lower than the regular rate. I believe balance transfers also trigger that limit and (much higher) interest rate.", "title": "" }, { "docid": "95d09eb0abac324be064402b319b207c", "text": "I'm not sure if someone else answered already in the same manner I will. I can't guarantee for sure if it's the same in the U.S.A. (it might since major credit cards companies like Visa/MC/AMEX are American companies) but in Canada having/keeping unused CC is a disadvantage because of the following: Banks and financing companies look more at the total amount of credit available to you than at how much purchases you have on your cards. Ex: Let's say that you have the following: - Visa cc with $10,000 limit and $2000 worth of purchases (made more than 30 days ago) on it. - Mastercard cc with $10,000 limit as well and $1000 worth of purchases (less than 30 days old) - A major retail store cc with $2000 limit and $0 balance. Hypothetical situation: You want a bank loan to do some expensive house repairs and are looking for a lower interest rate than what your cc can offer. The bank will not care about the amount on the cards. They will add-up all the limits of your cc and treat your loan request as if ALL your cards were filled to their respective limit. So in this case: they will consider you as being right now in debt of $10K+$10K+$2K = $22,000 instead of only $3000 and they might: 1. refuse you the loan 2. grant it only if you transfer all purchases on a single card and cancel all the others. 3. Once the $3000 is transferred on one of the cards (and the others cancelled), they can require that you reduce the limit of that card. Hope this helps!", "title": "" }, { "docid": "9bf1be9ecafff749ac8c6c74984f9a25", "text": "If you have a deposit account (like a checking account) and a credit card at the same bank, it is common for the bank to have a clause that lets them make automatic payments to the credit card. I've also seen this happen in the case of death where the deceased person had $2,000 in a checking account and owed some on a credit card. Upon death, the bank took the $2,000 and applied it to the credit card without asking.", "title": "" }, { "docid": "dde69407a68c2f0f4c5994a7db97627f", "text": "The answer is maybe. I had a Chase card without a purchase in over 4 years get canceled out of the blue, without so much as a notification telling me it was at risk for cancelation. They told me they typically close accounts after 24 months of inactivity (not including card fees) but let mine go for longer because I have several other credit cards, savings and checking accounts with them. I would recommend spending at least once per year on the card.", "title": "" }, { "docid": "ed92a26567b09642092447d525ece178", "text": "Yes, they're referring to the credit card dispute (chargeback) process. In the case of dispute, credit card company will refund/freeze your charge so you don't have to pay until the dispute is resolved (or at all, if resolved in your favor). If the dispute is resolved in your favor, your credit card company will charge back the merchant's service provider which in turn will charge back (if it can) the merchant itself. So the one taking the most risk in this scenario is the merchant provider, this is why merchants that are high risk pay significantly higher fees or get dropped.", "title": "" }, { "docid": "4b3b7cdfb6a85bd1b9986d8b380894a1", "text": "There's an interesting paper, Does Investor Attention Affect Stock Prices? (Sandhya et al), where researchers look at related stock tickers. When a large cap, better-known stock jumps, smaller firms with similar symbols also rise. Pretty nuts -- I interviewed the author of the paper [here](http://www.tradestreaming.com/?p=3745). There's also a transcript.", "title": "" } ]	fiqa
bea4b3b2d9ceff1a17c1c02f79286959	How to calculate cash loss over time?	[ { "docid": "7fee077f6b624e20dc496e2b01ac076e", "text": "If inflation is at 2% per annum, in a year you would need £102 to buy equivalent goods to what you could buy today. So if you keep your money in a drawer the buying power of your £100 in a year will be only 100/102 = 98.039% of what it is currently.", "title": "" }, { "docid": "b13c4235b0a17b8d2c77680721df9a92", "text": "While it is a true loss, as you've determined, is not a cash cost, per se. A cash cost would be a decrease in cash holdings. Inflation does not take your cash balance; it devalues it, so it is an accrued loss. Central banks are extremely lazy in determining inflation, so the highest resolution available at a public level is monthly. In the United States, there is a small project that tries to calculate daily inflation rates and seems to do a decent job, but unless if you are a customer of a particular financial institution, you will suffer a lag. The small project refuses to make the data public in real time or even allow outside analysis. In the UK, the Office for National Statistics is responsible for consumer inflation statistics. The methodology is not readily available, but considering the name, it is most likely an inferior Laspeyres index instead of the optimal Fisher index as it is in the US. To calculate the accrued cost due to inflation, simply multiply the amount of money held by the price index value at the beginning of the time held and divide by the price index value at the end of the time held. For example, to determine the amount of value lost since March 2014, multiply the money held by the price index value for March 2014 and divide by June 2014.", "title": "" }, { "docid": "41d16faa39889d7deb9d94d194aa8873", "text": "It helps to put the numbers in terms of an asset. Say a bottle of wine costs 10 dollars, but the price rises to 20 dollars a year later. The price has risen 100%, and your dollars have lost value. Whereas your ten used to be worth 100% of the price of bottle of wine, they now are worth 50% of the risen price of a bottle of wine so they've lost around 50% of their value. Divide the old price by the new inflated price to measure proportionally how much the old price is of the new price. 10 divided by 20 is 1/2 or .50 or 50%. You can then subtract the old price from the new in proportional terms to find how much value you've lost. 1 minus 1/2 or 1.00 minus .50 or 100% minus 50%.", "title": "" }, { "docid": "78e3adf89767e6d8654774c49cb9b1f2", "text": "There are two things you need to keep in mind when you look at Inflation as an entity. Inflation is necessary to keep in check the value of goods. As per Moore's Law for example, a mobile phone that you buy for £100 today will be available for £50 in two years. With increased purchasing power, one needs to maintain balance between the purchasing power and its value. If you think about the 'loss' at a rate of 2% you would have £96.04 (in terms of today's value) in two years. But if you looked at the same cell phone as leverage for your business where it allowed you to do work and earn £1000 in two years - the investment would clearly offset the cost of inflation. Inflation is incentive for people to spend their money. If you for example spent all of your £100 today, it is £100 income for someone else. He has further incentive to spend it creating a chain of transactions. In theory while this is a true mathematical loss, the increasing purchasing power helps you leverage your financial asset to get a return on your investment.", "title": "" } ]	[ { "docid": "e23e9b15dd562465366a939546bc4577", "text": "\"There are two ways to handle this. The first is that the better brokers, such as Charles Schwab, will produce summaries of your gains and losses (using historical cost information), as well as your trades, on a monthly and annual basis. These summaries are \"\"ready made\"\" for the IRS. More brokers will provide these summaries come 2011. The second is that if you are a \"\"frequent trader\"\" (see IRS rulings for what constitutes one), then they'll allow you to use the net worth method of accounting. That is, you take the account balance at the end of the year, subtract the beginning balance, adjust the value up for withdrawals and down for infusions, and the summary is your gain or loss. A third way is to do all your trading in say, an IRA, which is taxed on distribution, not on stock sales.\"", "title": "" }, { "docid": "cf8488ef41130233fcc63a7b933a6fdf", "text": "So, the price-earnings ratio is price over earnings, easy enough. But obviously earnings are not static. In the case of a growing company, the earnings will be higher in the future. There will be extra earnings, above and beyond what the stock has right now. You should consider the future earnings in your estimate of what the company is worth now. One snag: Those extra earnings are future money. Future-money is an interesting thing, it's actually worth less than present-money- because of things like inflation, but also opportunity cost. So if you bought $100 in money that you'll have 20 years from now, you'd expect to pay less than $100. (The US government can sell you that money. It's called a Series EE Savings Bond and it would cost you $50. I think. Don't quote me on that, though, ask the Treasury.) So you can't compare future money with present-money directly, and you can't just add those dollars to the earnings . You need to compute a discount. That's what discounted cash-flow analysis is about: figuring out the future cash flow, and then discounting the future figuring out what it's worth now. The actual way you use the discount rate in your formula is a little scarier than simple division, though, because it involves discounting each year's earnings (in this case, someone has asserted a discount of 11% a year, and five years of earnings growth of 10%). Wikipedia gives us the formula for the value of the future cash flow: essentially adding all the future cash flows together, and then discounting them by a (compounded) rate. Please forgive me for not filling this formula out; I'm here for theory, not math. :)", "title": "" }, { "docid": "f0c60b6d9e5879dbf18d1031721b272a", "text": "Annualize quarterly returns: AR = (1+QR)^4 Where QR is a decimal return, e.g. 0.05. Standard deviations are similar: Annual SD = SD * sqrt(T) If you have quarterly deviations, T=4, if you have daily, T=252, etc. As an aside, for work with money riding on it, it is not okay to aggregate standard deviations if there's autocorrelation amongst observations at a smaller time scale. Volatility is often quoted this way and that's fine, but it is dangerous to do any sort of risk management with this and you'll require more due diligence. It's a good enough approximation for napkin math, though.", "title": "" }, { "docid": "35a4bbdf656a4b0e349eb5bf63dd1e6d", "text": "\"Treat each position or partial position as a separate LOT. Each time you open a position, a new lot of shares is created. If you sell the whole position, then the lot is closed. Done. But if you sell a partial quantity, you need to create a new lot. Split the original lot into two. The quantities in each are the amount sold, and the amount remaining. If you were to then buy a few more shares, create a third lot. If you then sell the entire position, you'll be closing out all the remaining lots. This allows you to track each buy/sell pairing. For each lot, simply calculate return based on cost and proceeds. You can't derive an annualized number for ALL the lots as a group, because there's no common timeframe that they share. If you wish to calculate your return over time on the whole series of trades, consider using TWIRR. It treats these positions, plus the cash they represent, as a whole portfolio. See my post in this thread: How can I calculate a \"\"running\"\" return using XIRR in a spreadsheet?\"", "title": "" }, { "docid": "0244ad7d7f3b3a9289ef05a741c226ee", "text": "O boy you can take an entire on this. Here are the basics. Project future cash flows on a series of underlying assumptions such as growth rate and risk free rate. You then have to adjust top line items such as depreciation and come up with FCF. Then discount everything back with a terminal value.", "title": "" }, { "docid": "e6f8c74a0902a1fa88280961a409867b", "text": "This link does it ok: http://investexcel.net/1979/calculate-historical-volatility-excel/ Basically, you calculate percentage return by doing stock price now / stock price before. You're not calculating the rate of return hence no subtraction of 100%. The standard is to do this on a daily basis: stock price today / stock price yesterday. The most important and most misunderstood part is that you now have to analyze the data geometrically not arithmetically. To easily do this, convert all percentage returns with the natural log, ln(). Next, you take the standard deviation of all of those results, and apply exp(). This answers the title of your question. For convenience's sake, it's best to annualize since volatility (implied or statistical) is now almost always quoted annualized. There are ~240 trading days each year. You multiply your stdev() result by (240 / # of trading days per return) ^ 0.5, so if you're doing this for daily returns, multiply the stdev() result by 240^0.5; if you were doing it weekly, you'd want to multiply by (240 / ~5)^0.5; etc. This is your number for sigma. This answers the intent of your question. For black-scholes, you do not convert anything back with exp(); BS is already set up for geometric analysis, so you need to stay there. The reason why analysis is done geometrically is because the distribution of stock returns is assumed to be lognormal (even though it's really more like logLaplace).", "title": "" }, { "docid": "e8771dc2165ce076d4b9c06951d94b41", "text": "\"The best way to do this is to use IRR. It's a complicated calculation, but will take into account multiple in/out cash flows over time along with \"\"idle periods\"\" where your money may not have been doing anything. Excel can calculate it for you using the XIRR function\"", "title": "" }, { "docid": "e2e802dff593d3d9738f73690dc04ebc", "text": "\"I would suggest you forget everything you learned in economics. The only applicable knowledge is Accounting 101. Step 1: An accrual basis financial statement. There is no step 2 if you don't do this. Most small business do everything cash basis. Simpler, cheaper but useless for analysis. You would get better answers from the local fortune teller than a cash basis statement. Make one change from the general rules. If you have debt or are paying interest for inventory include that in your cost of sales. This is actually proper but the rule is little known and often ignored. Interest on debt up to the amount of inventory is a cost of inventory. Step 2: Gross profit. If you seem to be working hard and still losing money it may be because you are selling products for less than they cost you. In this case the more you sell the more you lose. So suggestions like advertising or doing anything to increase sales are actually destructive. Step 3 Price products at the level necessary to turn a profit at current sales and overhead. 'When we have enough sales we will make a profit\"\" is the philosophy of a start up business. It is toxic for a going concern. Step 4 If sales are unsustainable at the price that produces a profit have the courage to sell or close the business. I have seen people waste their lives on futile endeavors just because they can't make that tough decision. Finally Step 0: Ignore all other suggestions but this. They are well meaning but ill informed. To reiterate, growing sales while losing money on every transaction is a huge mistake. Trends, books, charts and graphs, analytics and market research are the tools of con-men and fortune tellers. Business is arithmetic and nothing more or less. FYI if I don't get at least one upvote, this is the last time I am giving my valuable professional advice away for free on reddit. Folks will have to rely on the suggestions of their fellow college kids.\"", "title": "" }, { "docid": "841f67a51fe5b559c4ce1db46e0b290f", "text": "The point of a total return index is that it already has accounted for the capital gains + coupon income. If you want to calculate it yourself you'll have to find the on-the-run 10y bond for each distinct period then string them together to calc your total return. Check XLTP if they have anything", "title": "" }, { "docid": "5e7a7044a927ec8ab40b5f4398ddd8cb", "text": "Generally speaking. 1. Take the position size / average daily volume. 2. Multiply that number by 10 or whatever 1/whatever % of volume you think you can execute, ( you can at best acct for 10 percent of traded volume on a day). 3. You now have days until liquidation (x) 4. Take the days until liquidation sample the return over time x. I.e. if days until liquidation is 10, you would sample 10 day returns. 5. Calculate the distribution characteristics of this window (mean, var, skew, kurt) and calculate VaR based on some confidence. You can now have a liquidity risk expected loss and a VaR. If position is on margin don't forget to add the interest cost. Note: Instead of taking 10 day return, you can take the 10 day VWAP and calculate return between Open and 10 day vwap.", "title": "" }, { "docid": "9a569aa1c64b6688f4f27726484078a5", "text": "For this, the internal rate of return is preferred. In short, all cash flows need to be discounted to the present and set equal to 0 so that an implied rate of return can be calculated. You could try to work this out by hand, but it's practically hopeless because of solving for roots of the implied rate of return which are most likely complex. It's better to use a spreadsheet with this capability such as OpenOffice's Calc. The average return on equity is 9%, so anything higher than that is a rational choice. Example Using this simple tool, the formula variables can easily be input. For instance, the first year has a presumed cash inflow of $2,460 because the insurance has a 30% discount from $8,200 that is assumed to be otherwise paid, a cash inflow of $40,000 to finance the sprinklers, a cash outflow of $40,000 to fund the sprinklers, a $400 outflow for inspection, and an outflow in the amount of the first year's interest on the loan. This should be repeated for each year. They can be input undiscounted, as they are, for each year, and the calculator will do the rest.", "title": "" }, { "docid": "2e3fd15a04772d1e2dee131172b03474", "text": "See this spread sheet I worked up for fun. https://docs.google.com/spreadsheets/d/1ZhI-Rls4FpwpdpEYgdn20lWmcqkIEhB-2AH0fQ7G2wY/edit?usp=sharing If you are really crazy you can do what I did and model the rates (modified normal) and expenses (large items like the roofing being replaced on exponential) distribution and run a monte carlo simulation to get maximum likely losses by years and ranges of final values. P.S. As a side note, this spreadsheet makes a lot of assumptions and I would consider it absolutely necessary to be able to build a sheet like this and understand all the assumptions and play with it to see how quickly this can turn into a losing investment before making any business investments.", "title": "" }, { "docid": "c7cf50b1d08c74636ecff24bf8c02aa3", "text": "These are the steps I'd follow: $200 today times (1.04)^10 = Cost in year 10. The 6 deposits of $20 will be one time value calculation with a resulting year 7 final value. You then must apply 10% for 3 years (1.1)^3 to get the 10th year result. You now have the shortfall. Divide that by the same (1.1)^3 to shift the present value to start of year 7. (this step might confuse you?) You are left with a problem needing 3 same deposits, a known rate, and desired FV. Solve from there. (Also, welcome from quant.SE. This site doesn't support LATEX, so I edited the image above.)", "title": "" }, { "docid": "22dcd0ba9de89e97f557a7a9a927f198", "text": "Thanks for this, great in depth answer. I had previously calculated a WACC and have used it for my discount rate. As part of your last point on revenue vs. cash, I've set a accounts receivable period of 30 days, and then applied a factor of 30/365 * revenue to understand what portion of my revenue is not cash in hand. Does that make sense?", "title": "" }, { "docid": "1a5d7946255a0c9f37b42e4ec70d58ca", "text": "First, I believe that you can't just divide the losses over a number of years. I know that would be ideal as it might let you use the losses to only offset 25% income. A loss that gets you below zero taxable income would carry forward to the next year. That said, I think it would be a great strategy to use the loss to offset a Roth conversion, in your case, from the traditional 401(k) to Roth 401(k). Keep in mind, as you've seen from using the 2016 tax year TurboTax, you should be able to make a fairly good estimate for your 2017 return. This could effectively use all of the loss to offset 25% income. I'd look at the current projection and convert say 75-80% of the target amount immediately, then in November when the 2017 software comes out, convert the rest to get as close to your goal as you can.", "title": "" } ]	fiqa
8f2a0eb89d514b8050a1cf850538c51b	How to realize capital gains before going from non-resident alien to resident alien in USA	[ { "docid": "26d40b0256f72a945d5e165e43070be5", "text": "Is this possible and will it have the intended effect? From the US tax perspective, it most definitely is and will. Is my plan not very similar to Wash Sale? Yes, except that wash sale rules apply for losses, not gains. In any case, since you're not a US tax resident, the US wash sale rules won't apply to you.", "title": "" }, { "docid": "9a9f4b7858f3cd4dfbaef38c8c54470b", "text": "This will work as intended, but there's another point to consider. In the US, the tax rate on proceeds from stock sales is higher for short term holdings, which are defined as held for less than one year. Both rates vary based on your income. Bracket numbers are for fiscal year 2014, filing as single. The difference between short and long term capital gains tax in the US is a minimum of ten percentage points, and works out to 15 percentage points on average. This is substantial. If you won't be reporting much income the year you move to the US (say because you only worked for a portion of the year) it is decidedly to your advantage to wait and sell the stocks in the US, to get that sweet 0% rate. At a minimum, you should hold the position for a year if you sell and rebuy, from a tax optimization perspective. Two caveats:", "title": "" } ]	[ { "docid": "e24ad712189fd4f20d9f7cef9b53e1b5", "text": "When you sell your primary residence, you are required to capitalize any loss or gain at that point; you do not carry over your loss or gain (as you might in an investment property). As such, the timing of the purchase of the next house is not relevant in this discussion: you gained however much you gained already. This changed from the other (rollover) method in 1997 (see this bankrate article for more details.) However, as discussed in IRS Tax Topic 701, you can exclude up to $250,000 (single or filing separately) or $500,000 (married filing jointly) of gain if it is your primary residence and meets a few requirements (mostly, that you owned it for at least 2 years in the past 5 years, and similarly used it as your main home for at least 2 years of the past 5 years). So given you reported 25% gain, as long as your house is under a million dollars or so, you're fine (and if it's over a million dollars, you probably should be paying a CPA for this stuff). For California state tax, it looks like it is the same (see this Turbotax forum answer for a good explanation and links to this California Franchise Tax Board guide which confirms it: For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months.", "title": "" }, { "docid": "ec3d14f8d9e15d3aab6f98d3a9cf46fd", "text": "If you are tax-resident in the US, then you must report income from sources within and without the United States. Your foreign income generally must be reported to the IRS. You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner. If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US. As a US tax resident, you are already subject to income tax on the gain from the sale in India. However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis. Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable. Your sale of the entity containing the investments would be taxable. There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC). There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms). But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens.", "title": "" }, { "docid": "e8426dce951f35375138937670093510", "text": "In any case you need a CA. Please consult one. I am selling a plot of land that I own in India. This would be treated as capital gains event and you would owe taxes on the gains. I would like to purchase an apartment in India for my parents use. Yes you can. You maybe able to offset some gains on land sale against the apartment. Would like to gift part the money (about INR 20 lakhs) towards my US born son's college education in the US. As you are NRI; Under FEMA, you can transfer funds from your NRO account to US. A form 15CAB and 15CB need to be submitted to the bank to enable transer.", "title": "" }, { "docid": "29072a5d38bc60ace3fc0fbba2e862b9", "text": "You're asking whether the shares you sold while being a US tax resident are taxable in the US. The answer is yes, they are. How you acquired them or what were the circumstances of the sale is irrelevant. When you acquired them is relevant to the determination of the tax treatment - short or long term capital gains. You report this transaction on your Schedule D, follow the instructions. Make sure you can substantiate the cost basis properly based on how much you paid for the shares you sold (the taxable income recognized to you at vest).", "title": "" }, { "docid": "b71efbb3f5044251b6e0a556fed686ed", "text": "\"If you haven't been a US resident (not citizen, different rules apply) at the time you sold the stock in Europe but it was inside the same tax year that you moved to the US, you might want to have a look at the \"\"Dual Status\"\" part in IRS publication 519.\"", "title": "" }, { "docid": "f6402f4647bbd723317bbe4ea5e5179f", "text": "How would I go about doing this? Are there any tax laws I should be worried about? Just report it as a regular sale of asset on your form 8949 (or form 4797 if used for trade/business/rental). It will flow to your Schedule D for capital gains tax. Use form 1116 to calculate the foreign tax credit for the taxes on the gains you'd pay in India (if any).", "title": "" }, { "docid": "3bb072e755ce59b9c53a54cf0cfeffd8", "text": "\"Transferring the money or keeping it in US does has no effect on taxes. Your residency status has. Assuming you are Resident Alien in US for tax purpose and have paid the taxes to IRS and you are \"\"Non-Resident\"\" Indian for tax purposes in India as you are more than 182 outside India. How would it effect my Tax in US and India If you are \"\"Non-Resident\"\" in India for tax purposes, there is no tax liability of this in India. I have transferred an amount of approx 15-20k$ to Indian Account (not NRE) By RBI regulation, if you are \"\"Non-Resident\"\" then you should get your savings account converted to \"\"NRO\"\". You may not may not choose to open an NRE account. To keep the paper work clear it helps that you open an NRE account in India. Any investment needed ? Where do i need to declare if any ? These are not relevant. Note any income generated in India, i.e. interest in Savings account / FDs / Rent etc; taxes need to be paid in India and declared in US and taxes paid in US as well. There is some relief under DTAA. There are quite a few question on this site that will help you clarify what needs to be done.\"", "title": "" }, { "docid": "db96aca55b045235a2a64b26af02948f", "text": "\"I don't think its a taxable event since no income has been constructively received (talking about the RSU shareholders here). I believe you're right with the IRC 1033, and the basis of the RSU is the basis of the original stock option (probably zero). Edit: see below. However, once the stock becomes vested - then it is a taxable event (not when the cash is received, but when the chance of forfeiture diminishes, even if the employee doesn't sell the stock), and is an ordinary income, not capital. That is my understanding of the situation, do not consider it as a tax advice in any way. I gave it a bit more though and I don't think IRC 1033 is relevant. You're not doing any exchange or conversion here, because you didn't have anything to convert to begin with, and don't have anything after the \"\"conversion\"\". Your ISO's are forfeited and no longer available, basically - you treat them as you've never had them. What happened is that you've received RSU's, and you treat them as a regular RSU grant, based on its vesting schedule. The tax consequences are exactly as I described in my original response: you recognize ordinary income on the vested stocks, as they vest. Your basis is zero (i.e.: the whole FMV of the stock at the time of vesting is your ordinary income). It should also be reflected in your W2 accordingly.\"", "title": "" }, { "docid": "d090e456a27088b6844ae132bb20c829", "text": "\"You mention \"\"early exercise\"\" in your title, but you seem to misunderstand what early exercise really means. Some companies offer stock options that vest over a number of years, but which can be exercised before they are vested. That is early exercise. You have vested stock options, so early exercise is not relevant. (It may or may not be the case that your stock options could have been early exercised before they vested, but regardless, you didn't exercise them, so the point is moot.) As littleadv said, 83(b) election is for restricted stocks, often from exercising unvested stock options. Your options are already vested, so they won't be restricted stock. So 83(b) election is not relevant for you. A taxable event happen when you exercise. The point of the 83(b) election is that exercising unvested stock options is not a taxable event, so 83(b) election allows you to force it to be a taxable event. But for you, with vested stock options, there is no need to do this. You mention that you want it not to be taxable upon exercise. But that's what Incentive Stock Options (ISOs) are for. ISOs were designed for the purpose of not being taxable for regular income tax purposes when you exercise (although it is still taxable upon exercise for AMT purposes), and it is only taxed when you sell. However, you have Non-qualified Stock Options. Were you given the option to get ISOs at the beginning? Why did your company give you NQSOs? I don't know the specifics of your situation, but since you mentioned \"\"early exercise\"\" and 83(b) elections, I have a hypothesis as to what might have happened. For people who early-exercise (for plans that allow early-exercise), there is a slight advantage to having NQSOs compared to ISOs. This is because if you early exercise immediately upon grant and do 83(b) election, you pay no taxes upon exercise (because the difference between strike price and FMV is 0), and there are no taxes upon vesting (for regular or AMT), and if you hold it for at least 1 year, upon sale it will be long-term capital gains. On the other hand, for ISOs, it's the same except that for long-term capital gains, you have to hold it 2 years after grant and 1 year after exercise, so the period for long-term capital gains is longer. So companies that allow early exercise will often offer employees either NQSOs or ISOs, where you would choose NQSO if you intend to early-exercise, or ISO otherwise. If (hypothetically) that's what happened, then you chose wrong because you got NQSOs and didn't early exercise.\"", "title": "" }, { "docid": "fa0998baeb72629d611ff0314ab28ff2", "text": "Will I have to pay Income Tax/Capital Gain Tax in India for the full amount or 50% of the amount. Assuming you were the owner of the plot, you have to pay capital gains tax on the full amount. Current at 10% without indexation and 20% with indexation. Rest of amount will be used to purchase property in India. If you are re-investing the money into capital assets, you are not liable to pay Capital Gains for the amount invested. This is applicable only for first 2 houses. Consult a CA. What is the procedure to transferring the money to him. What declaration in have to give to the Bank (any Forms to fill) Under the liberalized remittance scheme you can transfer upto USD 1 Million per year. A CA certificate is required declaring the purpose and giving certificate that taxes are paid. Please contact your Bank or CA to guide further.", "title": "" }, { "docid": "7ca594024cad43676e532bdd3be3a86d", "text": "No, it's not all long-term capital gain. Depending on the facts of your situation, it will be either ordinary income or partially short-term capital gain. You should consider consulting a tax lawyer if you have this issue. This is sort of a weird little corner of the tax law. IRC §§1221-1223 don't go into it, nor do the attendant Regs. It also somewhat stumped the people on TaxAlmanac years ago (they mostly punted and just declared it self-employment income, avoiding the holding period issue). But I did manage to find it in BNA Portfolio 562, buried in there. That cited to a court case Comm'r v. Williams, 256 F.2d 152 (5th Cir. 1958) and to Revenue Ruling 75-524 (and to another Rev. Rul.). Rev Rul 75-524 cites Fred Draper, 32 T.C. 545 (1959) for the proposition that assets are acquired progressively as they are built. Note also that land and improvements on it are treated as separate assets for purposes of depreciation (Pub 946). So between Williams (which says something similar but about the shipbuilding industry) and 75-524, as well as some related rulings and cases, you may be looking at an analysis of how long your property has been built and how built it was. You may be able to apportion some of the building as long-term and some as short-term. Whether the apportionment should be as to cost expended before 1 year or value created before 1 year is explicitly left open in Williams. It may be simpler to account for costs, since you'll have expenditure records with dates. However, if this is properly ordinary income because this is really business inventory and not merely investment property, then you have fully ordinary income and holding period is irrelevant. Your quick turnaround sale tends to suggest this may have been done as a business, not as an investment. A proper advisor with access to these materials could help you formulate a tax strategy and return position. This may be complex and law-driven enough that you'd need a tax lawyer rather than a CPA or preparer. They can sort through the precedent and if you have the money may even provide a formal tax opinion. Experienced real estate lawyers may be able to help, if you screen them appropriately (i.e. those who help prepare real estate tax returns or otherwise have strong tax crossover knowledge).", "title": "" }, { "docid": "fcd63746460412b016148057d123dec0", "text": "It looks like your best option is to go with an online broker. There are many available. Some of them won't let you open an account online as a foreign national but will allow you to open one through the mail. See more about that http://finance.zacks.com/can-nonus-citizen-trade-us-stocks-9654.html Also keep in mind that you will need to pay taxes on any capital gains made through selling http://www.irs.gov/pub/irs-pdf/p519.pdf", "title": "" }, { "docid": "c630aeb467186a71cce758e33cc14d9f", "text": "ML is a brokerage firm. Tell them to sell. If you can't or don't know how to do it on-line - call them and do it over the phone. Your citizenship might come in effect when tax are withheld, you need to fill form W8-BEN if you haven't done so yet. If US taxes are withheld, you can file 1040NR to request refund, or get it credited against your local tax liabilities.", "title": "" }, { "docid": "7ac96c93bd48428d27dd972865d7dd0a", "text": "It turns out that in this special case for New York, they have a law that says that if you are changing your filing status from resident to nonresident, you must use the accrual method for calculating capital gains. So in this case, the date on the papers is the important one.", "title": "" }, { "docid": "baf0db3362f62d16367d20a9b65aaebf", "text": "\"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.\"", "title": "" } ]	fiqa
e300c3cdf61e566e8fa6c4f1c57f8b5d	No-line-of-credit debit card?	[ { "docid": "2b3376e79e38cb0b6dc84b0577992d86", "text": "This arrangement might be a bit of a pain, but what about Visa gift card(s)? The transfer of money just doesn't happen if the money isn't already on the card. See here.", "title": "" }, { "docid": "1a3786764d2e6576dfd4848fae81f485", "text": "We have a pre-paid mastercard. This will only allow the spending up to the amount already paid into the card account. Visa Electron is a bank account linked debit card that will not allow the account to go overdrawn but this card type is getting quite rare.", "title": "" }, { "docid": "91efabcf23d61de83dcd17e01d95c055", "text": "\"I think what you are looking for is a secured credit card. They are mostly used by people who have ruined their credit and want to rebuild it, but it might also serve your purpose. Essentially you deposit some money in an account and the credit card can be used up to the amount left in the account. Each month when you pay the bill, it resets the balance that you can charge. Also, many credit card providers also offer \"\"disposable\"\" or \"\"one use\"\" credit card numbers for the express purpose of using it online. It still gets charged against your regular account, but you get a separate number that can only be used for up to X dollars of transactions.\"", "title": "" }, { "docid": "5cbabb8e33466d09fa56112969ee35f3", "text": "Having worked at a financial institution, this is a somewhat simple, two-part solution. 1) The lendor/vendor/financial institution simply turns off the overdraft protection in all its forms. If no funds are available at a pin-presented transaction, the payment is simply declined. No fee, no overdraft, no mess. 2) This sticking point for a recurring transaction, is that merchants such as Netflix, Gold's Gym etc, CHOOSE to allow payments like this, BECAUSE they are assured they are going to get paid by the financial institution. It prevents them from having issues. Only a gift card will not cost you more money than you put in, BUT I know of several institutions, that too many non-payment periods can cause them to cease doing business with you in the future. TL:DR/IMO If you don't want to pay more than you have, gift cards are the way to go. You can re-charge them whenever you choose, and should you run into a problem, simply buy a new card and start over.", "title": "" } ]	[ { "docid": "b4667ca0b508c1213651893932ccb69e", "text": "\"Understood. But based on the OP, it's not categorically clear what they were refusing. If they refused to quote the balance and/or refused to take a phone payment that was otherwise in keeping with the cardholder agreement (i.e., the cardmember called the correct number for phone payments and balance-checking, etc), then yeah, they were not only being unreasonable, but also violating the contract. What I read as ambiguous is whether the cardholder was specifically asking for the payoff balance/amount, and whether they were following process for phone-payments and balance-checking, etc. IOW, it's not necessarily \"\"illegal\"\" and might not even be unreasonable for the customer-service number to have different departments for balance-checking and phone-payments versus card-cancellation. It's not falsifiably clear from the OP that the cardholder was not asking the person on the other end of the phone for categorical statements of fact that they were obligated to make. I'm not accusing anyone of lying or saying that the CC company was acting reasonably, I'm just saying that language such as \"\"They do not provide mid-cycle payoff quotes\"\" is not evidence that they were doing any kind of funny-business.\"", "title": "" }, { "docid": "397050bf496379d0b5e27f6d329f1278", "text": "\"you could get a discover card and then just \"\"freeze\"\" it. you might need to unfreeze it for a few minutes when you sign up for a new service, but it is unlikely an ongoing subscription would process a charge in that window. i believe merchants are charged a small fee for a transaction even if it is declined, so they won't try constantly forever. discover account freeze faq capitalone offers this freeze feature on their \"\"360\"\" debit cards. you can even freeze and unfreeze your card from their mobile app. this feature is becoming more common at small banks and credit unions too. i know of 2 small local banks that offer it. in fact, almost any bank can give you a debit card, then set the daily POS limit to 0$, effectively making it an atm-only card. but you may need to call the bank to get that limit temporarily lifted whenever you want to sign up for a new service. alternatively, jejorda2's suggestion of virtual account numbers is a good idea. several banks (including discover) have discontinued that feature, but i believe citi, and boa still offer them. side notes:\"", "title": "" }, { "docid": "69a4097030d02ad2fe799e6e03e6d176", "text": "Debit card purchases without PIN are treated as credit card purchases by merchants, and that includes ID verification. In addition to the ways you mentioned, you can get a debit card in any grocery store and load it with cash, and these debit cards don't have a name imprinted on them. But then if you lose them - you may have troubles proving you did in fact lose them when you try to recover your money, as anyone can use them. Technically you can register them online and call in and request refunds for fraud losses just as any other debit/credit card in the US (with $50 deductible), but in practice it may be difficult. These cards have very high fees, and may not be accepted for rentals etc.", "title": "" }, { "docid": "342a3b88df4846cd1e17381d27005525", "text": "\"A few years ago I had a US bank credit card that was serviced (all support, website, transaction issues) handled by FIA Card Services (part of Bank of America). I could create one-use credit card numbers, or time-limited (for example, 3 months) numbers. I could also create (\"\"permanent)) extra card numbers. All of these could have a max charge value (IIRC, even a fixed value), so you could have a separate card number, with a limit, just for a subscription service or gym membership. The Bank issuing the card cancelled the entire card offering, so I lost these features. Maybe FIA still provides these features on cards they service. As a note to pjc50 (can't comment in this SE yet), Japan has had contactless cards for >10 years, but during use they tend to place them in a special tray (with the sensor underneath) during the transaction.\"", "title": "" }, { "docid": "bb5b5d4ab25c5fd56512c2a407edd05e", "text": "Typically, a direct debit is set up by the company who will be receiving the money, not by you or your bank. So you need to contact your credit card company, and ask them to set up the direct debit.", "title": "" }, { "docid": "377cac873084e349792849a9b7b8c278", "text": "Some already mentioned that you could pay with your savings and use the credit card as an emergency buffer. However, if you think there is a reasonable chance that your creditcard gets revoked and that you need cash quickly, here is a simple alternative:", "title": "" }, { "docid": "22338a43b9006dea9a3662a5d65947de", "text": "Nope. Or at least, if it were possible the company offering such a credit card would quickly go out of business. Credit card companies make money off of fees from the merchants the user is buying from and from the users themselves. If they charged no fees to the user on cash advances and, in fact, gave a 3% back on cash advances, then it would be possible for a user to: The company would lose money until they stopped the loophole or went out of business.", "title": "" }, { "docid": "b0d57edd6481ac8cd3517bceeb8db84f", "text": "Switch to cash for a few months. No debit. No credit. This will help for two reasons: Once you've broken the bad habits, you should be able to go back to cards for the convenience factor.", "title": "" }, { "docid": "6f722df3ca2eb8fbd660feb3b5217055", "text": "Actually BofA never charged for their debit card usage. It was all heresy from the media because Wells Fargo and Chase Bank were actually charging their customers. As to your credit card, you know that you can close that at anytime and pay off whatever owing balance you have left with it still closed.", "title": "" }, { "docid": "d6a60c618fd71bab36039cec4b9b3479", "text": "\"I would think it extremely unlikely that an issuer would cancel your card for having an ADB of approximately zero. The issuer charges the vendor that accepts a card a percentage of the transaction (usually up to ~3%, AMEX is generally higher) - so they are making money even if you carry no balance on your card (the specific language for various vendor-side (acceptor) credit card agreements boils down to \"\"we are essentially giving you, the vendor, a short-term loan and you will pay us for it). This why you see credit-card minimum purchase amounts at places like hot-dog stands - they're getting nailed on the percentage. This is also why, when given the choice between \"\"Debit or Credit\"\" for a particular card, I choose where to put the hit on the company I like less - the retailer or the bank.\"", "title": "" }, { "docid": "8a464b9052001d051093a8dc7cdc0325", "text": "\"The credit card may have advantages in at least two cases: In some instances (at least in the US), a merchant will put a \"\"hold\"\" on a credit card without charging it. This happens a lot at hotels, for example, which use the hold as collateral against damages and incidental charges. On a credit card this temporarily reduces your credit limit but never appears on your bill. I've never tried to do it on a debit card, but my understanding is that they either reject the debit card for this purpose or they actually make the withdrawal and then issue a refund later. You'll actually need to account for this in your cash flow on the debit card but not on the credit card. If you get a fraudulent charge on your credit card, it impacts that account until you detect it and go through the fraud resolution process. On a debit card, the fraudulent charge may ripple through the rest of your life. The rent payment that you made by electronic transfer or (in the US) by check, for example, is now rejected because your bank account is short by the amount of the fraud even if you didn't use the debit card to pay it. Eventually this will probably get sorted out, but it has potential to create a bigger mess than is necessary. Personally, I never use my debit card. I consider it too risky with no apparent benefit.\"", "title": "" }, { "docid": "6363b711e06040fa32ced06dc51c3e9f", "text": "\"The danger of overdrawing the account via the use of a debit card, and the exorbitant fees that can result make me hesitant to use a debit card. The ability to cover all the transactions with one payment is why I use a credit card for these \"\"debit\"\" transactions. Yes there is a risk of a late payment, but that can be easily avoided within the three week grace period. The ability to electronically transfer the money to pay off the card makes this even easier.\"", "title": "" }, { "docid": "56835c16340b124ccf9801b3f8d8f94b", "text": "My reason for not using direct debit is #4 on Dheer's list. I just don't know where exactly I'm going to have what balance on what day, because I usually don't leave more than $100-$200 on my checking, all my cash is in Savings. I also don't want to direct debit from Savings in order to not break the 6-withdrawals limit accidentally. I use direct debit to my credit card where its available, but most places charge for that and I don't want to pay the extra fee. So, I prefer to pay my bills manually. What I don't understand is the people who pay the credit card bills when the statement arrives. I haven't received a credit card statement in years. Don't they have on-line access? Can't they set reminders there? If so - throw the card away, and get a normal one. Same with mailing checks, by the way. I'm still not even half done with the free checks I got from Washington Mutual 5 years ago. I almost never write checks. All the bills are paid online, whether through bill-pay service or an ACH transfer.", "title": "" }, { "docid": "6f04c572febf901d91fa7fbf164c5f1f", "text": "Your chief problem seems to be that you're mixing Visa (credit cards) and Step2 (a European Automated Clearing House). Credit cards are primarily an American concept, but do work worldwide especially in travel&tourism industry. The Credit Card companies are financial institutions themselves and operate similar to international banks They're typically acting as intermediaries between the customer's bank and the retailer's bank, so this works even if those two banks have no existing agreements. This is expensive, though. Step2 is a cheaper European system which eliminates the middle man. It allows the consumer's bank to directly pay the retailer's bank. VISA is not a member of Step2.", "title": "" }, { "docid": "98ba8154a4fdeb826cdd6ef732faaf67", "text": "In most cases, a debit card can be charged like a credit card so there is typically no strict need for a credit card. However, a debit card provides weaker guarantees to the merchant that an arbitrary amount of money will be available. This is for several reasons: As such, there are a few situations where a credit card is required. For example, Amazon requires a credit card for Prime membership, and car rental companies usually require a credit card. The following does not apply to the OP and is provided for reference. Debit cards don't build credit, so if you've never had a credit card or loan before, you'll likely have no credit history at all if you've never had a credit card. This will make it very difficult to get any nontrivially-sized loan. Also, some employers (typically if the job you're applying for involves financial or other highly sensitive information) check credit when hiring, and not having credit puts you at a disadvantage.", "title": "" } ]	fiqa
98af2d41f1c9830a13db05910210e0e5	Do classes have to pay sales tax on materials used?	[ { "docid": "b958ecddb6579a5edb96c07558272915", "text": "\"In most jurisdictions, both the goods (raw materials) and the service (class) are being \"\"sold\"\" to the customer, who is the end user and thus the sale is subject to sales tax. So, when your friend charges for the class, that $100 is subject to all applicable sales taxes for the jurisdiction and all parent jurisdictions (usually city, county and state). The teacher should not have to pay sales tax when they buy the flowers from the wholesaler; most jurisdictions charge sales tax on end-user purchases only. However, they are required to have some proof of sales tax exemption for the purchase, which normally comes part and parcel with the DBA or other business entity registration paperwork in most cities/states. Wholesalers deal with non-end-user sales (exempt from sales tax) all the time, but your average Michael's or Hobby Lobby may not be able to deal with this and may have to charge your friend the sales tax at POS. Depending on the jurisdiction, if this happens, your friend may be able to reduce the amount the customer is paying that is subject to sales tax by the pre-tax value of the materials the customer has paid for, which your friend already paid the tax on.\"", "title": "" } ]	[ { "docid": "1c01283ab709a39fc1d09315caffed24", "text": "The money from the employer is counted as income for you, and should be included in the numbers on your W-2. You also have tuition you paid. That is an educational expense. That would generally be a tax credit if you qualify for those educational tax credits. If the money from the employer was counted as income you can use also claim tuition expenses. If the money wasn't included as income you then can't claim the tuition as an educational expense. My experience has been that expenses such as books have not been covered, but could be paid for with the money from a 529. Money to cover mandatory fees: such as lab fees and a fee that all students must pay can be counted as tuition expenses. Regarding customized books, those are much harder to prove. If you were to count that particular book as a tuition expenses, and were audited, you would have to show them the book to prove it. Most books aren't mandatory. Also if you do want to claim the books as an expense, remember to account for the money that is returned if any are sold back to the bookstore at the end of the term.", "title": "" }, { "docid": "86376543a6c5ea3be9031394552c401b", "text": "In many cases yes. In the case of an employer handing employees a credit card to use, that is clearly income if the card is used for something other than a business expense. Generally speaking, if you're receiving something with a significant value without strings attached, it is likely taxable. Google no doubt has an army of tax attorneys, so perhaps they are able to exploit loopholes of some sort.", "title": "" }, { "docid": "9797c3ae43e312e7a4e29c26a0f28f57", "text": "If i am not wrong, any business activities such should be declared on Year End Tax filing. If your friend is going to own that website either it is commercial or nonprofit, he has to declare in the year end taxation.", "title": "" }, { "docid": "772946ff47e21a96b19981c24cf4bcc0", "text": "\"The short answer is you're tax exempt if the tax laws say you are. There are a bunch of specific exemptions based on who you are, what you're buying and why. Taking British Columbia as an example. One exemption is supplies for business use: Some exemptions are only available to certain purchasers in certain circumstances. These exemptions include: You can also claim an exemption if you are buying \"\"adult size\"\" clothing for a child under 15 years. Farmers are exempt from sales tax on various goods and services. First Nations individuals are exempt in some circumstances. And so on and so on.\"", "title": "" }, { "docid": "b219e3f4fc351e102ae83ad6c09750c8", "text": "Any commercially distributed product needs to be taxed. Depending on country of residence and distribution, legislation varies widely, therefore the best place to ask would be your local small business counsel or even your local taxation office. Depending on the size of your business, you might need a license to sell them in the first place anyway and that comes with its own set of prerequisites.", "title": "" }, { "docid": "547b4e9e1520ac085e0ddc41d12abe56", "text": "It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year.", "title": "" }, { "docid": "d4243edf7abe2a57182287a5dde9a20b", "text": "In the UK we give small businesses the option not to charge sales tax and as a business owner I can see a parallel. Then I think about it from the perspective of a black, career-focused woman who happens to be put in front of a racist HR manager who thinks all women are baby factories and I realise it's not the right solution at all.", "title": "" }, { "docid": "abe49f26f27ffe70f80550ff0b9d841a", "text": "\"Payment gateways such as Square do not normally withhold tax. It is up to you to pay the appropriate tax at tax time. That having been said, Square does report your payments to the IRS on a form 1099-K if your payments are large enough. According to Square, you'll get a 1099-K from them if your total payments for the year add up to $20,000 AND more than 200 transactions. Whether or not they report on a 1099-K, you are required to pay the appropriate taxes on your income. So now the question becomes, \"\"Do I have to pay income tax on the proceeds from my garage sale?\"\" And the answer to that question is usually not. When you sell something that you previously purchased, if you sell it for more than you paid for it, you have a capital gain and need to pay tax on that. However, generally you sell things in a garage sale at a loss, meaning that there is no tax due. If you make more than $20,000 at your garage sale and the IRS gets a 1099-K, the IRS might be curious as to how you did that with no capital gain. So if you sell any big ticket items (a bulldozer, for example), you should keep a record of what you paid for it, so you can show the loss to the IRS in the event of an audit.\"", "title": "" }, { "docid": "a4370d67184d731bc7e118aca47f90f9", "text": "I think it should be free. Why? I had a coupon for 35, I bought something for 35.01 including taxes and total to pay was 0.01, rounded to 0.00. I think it's almost the same scenario.", "title": "" }, { "docid": "2ea27d758aa150fce4e401e49d605de2", "text": "From Tax Benefits for Education Student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. It seems to me the books are not a deduction unless the above criteria is met.", "title": "" }, { "docid": "6d7a39e18fe7359a500344b8b5016f82", "text": "If they charge a fee to accept an item, it's reasonable to assume the item has insignificant value, so the only tax-deductible bit would be the money you donated to their charity. What you describe sounds like a fee for service, not a charitable donation. The organization should provide a fee breakdown to show what percentage (if any) of the fee is a deductible contribution. There could be some additional PA-only tax benefit, but I didn't come across anything in my brief search.", "title": "" }, { "docid": "122f3058c852e263c160735fb876b210", "text": "No. The equipment costs are not necessarily a direct expense. Depending on the time of purchase and type of the expenditure you may need to capitalize it and depreciate it over time. For example, if you buy a computer - you'll have to depreciate it over 5 years. Some expenditures can be expensed under Section 179 rules, but there are certain conditions to be made, including business revenue. So if your business revenue is $3K - your Sec. 179 deduction is limited to $3K even if more purchases can qualify. Not every purchase qualifies for Sec. 179 treatment, and not all the State tax rules conform to the Federal treatment. Get a professional advice from a CPA/EA licensed in your State.", "title": "" }, { "docid": "f7ddaedc3d2c021d60063bc7812ac172", "text": "Taxes should not be calculated at the item level. Taxes should be aggregated by tax group at the summary level. The right way everywhere is LINE ITEMS SUMMARY PS:If you'd charge at the item level, it would be too easy to circumvent the law by splitting your items or services into 900 items at $0.01 (Which once rounded would mean no tax). This could happen in the banking or plastic pellets industry.", "title": "" }, { "docid": "46a36a35ae2c95ebde6fa7d46367d2ac", "text": "Disclaimer: I am not a tax specialist You probably need a sales tax permit if you're going to sell goods, since just about every state taxes goods, though some states have exemptions for various types of goods. For services, it gets tricker. There is a database here that lists what services are taxed in what states; in Wyoming, for example, cellphone services and diaper services are taxed, while insurance services and barber services are not. For selling over the internet, it gets even dicier. There's a guide on nolo.com that claims to be comprehensive; it states that the default rule of thumb is that if you have a physical presence in a state, such as a warehouse or a retail shop or an office, you must collect tax on sales in that state. Given your situation, you probably only need to collect sales tax on customers in Wyoming. Probably. In any event, I'd advice having a chat with an accountant in Wyoming who can help walk you through what permits may or may not be needed.", "title": "" }, { "docid": "ac8ee78517eb043bb57dc8c09a9056e8", "text": "For case 1, there is no tax due as you sold the book for less than your cost basis. If you had sold for more than $100, then you would have had a profit. For case 2, that depends on the value of the gift card with respect to the value of your fare. Most likely that gift card is less than the cost of the fare. And in that case it would generally be treated as a reduction in the purchase price. The same way that rebates and cash back on credit card are treated. Note if for some reason a 1099 was generated that would change the situation and you would need to consult a tax professional. Since that would indicate that the other party to the transaction had a different view of the situation.", "title": "" } ]	fiqa
41dc204575d6f37556fa7ff45ce1a5f1	Why are interbank payment (settlement) systems closed for weekends and holidays?	[ { "docid": "aa91763d3069df0a5cadff629dfd558f", "text": "\"The second part of your question is the easiest to answer, how much manual work is involved in settlement processes? Payment systems which handle low value (i.e. high volume) transactions work on the basis of net settlement. Each of the individual payments are netted across all of the participant banks, so that only one \"\"real\"\" payment is made by each bank. Some days banks will receive money, others they will pay money. This is arbitrary and depends on whether their outbound payments exceed their inbound payments for that day. The payment system will notify each Bank how much it owes/will receive for the day. The money is then transferred between all of the banks simultaneously by the payment system to remove the risk that some pay and others don't. If you're going to make or receive a very large payment, you're going to want to make certain that its correct. This means that if there's a discrepancy, you need operations people available to find out why its wrong. When dealing with this many payments, answering that question can be hard. Did we miss a payment? Is there a duplicate? Etc. The vast majority of payments will process without any human involvement, but to make the process work, you always need human brains there to fix problems that occur. This brings me to your first question. On every day that settlement happens, a bank will receive (or pay) a very large sum of money. As a settlement bank you must settle that money - the guarantee that every bank will pay is one of the main reasons these systems exist. For settlement to happen, every bank has to agree to participate, and be ready to verify the data on their side and deliver the funds from their account. So there is no particular reason that this doesn't happen on weekends and holidays other than history. But for any payment system to change, it would require the support of (at least) a majority of participants to pay staff to manage the settlement process on weekends. This would increase costs for banks, but the benefits would only really be for you and me (if at all). That means it's unlikely to happen unless a government forces the issue.\"", "title": "" }, { "docid": "e48d0443319cd49f9c32c2c8fba88553", "text": "TARGET2 is a high value realtime settlement system across Europe and for this to be open on weekends would mean all the Banks including Central Banks in the Euro Zone work. Quite a few times to manage intra day liquidity, banks borrow from each other, hence there is an active monitering of the liquidity by Banks. The borrowing happens over phone and fax and the lending bank sending a high value transaction that credits the borrowing banks. These is the day to day job of treasury group [highly paid individuals] to manage liquidity. Now if on weekends the volume is less, it does not make sense to keep these people, the cost of supporting this for very insiginificant business gain is not driving to build such systems. On the other hand on retail transactions, say Cards [Debit / Credit], ATM, the value is not high and hence there is no treasury function involved and there is a huge need, everything is automated. So no issues.", "title": "" } ]	[ { "docid": "84eab1cccef725a0fed082edc3bf44f6", "text": "\"All public US equity exchanges are closed on the 9 US trading holidays (see below) and open on all other days. Exchanges also close early (13:00 ET) on the Friday after Thanksgiving and on the day before Independence Day if Independence Day is being observed on a Tuesday, Wednesday, Thursday, or Friday. (Some venues have extended trading hours as a matter of course; for them an \"\"early close\"\" might be later than 13:00 ET.) To answer the second question, yes, if you know NASDAQ's or AMEX's holiday schedule, then you know NYSE's (modulo the timing of their early close). I'm not sure about the options exchanges; they're not regulated the same way and are a good example of exchanges with extended trading hours in the first place. The US trading holidays are as follows. Note that trading holidays are not the same as federal or bank holidays, which include Columbus Day and Veterans Day but do not include Good Friday.\"", "title": "" }, { "docid": "6cc787c66286e2c2fb1e5324f4a23d80", "text": "\"From my days in e-commerce they break down like this? The company doesn't know a debit from a credit card. Got the Visa logo, then it is a Visa through the company's payment gateway. The gateway talks to the bank and that is where the particulars for money is figured out. When I programmed gateway interfaces, I had the option to \"\"authorize\"\" or check for funds (which didn't reserve anything, just verified funds existed), run for batch (which put a hold on the funds and collected them at the end of the night) or just take the money. Most places did a verify during the early checkout stages and then did a batch at the end of the night. The nightly batch allows a merchant to cancel a transaction without getting charged a fee. The \"\"authorize\"\" doesn't mean the money is tied up, although that might be your banks policy. Furthermore, an authorize can only last for so many days. This also explains why most of your banks don't report your transactions to you the day of. There is a bunch more activity on your card than the transactions that complete.\"", "title": "" }, { "docid": "ca9cab87799e37f09569ee494d85d57c", "text": "They're batched typically and about 30-90 days out typically, though the speed is routinely increasing the last few years. The flow depends from payment processor to payment processor. Generally, the cheaper the payment processing the longer the delay. The future of this stuff is blockchain if you'd like to look at that http://www.goldmansachs.com/our-thinking/pages/blockchain/", "title": "" }, { "docid": "ecad50d0648a674b4523a69676b615e9", "text": "credit cards are almost never closed for inactivity. i have had dozens of cards innactive for years on end, and only one was ever closed on me for inactivity. i would bet a single 1$ transaction per calendar year would keep all your cards open. as such, you could forget automating the process and just spend 20 minutes a year making manual 1$ payments (e.g. to your isp, utility company, google play, etc.). alternatively, many charities will let you set up an automatic monthly donation for any amount (e.g. 1$ to wikipedia). or perhaps you could treat yourself to an mp3 once a month (arguably a charitable donation in the age of file sharing). side note: i use both of these strategies to get the 12 debit card transactions per month required by my kasasa checking account.", "title": "" }, { "docid": "53e374665eaace62273f1f98af21ad34", "text": "Surprisingly accurate. Are you in the industry? I usually see wildly incorrect info about processing online. (I work in processing.) Only part not quite correct: >At the end of the day, week, whatever, the processor collects money from the issuing financial institution and is responsible for giving the right amount -- less fees -- to the merchant. The acquiring bank/processor actually fronts money to the merchant (typically within 1-2 days.) The issuing bank later reimburses the acquiring bank/processor, less interchange fees. The processor then deducts the interchange fee amount and their markup from the merchant's account, making themselves whole from the original money fronting and getting their profit. That's why there's risk to processors when it comes to chargebacks. If a transaction is fraudulent, the issuing bank isn't going to give them money for it, but they've already given money to the merchant. So they need to be able to recoup it from the merchant or they'll be out that money. But yeah, definitely a service, and it's odd that people often argue that it isn't.", "title": "" }, { "docid": "7be1da953541e9ce40e4598da9a824e4", "text": "\"Debit Cards have a certain processing delay, \"\"lag time\"\", before the transaction from the vendor completes with your bank. In the US it's typically 3 business days but I have seen even a 15 day lag from Panera Bread. I guess in the UK, payment processors have similar processing delays. A business is not obliged to run its payment processing in realtime, as that's very expensive. Whatever be the lag time, your bank is supposed to cover the payment you promised through your card. Now if you don't have agreements in place (for example, overdraft) with your bank, they will likely have to turn down payments that exceed your available balance. Here is the raw deal: In the end, the responsibility to ensure that your available balance is enough is upon you (and whether you have agreements in place to handle such situations) So what happened is very much legal, a business is not obliged to run its payment processing in realtime and no ethics are at stake. To ensure such things do not happen to me, I used to use a sub-account from which my debit card used to get paid. I have since moved to credit cards as the hassle of not overdrawing was too much (and overdraft fees from banks in the US are disastrous, especially for people who actually need such a facility)\"", "title": "" }, { "docid": "dbd62be03bb002ae46dc41aa9b2276eb", "text": "I've been hearing storied from Germans that this is happening in Germany, too, but at the bank level. All anecdotal, people I've met telling me their personal stories, but they follow the same pattern. Go to the bank, try to take out a few grand for a vacation or large purchase, bank tells them they can't have that much and that they just have to do with less, even if the account balance covers the withdrawal.", "title": "" }, { "docid": "b727ae7b43228b83efcdc86a2ddfa0c7", "text": "Looking at your dates, I think I see a pattern. It appears that your statement closing date is always 17 business days before the last business day of the month. For example, if you start at May 31 and start counting backwards, skipping Saturdays, Sundays, and May 30 (Memorial Day), you'll see that May 5 is 17 business days before May 31. I cannot explain why Bank of America would do this. If you ask them, let us know what they say. If it bothers you, find another bank. I do most of my banking (checking, savings, etc.) with a local credit union. Their statements end on the last day of the month, every month without fail. (Very nice, in my opinion.) I have two credit cards with nationally known banks, and although those statements end in the middle of the month, they are consistently on the same date every month. (One of them is on the 13th; the other date I can't recall right now.) You are right, a computer does the work, and your statement date should be able to fall on a weekend without trouble. Even when these were assembled by hand, the statement date could still be on a weekend, and they just wouldn't write it up until the following Monday. You should be able to find another bank or credit union that does this.", "title": "" }, { "docid": "e6e2c4144b03eee8275d2caeee234a0b", "text": "\"Company values (and thus stock prices) rely on a much larger time frame than \"\"a weekend\"\". First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks). They look at performance over quarters and years to determine the \"\"value\"\" of a company. They also look forward, not backwards to determine value. Prior performance only gives a hint of what future performance may be. If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits.\"", "title": "" }, { "docid": "c5a8fe43f46fc6dbe9eb7ad9291f4730", "text": "\"ACH transfers are the evolution of paper check clearing houses. Transactions are conducted in bulk and do not immediately settle -- the drawer and drawee still retain liability for a period of days or weeks after the transaction date. (I'd suggest looking to the legal definition of a check or draft to understand this better.) A for-fee wire transfer still goes through an intermediary, but settle immediately and irrevocably. Wire transfers are analogous to handing cash to someone. In the US, the various Federal Reserve banks are involved because they are the central banks of the the United States. In the past, bank panics were started or exacerbated when banks would refuse to honor drafts drawn on other banks of questionable stability. Imagine what would happen today if your electric company refused to accept Bank of America or Citibank's check/ACH transactions? Wouldn't you get withdraw every penny you could from BoA? During the 1907 banking panic, many solvent banks collapsed when the system of bank \"\"subscriptions\"\" (ie. arrangements where small town banks would \"\"subscribe\"\" to large commercial banks for check clearing, etc) broke down. Farmers, small business people and individuals lost everything, all because the larger banks would not (or could not) risk holding drafts/checks from the smaller banks.\"", "title": "" }, { "docid": "6f04c572febf901d91fa7fbf164c5f1f", "text": "Your chief problem seems to be that you're mixing Visa (credit cards) and Step2 (a European Automated Clearing House). Credit cards are primarily an American concept, but do work worldwide especially in travel&tourism industry. The Credit Card companies are financial institutions themselves and operate similar to international banks They're typically acting as intermediaries between the customer's bank and the retailer's bank, so this works even if those two banks have no existing agreements. This is expensive, though. Step2 is a cheaper European system which eliminates the middle man. It allows the consumer's bank to directly pay the retailer's bank. VISA is not a member of Step2.", "title": "" }, { "docid": "ca9f15b971066c655c369646ad1c9047", "text": "Some companies have banks and brokerages that are completely separate systems. So you could be actually running ACH transactions between two different banking entities. Bank of America used to have significant latency between BoA accounts, because they ran into delays integrating Fleet, BankSouth and BoA systems.", "title": "" }, { "docid": "2a47741f89484e2c6953bab4a02884f6", "text": "\"In the US, this was the case during the 19th century. There was a system of \"\"subscriptions\"\" between banks, where larger banks backed the smaller banks to some extent. In trade, notes from distant banks were not accepted or discounted relative to known local banks, or silver/gold coinage. There were a number of problems with this system which came to a head during the Panic of 1907. During this crisis, a cascading series of banking failures was only stopped by the personal intervention of JP Morgan. Even when Morgan intervened, it was very difficult to make capital available in a way that avoided the panic. The subsequent creation of the Federal Reserve was a response to that crisis.\"", "title": "" }, { "docid": "f70265ed3e89fe16f52b76e56bffb18d", "text": "It is because 17th was Friday, 18th-19th were weekends and 20th was a holiday on the Toronto Stock Exchange (Family Day). Just to confirm you could have picked up another stock trading on TMX and observed the price movements.", "title": "" }, { "docid": "ab2c8385fbe611ad736f66331f17cbaa", "text": "Every bank and credit union in the US has a Deposit Agreement and Disclosures document, Bank of America is no different. Our general policy is to make funds from your cash and check deposits available to you no later than the first business day after the day of your deposit. However, in some cases we place a hold on funds that you deposit by check. A hold results in a delay in the availability of these funds. that sounds great but ... For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays, and federal holidays. If you make a deposit on a business day that we are open at one of our financial centers before 2:00 p.m. local time, or at one of our ATMs before 5:00 p.m. local time in the state where we maintain your account, we consider that day to be the day of your deposit. However, if you make a deposit after such times, or on a day when we are not open or that is not a business day, we consider that the deposit was made on the next business day we are open. Some locations have different cutoff times. so if you deposit a check on Friday afternoon, the funds are generally available on Tuesday. but not always... In some cases, we will not make all of the funds that you deposit by check available to you by the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the second business day after the day of your deposit. The first $200 of your deposits, however, may be available no later than the first business day after the day of your deposit. If we are not going to make all of the funds from your deposit available by the first business day after the day of your deposit, we generally notify you at the time you make your deposit. We also tell you when the funds will be available. Ok what happens when the funds are available... In many cases, we make funds from your deposited checks available to you sooner than we are able to collect the checks. This means that, from time to time, a deposited check may be returned unpaid after we made the funds available to you. Please keep in mind that even though we make funds from a deposited check available to you and you withdraw the funds, you are still responsible for problems with the deposit. If a check you deposited is returned to us unpaid for any reason, you will have to repay us and we may charge your account for the amount of the check, even if doing so overdraws your account. Fidelity has a similar document: Each check deposited is promptly credited to your account. However, the money may not be available until up to six business days later, and we may decline to honor any debit that is applied against the money before the deposited check has cleared. If a deposited check does not clear, the deposit will be removed from your account, and you are responsible for returning any interest you received on it. I would think that the longer holding period for Fidelity is due to the fact that they want to wait long enough to make sure that the number of times they have to undo investments due to the funds not clearing is nearly zero.", "title": "" } ]	fiqa
252105afa303e00cbad9c0606a640b15	Working as a freelancer overseas, but US Citizen, what is my tax situation?	[ { "docid": "2148f54cd790ae6431fc9768685838ae", "text": "This person must pay taxes in both the overseas country and in the U.S. This is unusual; generally, only the U.S. demands this. Depending on the specific country, he would likely not be taxed twice as the U.S. generally recognises tax paid in a different country. Note there are some gotchas, though. For example, although Canada has a generally higher tax scheme than the U.S., you may still end up owing tax if you use the Tax-Free Savings Account system in Canada, as that is not recognised in the U.S. As to whether or not this person should form a company, that is far too broad a question. It's going to depend in large part on the tax situations of the countries involved. This person needs to consult an accountant specialising in this situation. That is, on personal versus business tax and on tax involving U.S. citizens. Yes, this person can and indeed must file and pay taxes in the U.S., from outside the U.S.", "title": "" } ]	[ { "docid": "f41ce7e0d2fa9c6ff52ac387f7808299", "text": "The committee folks told us Did they also give you advice on your medication? Maybe if they told you to take this medicine or that you'd do that? What is it with people taking tax advice from random people? The committee told you that one person should take income belonging to others because they don't know how to explain to you which form to fill. Essentially, they told you to commit a fraud because forms are hard. I now think about the tax implications, that makes me pretty nervous. Rightly so. Am I going to have to pay tax on $3000 of income, even though my actual winning is only $1000? From the IRS standpoint - yes. Can I take in the $3000 as income with $2000 out as expenses to independent contractors somehow? That's the only solution. You'll have to get their W8's, and issue 1099 to each of them for the amounts you're going to pay them. Essentially you volunteered to do what the award committee was supposed to be doing, on your own dime. Note that if you already got the $3K but haven't paid them yet - you'll pay taxes on $3K for the year 2015, but the expense will be for the year 2016. Except guess what: it may land your international students friends in trouble. They're allowed to win prizes. But they're not allowed to work. Being independent contractor is considered work. While I'm sure if USCIS comes knocking, you'll be kind enough to testify on their behalf, the problem might be that the USCIS won't come knocking. They'll just look at their tax returns and deny their visas/extensions. Bottom line, next time ask a professional (EA/CPA licensed in your State) before taking advice from random people who just want the headache of figuring out new forms to go away.", "title": "" }, { "docid": "9ef174b33606cc48292303fe2a920126", "text": "This is a complicated question that relies on the US-India Tax Treaty to determine whether the income is taxable to the US or to India. The relevant provision is likely Article 15 on Personal Services. http://www.irs.gov/pub/irs-trty/india.pdf It seems plausible that your business is personal services, but that's a fact-driven question based on your business model. If the online training is 'personal services' provided by you from India, then it is likely foreign source income under the treaty. The 'fixed base' and '90 days' provisions in Article 15 would not apply to an India resident working solely outside the US. The question is whether your US LLC was a US taxpayer. If the LLC was a taxpayer, then it has an obligation to pay US tax on any worldwide income and it also arguably disqualifies you from Article 15 (which applies to individuals and firms of individuals, but not companies). If you were the sole owner of the US LLC, and you did not make a Form 8832 election to be treated as subject to entity taxation, then the LLC was a disregarded entity. If you had other owners, and did not make an election, then you are a partnership and I suspect but cannot conclude that the treaty analysis is still valid. So this is fact-dependent, but you may be exempt from US tax under the tax treaty. However, you may have still had an obligation to file Forms 1099 for your worker. You can also late-file Forms 1099 reporting the nonemployee compensation paid to your worker. Note that this may have tax consequences on the worker if the worker failed to report the income in those years.", "title": "" }, { "docid": "208e8e6f82fcd8cd2d8e45af2e8a510e", "text": "Because you actually reside in New Zealand, your income taxes will be paid in New Zealand. However, as a non-resident of Australia you will have tax withholding on all of the interest you earn in an Australian bank account. Obviously, because that tax is paid to Australia, that will not be counted against your New Zealand income taxes due to the taxation agreement between those countries. You should still discuss this with an accountant in New Zealand and consider acting as a sole trader. Since you are doing freelance work, that seems like the most logical setup anyway.", "title": "" }, { "docid": "d1b56254525ee1a4d3bd61ecf5a539da", "text": "Before answering specific question, you are liable to pay tax as per your bracket on the income generated. I work with my partner and currently we transfer all earning on my personal bank account. Can this create any issue for me? If you are paying your partner from your account, you would need to maintain proper paperwork to show the portion of money transferred is not income to you. Alternatively create a join Current Account. Move funds there and then move it to your respective accounts. Which sort off account should be talk and by whose name? Can be any account [Savings/Current]. If you are doing more withdrawls open Current else open Savings. It does not matter on whos name the account is. Paperwork to show income matters from tax point of view. What should we take care while transfering money from freelance site to bank? Nothing specific Is there any other alternative to bank? There is paypal etc. However ultimately it flows into a Bank Account. What are other things to be kept in mind? Keep proper record of actual income of each of you, along with expenses. There are certain expenses you can claim from income, for example laptop, internet, mobile phone etc. Consult a CA he will be able to guide and it does not cost much.", "title": "" }, { "docid": "b71efbb3f5044251b6e0a556fed686ed", "text": "\"If you haven't been a US resident (not citizen, different rules apply) at the time you sold the stock in Europe but it was inside the same tax year that you moved to the US, you might want to have a look at the \"\"Dual Status\"\" part in IRS publication 519.\"", "title": "" }, { "docid": "6c31cc642447b46b462ffbae99e40bcf", "text": "\"As you are earning an income by working in India, you are required to pay tax in India. If you contract is of freelance, then the income earned by you has to be self declared and taxes paid accordingly. There are some expenses one can claim, a CA should be able to guide you. Not sure why the Swiss comapny is paying taxes?. Are they depositing this with Income Tax, India, do they have a TAN Number. If yes, then you don't need to pay tax. But you need to get a statement from your company showing the tax paid on behalf of you. You can also verify the tax paid on your behalf via \"\"http://incometaxindia.gov.in/26ASTaxCreditStatement.asp\"\" you cna register. Alternatively if you have a Bank Account in India with a PAN card on their records, most Banks provide a link to directly see\"", "title": "" }, { "docid": "20c142df943348a0135a62c9553986d0", "text": "\"I don't see why you would need an \"\"international tax specialist\"\". You need a tax specialist to give you a consultation and training on your situation, but it doesn't seem too complicated to me. You invoice your client and get paid - you're a 1099 contractor. They should issue you a 1099 at the end of the year on everything they paid you. Once you become full-time employee - you become a W2 employee and will get a W2 at the end of the year on the amounts paid as such. From your perspective there's nothing international here, regular business. You have to pay your own taxes on the 1099 income (including SE taxes), they have to withhold taxes from your W2 income (including FICA). Since they're foreign employers, they might not do that latter part, and you'll have to deal with that on your tax return, any decent EA/CPA will be able to accommodate you with that. For the employer there's an issue of international taxation. They might have to register as a foreign business in your state, they might be liable for some payroll taxes and State taxes, etc etc. They might not be aware of all that. They might also be liable (or exempt) for Federal taxes, depending on the treaty provisions. But that's their problem. Your only concern is whether they're going to issue you a proper W2 and do all the withholdings or not when the time comes.\"", "title": "" }, { "docid": "8b45e548d7249ae24266bede29b37465", "text": "I will not pay any taxes in the Us, since I am not working for an US company What you will or will not pay is up to you of course, but you definitely should pay taxes in the US, as you're working in the US. Since you mentioned being from Japan, I'll also suggest checking whether you're allowed to perform any work in the US under the conditions of your visa. If you're a F1/J1 student - you'll be breaking the immigration law and may be deported. You might be liable for taxes in Germany, as well, and also in Japan. I'll have to edit this to allow people who downvoted the answer without knowing the legal requirements to change their vote. F1 student cannot be a contractor without a valid EAD. Period. There's no doubt about it and legal requirements are pretty clear. Anyone who claims that you wouldn't be breaking the terms of your visa is wrong. Note, I'm neither a lawyer nor a tax professional, for definite advice talk to a professional.", "title": "" }, { "docid": "be8d414a0fd1c029f1c9ad663a449c4d", "text": "I do NOT know the full answer but I know here are some important factors that you need to consider : Do you have a physical location in the United States? Are you working directly from Canada? With a office/business location in the United States your tax obligation to the US is much higher. Most likely you will owe some to the state in which your business is located in Payroll Tax : your employer will likely want to look into Payroll tax, because in most states the payroll tax threshold is very low, they will need to file payroll tax on their full-time, part-time employees, as well as contractor soon as the total amount in a fiscal year exceeds the threshold Related to No.1 do you have a social security number and are you legally entitled to working in the States as an individual. You will be receiving the appropriate forms and tax withholding info Related to No.3 if you don't have that already, you may want to look into how to obtain permissions to conduct business within the United States. Technically, you are a one person consulting service provider. You may need to register with a particular state to obtain the permit. The agency will also be able to provide you with ample tax documentations. Chances are you will really need to piece together multiple information from various sources to resolve this one as the situation is specific. To start, look into consulting service / contractor work permit and tax info for the state your client is located in. Work from state level up to kick start your research then research federal level, which can be more complex as it is technically international business service for Canada-US", "title": "" }, { "docid": "22b5a58c9b402f5d89f7f3c5801e101a", "text": "Hi u/Sagiv1, Short answer: Yes, you do have to pay taxes in Israel for all your worldincome. Long answer: All countries within the OCDE consider you as a fiscal resident in the country where you spend over half a year in (183 days and up). If you do not spend that much time in any country, there are other tying measures to avoid people not being fiscal residents in any country. Since you are living in Israel, you will have to pay all your worlwide generated income in Israel, following the tax regulation that is in place there. I am no Isarely Tax Lawyer so I cannot help you there. Having a lot of business internationally brings other headaches with it. Taking for example the U.S. there is a possibility that they withold taxes in their payments. It is unlikely, though, as they have a Tax Treaty to prevent double taxation. You can ask for this witholded money to be returned from the U.S. or other countries through each country's internal process. Another thing to take into account is that you can be taxed in other countries for any revenue you generate in said country. This is especially relevant for revenue that comes from Real Estate. The country where the real estate is will tax you in the country and you will have to deduct these taxes paid in your country, Israel in this case. If there is no tax treaty you might possibly be paying twice. I know you said you do promotion, but I have to warn you about this, because I ignore what other countries tax or do not tax. So been giving more info won't hurt. If the US is the main and/or only country you will be doing business with, I strongly recommend you real the Tax treaty with lots of love and patience. You can find it here: https://www.irs.gov/pub/irs-trty/israel.pdf or here: Treaty:http://mfa.gov.il/Style%20Library/AmanotPdf/005118.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005120.pdf If you are from Israel and prefer it in Hebrew, here are the treaties in your language: Treaty: http://mfa.gov.il/Style%20Library/AmanotPdf/005119.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005121.pdf Normally most IRS Departments have sections with very uselful help on these sort of matters. I'd recomment you to take a look at yours. Last, what I've explained is the normal process that applies almost all over the world. But each country has their own distinctions and you need to look carefully. Take what I said as a starting point and do your own research or ideally try to find a tax consultant/lawyer who helps you. Best of luck.", "title": "" }, { "docid": "a3b95031eb506b30bf9d5cc055cbaba9", "text": "You should consult a US CPA to ensure your situation is handled correctly. It appears, the money is Israel source income and not US source income regardless if you receive it while living in the U.S. If you file the correct form, I suspect the form is 1040NR and your state form to disclose your income, if any, in 2015 and 2016, it should not be a problem. Having said that, if you do earn any type of income while in the U.S. , you are required to disclose it to both the IRS and state.", "title": "" }, { "docid": "e948ca5b9558c42927b25e6330a3ae74", "text": "\"The real question you're asking is how you can work for your business. You cannot. Whether your \"\"friend\"\" pays you or not is entirely irrelevant. Claiming your work-related earnings as interest/dividend will make it also a tax fraud, in addition to the immigration violation (i.e.: not only deportation but also potentially jail time).\"", "title": "" }, { "docid": "d268171091dd171b468c547cc8453f33", "text": "You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?", "title": "" }, { "docid": "8fe6f7a9cad2f4520ed898b0c39b47ba", "text": "\"I assume your employer does standard withholding? Then what you need to do is figure what bracket that puts you in after you've done all your normal deductions. Let's say it's 25%. Then multiply your freelance income after business expenses, and that's your estimated tax, approximately. (Unless the income causes you to jump a bracket.) To that you have to add approximately 12-13% Social Security/Medicare for income between the $90K and $118,500. Filling out Form 1040SSE will give you a better estimate. But there is a \"\"safe harbor\"\" provision, in that if what you pay in estimated tax (and withholding) this year is at least as much as you owed last year, there's no penalty. I've always done mine this way, dividing last year's tax by 4, since my income is quite variable, and I've never been able to make sense of the worksheets on the 1040-ES.\"", "title": "" }, { "docid": "2344c287634cb6e22a4b35f37aee3997", "text": "Sale of a stock creates a capital gain. It can be offset with losses, up to $3000 more than the gains. It can be deferred when held within a retirement account. When you gift appreciated stock, the basis follows. So when I gifted my daughter's trust shares, there was still tax due upon sale. The kiddy tax helped reduce but not eliminate it. And there was no quotes around ownership. The money is gone, her account is for college. No 1031 exchange exists for stock.", "title": "" } ]	fiqa
81a7910bf3a706046fc3df543d983f04	Are stock prices likely drop off a little bit on a given friday afternoon?	[ { "docid": "b37e26089960d75e1ba62ecb40a88e49", "text": "It is called the Monday Effect or the Weekend Effect. There are a number of similar theories including the October Effect and January Effect. It's all pretty much bunk. If there were any truth to traders would be all over it and the resulting market forces would wipe it out. Personally, I think all technical analysis has very little value other than to fuel conversations at dinner parties about investments. You might also consider reading about Market efficiency to see further discussion about why technical approaches like this might, but probably don't work.", "title": "" }, { "docid": "1d459e4c58071c730fd8644734322295", "text": "There are classes of 'traders' who close their positions out every evening, not just on fridays. But their are other types of businesses who trade shortly before or nearly right at market close with both buys and sells There are lots of theories as to how the market behaves at various times of day, days of the week, months of the year. There are some few patterns that can emerge but in general they don't provide a lot of 'lift' above pure random chance, enough so that if you 'bet' on one of these your chances of being wrong are only very slightly different from being right, enough so that it's not really fair to call any of them a 'sure thing'. And since these events are often fairly widely spaced, it's difficult to play them often enough to get the 'law of large numbers' on your side (as opposed to say card-counting at a blackjack table) which basically makes betting on them not much different from gambling", "title": "" } ]	[ { "docid": "81c0ba6d26ca860bf07777e2e195e6ea", "text": "\"4PM is the market close in NYC, so yes, time looks good. If \"\"out of the money,\"\" they expire worthless. If \"\"in the money,\"\" it depends on your broker's rules, they can exercise the option, and you'll need to have the money to cover on Monday or they can do an exercise/sell, in which case, you'd have two commissions but get your profit. The broker will need to tell you their exact procedure, I don't believe it's universal.\"", "title": "" }, { "docid": "4046514c9c1f46c97d5cbb109400ba6e", "text": "It depends completely on the current order book for that security. There is literally no telling how that buy order would move the price of a stock in general.", "title": "" }, { "docid": "bc0e8da639dc1e73363d45aa6c5efce5", "text": "Volatility typically decreases when stocks rise except pending news events or fast markets. It has a great impact of the premium of the option.", "title": "" }, { "docid": "dd99ef5267bc2cb10f23ee1f62bc9f82", "text": "I've never seen a dividend, split or other corporate action during the day, but I have seen trade suspended a few times when something big happened. The market opening price is not in general the same as the close of the previous day. It can gap up or down and does frequently. I don't know of an api to find out if the dividend was cash or stock, but stock dividends are a lot less common.", "title": "" }, { "docid": "af985c110e87b9fc2117bba813b62cc5", "text": "\"No it does not. Candlesticks really have nothing to do with this, a stock price can open different then the previous day's close. Examining the chart of TSLA provides an example it closed on 1/18 at 238.8 it opened on 1/19 at 243.7 In candlestick parlance is is known as a \"\"gap up\"\".\"", "title": "" }, { "docid": "aae2777210fbf6a6b72c745f7e5414aa", "text": "I feel like when your assets are mostly stock, then your every minute is basically fluctuating by the hundreds of millions and on a ~~good~~ active trading day you could be up or down a few billions.", "title": "" }, { "docid": "3ae22710c80a01cf0fa6319f8862dcff", "text": "Apparent data-feed issues coming out of NASDAQ in the after hours market. Look at MSFT, AMZN, AAPL, heck even Sears. Funny thing though, is that you see traces of irregular prices during the active session around 10:20am on stocks like GOOG.", "title": "" }, { "docid": "5f66ae91750684fb0c60a2d4db4cbfe4", "text": "1) Explicitly, how a company's share price in the secondary market affects the company's operations. (Simply: How does it matter to a company that its share price drops?) I have a vague idea of the answer, but I'd like to see someone cover it in detail. 2) Negative yield curves, or bonds/bills with negative yields Thanks!", "title": "" }, { "docid": "fd998359fb000bcb3b812061132ec65b", "text": "http://www.marketwatch.com/optionscenter/calendar would note some options expiration this week that may be a clue as this would be the typical end of quarter stuff so I suspect it may happen each quarter. http://www.investopedia.com/terms/t/triplewitchinghour.asp would note in part: Triple witching occurs when the contracts for stock index futures, stock index options and stock options expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. Triple witching days, particularly the final hour of trading preceding the closing bell, can result in escalated trading activity and volatility as traders close, roll out or offset their expiring positions. June 17 would be the 3rd Friday as the 3rd and 10th were the previous two in the month.", "title": "" }, { "docid": "086db281b329700ebd6002e719dceee4", "text": "Are you kidding? The stock markets just took a nose dive this week. Perfect buying opportunity. Just be sure to dollar cost average your way in to avoid excessive timing risk.", "title": "" }, { "docid": "e4cf1f5efd115f13c58c14aad6ff927f", "text": "Everyone and their grandmother has been expecting QE to taper since May 2013. If the drop is caused by that, then it shouldn't be too serious. Also, can people stop comparing stuff to 2009? 2009 was a unique once-in-a-lifetime circumstance, and not indicative of actual market values.", "title": "" }, { "docid": "9ac7c6630baa51700ec34153a9559f2b", "text": "Okay I don't know where my disconnect was, in my mind I was viewing that as a negative for some reason haha. Thanks! That makes sense. What is your perspective on the large amount of companies buying back shares right now?", "title": "" }, { "docid": "4571bbf2ec41f30bc870081d15d4d138", "text": "Summarized article: On Friday, the Dow Jones Industrial Average dropped almost 275 points and wiped out the last of the index's gains for the year. Friday's massive selloff was triggered by a dismal US jobs report and data indicating a European and Chinese economic slowdown. Friday was the worst day of the year for the market. Worried investors moved cash to the US Treasury bond market which also dragged the yield to a record low. Some analysts believe the panic in the market may cause the Federal Reserve to plan for additional stimulus. Federal Reserve Chairman Ben Bernanke is scheduled to speak next week. For more summarized news, subscribe to the [/r/SkimThat](http://www.reddit.com/r/SkimThat) subreddit", "title": "" }, { "docid": "2029bd574d55c1460900eccad751d64c", "text": "Yes, the stock price drops on the ex-dividend date by roughly the amount of the dividend. There is even academic research testing this and confirming that the popular rule of thumb works well.", "title": "" }, { "docid": "6a54e644b5544df0d9b26eb811dd81af", "text": "You can't tell for sure. If there was such a technique then everyone would use it and the price would instantly change to reflect the future price value. However, trade volume does say something. If you have a lemonade stand and offer a large glass of ice cold lemonade for 1c on a hot summer day I'm pretty sure you'll have high trading volume. If you offer it for $5000 the trading volume is going to be around zero. Since the supply of lemonade is presumably limited at some point dropping the price further isn't going to increase the number of transactions. Trade volumes reflect to some degree the difference of valuations between buyers and sellers and the supply and demand. It's another piece of information that you can try looking at and interpreting. If you can be more successful at this than the majority of others on the market (not very likely) you may get a small edge. I'm willing to bet that high frequency trading algorithms factor volume into their trading decisions among multiple other factors.", "title": "" } ]	fiqa
40922b1ca346bdef13cd13447a95dcc6	How will a 1099 work with an existing W-2?	[ { "docid": "c82a3112b47f3aa1a05ff4c8b95a74bd", "text": "\"You can do either a 1099 or a W-2. There is no limitations to the number of W-2s one can have in reporting taxes. Problems occur, with the IRS, when one \"\"forgets\"\" to report income. Even if one holds only one job at a time, people typically have more than one W-2 if they change jobs within the year. The W-2 is the simplest way to go and you may want to consider doing this if you do not intend to work this side business into significant income. However, a 1099 gig is preferred by many in some situations. For things like travel expenses, you will probably receive the income from these on a 1099, but you can deduct them from your income using a Schedule C. Along these lines you may be able to deduct a wide variety of other things like travel to and from the client's location, equipment such as computers and office supplies, and maybe a portion of your home internet bill. Also this opens up different retirement contributions schemes such as a simplified employee pension. This does come with some drawbacks, however. First your life is more complicated as things need to be documented to become actual business expenses. You are much more likely to be audited by the IRS. Your taxes become more complicated and it is probably necessary to employee a CPA to do them. If you do this for primary full time work you will have to buy your own benefits. Most telling you will have to pay both sides of social security taxes on most profits. (Keep in mind that a good account can help you transfer profits to dividends which will allow you to be taxed at 15% and avoid social security taxes.) So it really comes down to what you see this side gig expanding into and your goals. If you want to make this a real business, then go 1099, if you are just doing this for a fes months and a few thousand dollars, go W-2.\"", "title": "" }, { "docid": "4541068da76cb92f024a769b9d81d85d", "text": "You can have multiple W2 forms on the same tax return. If you are using software, it will have the ability for you to enter additional W2 forms. If you are doing it by paper, just follow the instructions and combine the numbers at the correct place and attach both. Similarly you can also have a 1099 with and without a W2. Just remember that with a 1099 you will have to pay the self employment tax ( FICA taxes, both employee and employer) and that no taxes will be withheld. You will want to either adjust the withholding on your main job or file quartely estimated taxes. Travel reimbursement should be the same tax exempt wise. The difference is that with a 1098, you will need to list your business expenses for deduction on the corresponding tax schedule. The value on the 1099 will include travel reimbursement. But then you can deduct your self employment expenses. I believe schedule C is where this occurs.", "title": "" } ]	[ { "docid": "4d8138041b3ccb69d73a2e767b142572", "text": "\"Not sure I understood, so I'll summarize what I think I read: You got scholarship X, paid tuition Y < X, and you got 1098T to report these numbers. You're asking whether you need to pay taxes on (X-Y) that you end up with as income. The answer is: of course. You can have even lower tax liability if you don't include the numbers on W2, right? So why doesn't it occur to you to ask \"\"if I don't include W2 in the software, it comes up with a smaller tax - do I need to include it?\"\"?\"", "title": "" }, { "docid": "cf1c0c8f4ce07239858da167fbbcade1", "text": "You can and are supposed to report self-employment income on Schedule C (or C-EZ if eligible, which a programmer likely is) even when the payer isn't required to give you 1099-MISC (or 1099-K for a payment network now). From there, after deducting permitted expenses, it flows to 1040 (for income tax) and Schedule SE (for self-employment tax). See https://www.irs.gov/individuals/self-employed for some basics and lots of useful links. If this income is large enough your tax on it will be more than $1000, you may need to make quarterly estimated payments (OR if you also have a 'day job' have that employer increase your withholding) to avoid an underpayment penalty. But if this is the first year you have significant self-employment income (or other taxable but unwithheld income like realized capital gains) and your economic/tax situation is otherwise unchanged -- i.e. you have the same (or more) payroll income with the same (or more) withholding -- then there is a 'safe harbor': if your withholding plus estimated payments this year is too low to pay this year's tax but it is enough to pay last year's tax you escape the penalty. (You still need to pay the tax due, of course, so keep the funds available for that.) At the end of the first year when you prepare your return you will see how the numbers work out and can more easily do a good estimate for the following year(s). A single-member LLC or 'S' corp is usually disregarded for tax purposes, although you can elect otherwise, while a (traditional) 'C' corp is more complicated and AIUI out-of-scope for this Stack; see https://www.irs.gov/businesses/small-businesses-self-employed/business-structures for more.", "title": "" }, { "docid": "2d230b97c82f552fa6433e8f60ecfd99", "text": "You are correct that you do not need to file under a certain circumstances primarily related to income, but other items are taken into account such as filing status, whether the amount was earned or unearned income (interest, dividends, etc.) and a few other special situations which probably don't apply to you. If you go through table 2 on page 3 and 4 of IRS publication 501 (attached), there is a worksheet to fill out that will give you the definitive answer. As far as the 1099 goes, that is to be filed by the person who paid you. How you were paid (i.e., cash, check, etc., makes no difference). You don't have a filing requirement for that form in this case. https://www.irs.gov/pub/irs-pdf/p501.pdf", "title": "" }, { "docid": "1d443860bd1eb09e19af7b8465b17d1a", "text": "The IRS offers an online calculator to help you select the correct number of deductions on your W-4. The tricky part is that we're nearly half-way through the year, so if you add more deductions to offset the lower withholding during the first half of the year, you'll have to update the W-4 at the beginning of next year to correct that next year.", "title": "" }, { "docid": "691ebc769be4882276be7460d9e1cd52", "text": "Checkout the worksheet on page 20 of Pub 535. Also the text starting in the last half of the third column of page 18 onward. https://www.irs.gov/pub/irs-pdf/p535.pdf The fact that you get a W-2 is irrelevant as far as I can see. Your self-employment business has to meet some criteria (such as being profitable) and the plan needs to be provided through your own business (although if you're sole proprietor filing on Schedule C, it looks like having it in your own name does the trick). Check the publication for all of the rules. There is this exception that would prevent many people with full-time jobs on W-2 from taking the deduction: Other coverage. You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2014, do not use amounts paid for coverage for that month to figure the deduction. (Pages 20-21). Sounds like in your case, though, this doesn't apply. (Although your original question doesn't mention a spouse, which might be relevant to the rule if you have one and he/she works.) The publication should help. If still in doubt, you'll probably need a CPA or other professional to assess your individual situation.", "title": "" }, { "docid": "eebfd26667517727702aaec038ea12a4", "text": "\"You file taxes as usual. W2 is a form given to you, you don't need to fill it. Similarly, 1099. Both report moneys paid to you by your employers. W2 is for actual employer (the one where you're on the payroll), 1099 is for contractors (where you invoice the entity you provide services to and get paid per contract). You need to look at form 1040 and its instructions as to how exactly to fill it. That would be the annual tax return. It has various schedules (A, B, C, D, E, F, H, etc) which you should familiarize yourself with, and various additional forms that you attach to it. If you're self employed, you're expected to make quarterly estimate payments, but if you're a salaried employee you can instruct your employer to withhold the amounts you expect to owe for taxes from your salary, instead. If you're using a tax preparation software (like TurboTax or TaxAct), it will \"\"interview\"\" you to get all the needed information and provide you with the forms filled accordingly. Alternatively you can pay someone to prepare the tax return for you.\"", "title": "" }, { "docid": "f5cfa6200bbb4657e77e736027602d4d", "text": "It is true that with a job that pays you via payroll check that will result in a W-2 because you are an employee, the threshold that you are worried about before you have to file is in the thousands. Unless of course you make a lot of money from bank interest or you have income tax withheld and you want it refunded to you. Table 2 and table 3 in IRS pub 501, does a great job of telling you when you must. For you table 3 is most likely to apply because you weren't an employee and you will not be getting a W-2. If any of the five conditions listed below applied to you for 2016, you must file a return. You owe any special taxes, including any of the following. a. Alternative minimum tax. (See Form 6251.) b. Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other taxfavored account. (See Pub. 590A, Contributions to Individual Retirement Arrangements (IRAs); Pub. 590B, Distributions from Individual Retirement Arrangements (IRAs); and Pub. 969, Health Savings Accounts and Other TaxFavored Health Plans.) But if you are filing a return only because you owe this tax, you can file Form 5329 by itself. c. Social security or Medicare tax on tips you didn't report to your employer (see Pub. 531, Reporting Tip Income) or on wages you received from an employer who didn't withhold these taxes (see Form 8919). d. Writein taxes, including uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer or on groupterm life insurance and additional taxes on health savings accounts. (See Pub. 531, Pub. 969, and the Form 1040 instructions for line 62.) e. Household employment taxes. But if you are filing a return only because you owe these taxes, you can file Schedule H (Form 1040) by itself. f. Recapture taxes. (See the Form 1040 instructions for lines 44, 60b, and 62.) You (or your spouse if filing jointly) received Archer MSA, Medicare Advantage MSA, or health savings account distributions. You had net earnings from selfemployment of at least $400. (See Schedule SE (Form 1040) and its instructions.) You had wages of $108.28 or more from a church or qualified churchcontrolled organization that is exempt from employer social security and Medicare taxes. (See Schedule SE (Form 1040) and its instructions.) Advance payments of the premium tax credit were made for you, your spouse, or a dependent who enrolled in coverage through the Health Insurance Marketplace. You should have received Form(s) 1095A showing the amount of the advance payments, if any. It appears that item 3: You had net earnings from selfemployment of at least $400. (See Schedule SE (Form 1040) and its instructions.) would most likely apply. It obviously is not too late to file for 2016, because taxes aren't due for another month. As to previous years that would depend if you made money those years, and how much.", "title": "" }, { "docid": "fa5825450af7fba4836e5b9e31aa2c81", "text": "You pay it this tax year. Whether that's now due to W-2 withholding, or later with your 1040 next year, or with your 1040-ES all depends on your particular situation.", "title": "" }, { "docid": "9dab4f4eba07fe5cdd610a1ed0521d85", "text": "You mentioned that the 1099B that reports this sale is for 2014, which means that you got the proceeds in 2014. What I suspect happened was that the employer reported this on the next available paycheck, thus reporting it in the 2015 period. If this ends up being a significant difference for you, I'd argue the employer needs to correct both W2s, since you've actually received the money in 2014. However, if the difference for you is not substantial I'd leave it as is and remember that the employer will not know of your ESPP sales until at least several days later when the report from the broker arrives. If you sell on 12/31, you make it very difficult for the employer to account correctly since the report from the broker arrives in the next year.", "title": "" }, { "docid": "65d6268b9e11acd274bd0c2b77e86446", "text": "In general that's illegal. If you're a W2 employee, you don't miraculously become a 1099 contractor just because they pay you more. If your job doesn't change - then your status doesn't change just because they give you a raise. They can be sued (by you, and by the IRS) for that. Other issues have already been raised by other respondents, just wanted to point out this legal perspective.", "title": "" }, { "docid": "45390f1ecd215cbde66ecaa8e7578bd6", "text": "\"Gifts given and received between business partners or employers/employees are treated as income, if they are beyond minimal value. If your boss gives you a gift, s/he should include it as part of your taxable wages for payroll purposes - which means that some of your wages should be withheld to cover income, social security, and Medicare taxes on it. At the end of the year, the value of the gift should be included in Box 1 (wages) of your form W-2. Assuming that's the case, you don't need to do anything special. A 1099-MISC would not be appropriate because you are an employee of your boss - so the two of you need to address the full panoply of employment taxes, not just income tax, which would be the result if the payment were reported on 1099-MISC. If the employer wants to cover the cost to you of the taxes on the gift, they'll need to \"\"gross up\"\" your pay to cover it. Let's say your employer gives you a gift worth $100, and you're in a 25% tax bracket. Your employer has to give you $125 so that you end up with a gain of $100. But the extra $25 is taxable, too, so your employer will need to add on an extra $6.25 to cover the 25% tax on the $25. But, wait, now we've gotta pay 25% tax on the $6.25, so they add an extra $1.56 to cover that tax. And now they've gotta pay an extra $.39 . . . The formula to calculate the gross-up amount is: where [TAX RATE] is the tax rate expressed as a percentage. So, to get the grossed-up amount for a $100 gift in a 25% bracket, we'd calculate 1/(1-.25), or 1/.75, or 1.333, multiply that by the target gift amount of $100, and end up with $133.33. The equation is a little uglier if you have to pay state income taxes that are deductible on the federal return but it's a similar principle. The entire $133.33 would then be reported as income, but the net effect on the employee is that they're $100 richer after taxes. The \"\"gross-up\"\" idea can be quite complicated if you dig into the details - there are some circumstances where an additional few dollars of income can have an unexpected impact on a tax return, in a fashion not obvious from looking at the tax table. If the employer doesn't include the gift in Box 1 on the W-2 but you want to pay taxes on it anyway, include the amount in Line 7 on the 1040 as if it had been on a W-2, and fill out form 8919 to calculate the FICA taxes that should have been withheld.\"", "title": "" }, { "docid": "4867627f8a0ac6019c5a4cb6e87e0422", "text": "Unfortunately, the tax system in the U.S. is probably more complicated than it looks to you right now. First, you need to understand that there will be taxes withheld from your paycheck, but the amount that they withhold is simply a guess. You might pay too much or too little tax during the year. After the year is over, you'll send in a tax return form that calculates the correct tax amount. If you have paid too little over the year, you'll have to send in the rest, but if you've paid too much, you'll get a refund. There are complicated formulas on how much tax the employer withholds from your paycheck, but in general, if you don't have extra income elsewhere that you need to pay tax on, you'll probably be close to breaking even at tax time. When you get your paycheck, the first thing that will be taken off is FICA, also called Social Security, Medicare, or the Payroll tax. This is a fixed 7.65% that is taken off the gross salary. It is not refundable and is not affected by any allowances or deductions, and does not come in to play at all on your tax return form. There are optional employee benefits that you might need to pay a portion of if you are going to take advantage of them, such as health insurance or retirement savings. Some of these deductions are paid with before-tax money, and some are paid with after tax money. The employer will calculate how much money they are supposed to withhold for federal and state taxes (yes, California has an income tax), and the rest is yours. At tax time, the employer will give you a form W-2, which shows you the amount of your gross income after all the before-tax deductions are taken out (which is what you use to calculate your tax). The form also shows you how much tax you have paid during the year. Form 1040 is the tax return that you use to calculate your correct tax for the year. You start with the gross income amount from the W-2, and the first thing you do is add in any income that you didn't get a W-2 for (such as interest or investment income) and subtract any deductions that you might have that are not taxable, but were not paid through your paycheck (such as moving expenses, student loan interest, tuition, etc.) The result is called your adjusted gross income. Next, you take off the deductions not covered in the above section (property tax, home mortgage interest, charitable giving, etc.). You can either take the standard deduction ($6,300 if you are single), or if you have more deductions in this category than that, you can itemize your deductions and declare the correct amount. After that, you subtract more for exemptions. You can claim yourself as an exemption unless you are considered a dependent of someone else and they are claiming you as a dependent. If you claim yourself, you take off another $4,000 from your income. What you are left with is your taxable income for the year. This is the amount you would use to calculate your tax based on the bracket table you found. California has an income tax, and just like the federal tax, some state taxes will be deducted from your paycheck, and you'll need to fill out a state tax return form after the year is over to calculate the correct state tax and either request a refund or pay the remainder of the tax. I don't have any experience with the California income tax, but there are details on the rates on this page from the State of California.", "title": "" }, { "docid": "a13a67170ffc59dbf2ae2485ac4f2bd9", "text": "I do something pretty simple when figuring 1099 income. I keep track of my income and deductible expenses on a spreadsheet. Then I do total income - total expenses * .25. I keep that amount in a savings account ready to pay taxes. Given that your estimates for the quarterly payments are low then expected, that amount should be more then enough to fully fund those payments. If you are correct, and they are low, then really what does it matter? You will have the money, in the bank, to pay what you actually owe to the IRS.", "title": "" }, { "docid": "59e75daa5e86124187e195b99c1a93f1", "text": "In general What does this mean? Assume 10 holidays and 2 weeks of vacation. So you will report to the office for 240 days (48 weeks * 5 days a week). If you are a w2 they will pay you for 260 days (52 weeks * 5 days a week). At $48 per hour you will be paid: 260848 or $99,840. As a 1099 you will be paid 240850 or 96,000. But you still have to cover insurance, the extra part of social security, and your retirement through an IRA. A rule of thumb I have seen with government contracting is that If the employee thinks that they make X,000 per year the company has to bill X/hour to pay for wages, benefits, overhead and profit. If the employee thinks they make x/hour the company has to bill at 2X/hour. When does a small spread make sense: The insurance is covered by another source, your spouse; or government/military retirement program. Still $2 per hour won't cover the 6.2% for social security. Let alone the other benefits. The IRS has a checklist to make sure that a 1099 is really a 1099, not just a way for the employer to shift the costs onto the individual.", "title": "" }, { "docid": "7912721aeec16df874e5977ea2a9eaa0", "text": "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.", "title": "" } ]	fiqa
91a84cc1fbd41b5d06fd7579f6b93913	Hedging against Exchange Rate Risk	[ { "docid": "3df65e68c8633ccfc01a4496253623f3", "text": "How can I calculate my currency risk exposure? You own securities that are priced in dollars, so your currency risk is the amount (all else being equal) that your portfolio drops if the dollar depreciates relative to the Euro between now and the time that you plan to cash out your investments. Not all stocks, though, have a high correlation relative to the dollar. Many US companies (e.g. Apple) do a lot of business in foreign countries and do not necessarily move in line with the Dollar. Calculate the correlation (using Excel or other statistical programs) between the returns of your portfolio and the change in FX rate between the Dollar and Euro to see how well your portfolio correlated with that FX rate. That would tell you how much risk you need to mitigate. how can I hedge against it? There are various Currency ETFs that will track the USD/EUR exchange rate, so one option could be to buy some of those to offset your currency risk calculated above. Note that ETFs do have fees associated with them, although they should be fairly small (one I looked at had a 0.4% fee, which isn't terrible but isn't nothing). Also note that there are ETFs that employ currency risk mitigation internally - including one on the Nasdaq 100 . Note that this is NOT a recommendation for this ETF - just letting you know about alternative products that MIGHT meet your needs.", "title": "" }, { "docid": "eefc2de9693868d1aea53b7a9f8281ef", "text": "You can calculate your exposure intuitively, by calculating your 'fx sensitivity'. Take your total USD assets, let's assume $50k. Convert to EUR at the current rate, let's assume 1 EUR : 1.1 USD, resulting in 45.5k EUR . If the USD strengthens by 1%, this moves to a rate of ~1.09, resulting in 46k EUR value for the same 50k of USD investments. From this you can see that for every 1% the USD strengthens, you gain 500 EUR. For every 1% the USD weakens, you lose 500 EUR. The simplest way to reduce your exchange rate risk exposure, is to simply eliminate your foreign currency investments. ie: if you do not want to be exposed to fluctuations in the USD, invest in EUR only. This will align your assets with the currency of your future expenses [assuming you intend to continue living in Europe].This is not possible of course, if you would like to maintain investments in US assets. One relatively simple method available to invest in the US, without gaining an exposure to the USD, is to invest in USD assets only with money borrowed in USD. ie: if you borrow $50k USD, and invest $50k in the US stock market, then your new investments will be in the same currency as your debt. Therefore if the USD strengthens, your assets increase in relative EUR value, and your debt becomes more expensive. These two impacts wash out, leaving you with no net exposure to the value of the USD. There is a risk to this option - you are investing with a higher 'financial leverage' ratio. Using borrowed money to invest increases your risk; if your investments fall in value, you still need to make the periodic interest payments. Many people view this increased risk as a reason to never invest with borrowed money. You are compensated for that risk, by increased returns [because you have the ability to earn investment income without contributing any additional money of your own]. Whether the risk is worth it to you will depend on many factors - you should search this site and others on the topic to learn more about what those risks mean.", "title": "" } ]	[ { "docid": "a86ac339b5503e4547a79a0d3386e8dc", "text": "There are also currency hedged ETFs. These operate similarly to what gengren mentioned. For example, a currency hedged Japan equities ETF has an inherent short yen/usd position on it in addition to the equity position, so the effects of a falling yen are negated. Note that it will still be denominated in dollars, however. AED is pegged to the dollar though, isnt it? If your broker is charging you a crazy price maybe try again a different day, or get a new broker. http://www.ishares.com/us/strategies/hedge-currency-impact", "title": "" }, { "docid": "43dc85864d4e91c60c56b2e9969d2747", "text": "You have stumbled upon a classic trading strategy known as the carry trade. Theoretically you'd expect the exchange rate to move against you enough to make this a bad investment. In reality this doesn't happen (on average). There are even ETFs that automate the process for you (and get better transaction costs and lending/borrowing rates than you ever could): DBV and ICI.", "title": "" }, { "docid": "28a0e1b5359a14a50a5383e06c2e5531", "text": "The big risk for a bank in country X is that they would be unfamiliar with all the lending rules and regulations in country Y. What forms and disclosures are required, and all the national and local steps that would be required. A mistake could leave them exposed, or in violation of some obscure law. Plus they wouldn't have the resources in country Y to verify the existence and the actual ownership of the property. The fear would be that it was a scam. This would likely cause them to have to charge a higher interest rate and higher fees. Not to mention that the currency ratio will change over the decades. The risks would be large.", "title": "" }, { "docid": "e0f0da2c0e5a4bfa04bda19efad7eb01", "text": "There are some ETF's on the Indian market that invest in broad indexes in other countries Here's an article discussing this Be aware that such investments carry an additional risk you do not have when investing in your local market, which is 'currency risk' If for example you invest in a ETF that represents the US S&P500 index, and the US dollar weakens relative to the indian rupee, you could see the value if your investment in the US market go down, even if the index itself is 'up' (but not as much as the change in currency values). A lot of investment advisors recommend that you have at least 75% of your investments in things which are denominated in your local currency (well technically, the same currency as your liabilities), and no more than 25% invested internationally. In large part the reason for this advice is to reduce your exposure to currency risk.", "title": "" }, { "docid": "8f656a547ba7391fa53d8bd4e208f2e4", "text": "If you get your income in the currency you have the new loan in, there is no exchange risk for the future. Assuming that you are able to get and serve that loan, it reduces your cost, so go for it. Yes, if the currency exchange rate changes the right way over the next years, you could have made a better deal - but consider it could also go the other way. If you really want to play this game, do it separately, by trading calls/puts on the currency exchange rate. See it as a separate and decoupled investment option.", "title": "" }, { "docid": "1c0c5e7650ac2b723b638a50e5bc0f53", "text": "There are lots of reasons for the differences in price. Can you go to (a) bank, (b) forex bureau and (c) central bank and post back both bid and offer prices at a given time so we can consider the spread? What you've said above for (a) and (b) are presumably USDGHS offer prices, because they are higher than the (c) central bank price. If a bank or bureau bid price was higher than the central bank offer price then you could buy GHS from the central bank and then sell them to a bureau for a higher price, an almost no risk arbitrage, other than the armoured car to deliver the funds from central bank to bureau. What you've posted is: (a) a bank will sell you 1 USD for 3.4 GHS (b) a bureau will sell you 1 USD for 3.7 GHS (c) we can see the bid/offer for central bank is 3.1949/3.1975 which means the central bank, if you have an account, will sell you 1 USD for 3.1975 GHS. You clearly want to buy USD from the central bank, then the bank, then the bureau. Anyway, the reason for these differences is all to do with liquidity conditions in the local areas, the customer types, and the frequency of orders versus inventory... Think about it. The central bank has the most frequency of orders and the biggest customers so it offers the lower price, then the bank, and then the bureau. I think the bureau is the worst price there... You have to explain further :)", "title": "" }, { "docid": "db7a27bf0afb30d12a004f760578f6a8", "text": "\"is there anything I can do now to protect this currency advantage from future volatility? Generally not much. There are Fx hedges available, however these are for specialist like FI's and Large Corporates, traders. I've considered simply moving my funds to an Australian bank to \"\"lock-in\"\" the current rate, but I worry that this will put me at risk of a substantial loss (due to exchange rates, transfer fees, etc) when I move my funds back into the US in 6 months. If you know for sure you are going to spend 6 months in Australia. It would be wise to money certain amount of money that you need. So this way, there is no need to move back funds from Australia to US. Again whether this will be beneficial or not is speculative and to an extent can't be predicted.\"", "title": "" }, { "docid": "1e1a355598fe228c3a2011f9a52fdfd1", "text": "\"I think it's apt to remind that there's no shortcuts, if someone thinks about doing FX fx: - negative sum game (big spread or commissions) - chaos theory description is apt - hard to understand costs (options are insurance and for every trade there is equivalent option position - so unless you understand how those are priced, there's a good chance you're getting a \"\"sh1tty deal\"\" as that Goldman guy famously said) - averaging can help if timing is bad but you could be just getting deeper into the \"\"deal\"\" I just mentioned and giving a smarter counterparty your money could backfire as it's the \"\"ammo\"\" they can use to defend their position. This doesn't apply to your small hedge/trade? Well that's what I thought not long ago too! That's why I mentioned chaos theory. If you can find a party to hedge with that is not hedging with someone who eventually ends up hedging with JPM/Goldman/name any \"\"0 losing days a year\"\" \"\"bank\"\".. Then you may have a point. And contrary to what many may still think, all of the above applies to everything you can think of that has to do with money. All the billions with 0-losing days need to come from somewhere and it's definitely not coming just from couple FX punters.\"", "title": "" }, { "docid": "b4b354080dc85234776d08425d237976", "text": "Your definition of 'outside your country' might need some redefinition, as there are three different things going on here . . . Your financial adviser appears to be highlighting the currency risk associated with point three. However, consider these risk scenarios . . . A) Your country enters a period of severe financial difficulty, and money markets shut down. Your brokerage becomes insolvent, and your investments are lost. In this scenario the fact of whether your investments were in an overseas index such as the S&P, or were purchased from an account denominated in a different currency, would be irrelevant. The only thing that would have mitigated this scenario is an account with an overseas broker. B) Your country's stock market enters a sustained and deep bear market, decimating the value of shares in its companies. In this scenario the fact of whether your investments were made in from a brokerage overseas, or were purchased from an account denominated in a different currency, would be irrelevant. The only thing that would have mitigate this scenario is investment in shares and indices outside your home country. Your adviser has a good point; as long as you intend to enjoy your retirement in your home country then it might be advisable to remove currency risk by holding an account in Rupees. However, you might like to consider reducing the other forms of risk by holding non-Indian securities to create a globally diversified portfolio, and also placing some of your capital in an account with a broker outside your home country (this may be very difficult to do in practice).", "title": "" }, { "docid": "61d4dc5d0d5d24072fd42eeb5e6639bc", "text": "I've thought of the following ways to hedge against a collapsing dollar:", "title": "" }, { "docid": "4716c4aba4846bb7b7f17bbdd83f777e", "text": "I will just try to come up with a totally made up example, that should explain the dynamics of the hedge. Consider this (completely made up) relationship between USD, EUR and Gold: Now lets say you are a european wanting to by 20 grams of Gold with EUR. Equally lets say some american by 20 grams of Gold with USD. Their investment will have the following values: See how the europeans return is -15.0% while the american only has a -9.4% return? Now lets consider that the european are aware that his currency may be against him with this investment, so he decides to hedge his currency. He now enters a currency-swap contract with another person who has the opposite view, locking in his EUR/USD at t2 to be the same as at t0. He now goes ahead and buys gold in USD, knowing that he needs to convert it to EUR in the end - but he has fixed his interestrate, so that doesn't worry him. Now let's take a look at the investment: See how the european now suddenly has the same return as the American of -9.4% instead of -15.0% ? It is hard in real life to create a perfect hedge, therefore you will most often see that the are not totally the same, as per Victors answer - but they do come rather close.", "title": "" }, { "docid": "496e19544efadcd778720d5523807ea8", "text": "\"The essence of hedging is to find an investment that performs well under the conditions that you're concerned about. If you're concerned about China stock dropping, then find something that goes up in value if that asset class goes down. Maybe put options on a Chinese index fund, or selling short one of those funds? Or, if you're already \"\"in the money\"\" on your Chinese stock position, set a stop loss: instruct your broker to sell if that stock hits X or lower. That way you keep some gains or limit your losses. That involves liquidating your position, but if you've had a nice run-up, it may be time to consider selling if you feel that the prospects are dimming.\"", "title": "" }, { "docid": "62abbfebf8183ab8e25ec57ff97499ed", "text": "You have to balance several concerns here. The primary problem is that if you go to the effort of saving your money you want to also be sure that your savings will not lose too much of its value to inflation. Ukraine had a terrible inflation spike in 2015 for obvious reasons. Even as inflation has settled down in 2016, it is stabilizing around 12% which is very high Exchange rates are your next concern. If you lose a large percentage of the value of your money just in the process of exchanging it, that also eats away at the value of your money. If you accept the US Federal Reserve target of 2% inflation, then you should only exchange money that you will hold long enough that both exchange fees will outweigh the 10% inflation advantage. Even in cases where you have placed your money in a foreign currency, there's a chance that your government could freeze accounts denominated in foreign currencies, so there's always the political risk that you have to factor in. For that reason keeping foreign currency in cash also has some appeal because it cannot be confiscated as easily. You could still certainly be robbed, so keeping all of your savings in cash isn't a great solution either. All in all, you are diversifying your savings if you use the strategy of balancing all three methods. Splitting it evenly to 5% for each method isn't the most important. I would suggest taking advantage of good exchange rates (as they appear) to time when you buy foreign currency.", "title": "" }, { "docid": "89e762cfa1ea779ab51e8ebebce04405", "text": "There contracts called an FX Forwards where you can get a feel for what the market thinks an exchange rate will be in the future. Now exchange rates are notoriously uncertain, but it is worth noting that at current prices market believes your Krona will be worth only 0.0003 Euro less three years from now than it is worth now. So, if you are considering taking money out of your investments and converting it to Euro and missing out on three years of dividends and hopefully capital gains its certainly possible this may work out for you but this is unlikely. If you are at all uncertain that you will actually move this is an even worse idea as paying to convert money twice would be an additional expense on top of the missed returns. There are FX financial products (futures and forwards) where you can get exposure to FX without having to put the full amount down. This could help hedge your house value but this can be extremely expensive over time for individual investors and would almost certainly not work in your favor. Something that could help reduce your risk a bit would be to invest more heavily in European even Irish (and British?) stocks which will move along with the currency and economy. You can lose some diversification doing this, but it can help a little.", "title": "" }, { "docid": "43a9b92312ba34413f5070c89cd8da50", "text": "I live in europe but have been paid in usd for the last few years and the best strategy I've found is to average in and average out. i.e. if you are going in August then buy some Euro every few weeks until you go. At least this way you mitigate the risk involved somewhat.", "title": "" } ]	fiqa
50abbbf1d7c3d0b989023bc602f05aa6	If someone gives me cash legally, can my deposit trigger an audit for them?	[ { "docid": "5e8dbd3c502aa863aaad592f9507ebda", "text": "Am I right to worry about both of these? Of course. Who carries $75K in cash for no good reason? Your friend got the cash from somewhere, didn't he? If its legit - there's paper trail to show. Same for your parents. If you/they can show the legit paper trail - there's nothing to worry about, the hassle, at worse, is a couple of letters to the IRS. If the money is not legit (your friend is selling crack to the kids in the hood and your parents robbed a 7/11 to give you the money, for example) - there may be problems.", "title": "" }, { "docid": "95cdeb96ff1e7f301c7cfab14bf5b587", "text": "\"Yes you should worry and take care not to violate the law or provide any appearance of impropriety. Every bank in the USA is required under the Bank Secrecy Act to report cash transactions over $10,000 the same day to the IRS -- and here's the fun secret part -- without notification to the depositor. But splitting the deposits up into smaller amounts is also a crime, called \"\"structuring\"\". On occasion there is a news story where a retail business that naturally must deposit cash from customers will be (falsely?) accused of structuring, e.g.: Feds seize grocery store's entire bank account -- Institute for Justice defends grocer Under the legal doctrine of civil asset forfeiture, your money can be accused of a crime, seized, and tried separately from its owner. The actual cases indicate the money as defendant, i.e. \"\"US v $124,700\"\" In this somewhat bizarre system of \"\"justice\"\", the owner need not be charged with a crime, and is not in immediate peril of going to prison (about the only upside in this, but might be temporary because the authorities haven't charged the owner yet). When only the money is charged with a crime, there is no requirement for the government to supply a public defender for the owners who can not afford a lawyer.... can not afford a lawyer, because the government took all their money....\"", "title": "" }, { "docid": "acd2a2d8c700a7711505c73e74c97614", "text": "In the event of an audit, you AND your friends need to have already reported the cash the same way in previous tax filings. Even differences between legitimate sources can result in civil and criminal sanctions from the IRS, let alone questionable, dubious and illegal sources.", "title": "" }, { "docid": "f0ba380c8c3f1cc18d53f8033ee3a993", "text": "Why would you even accept 75K in cash? If anything is going to trigger an audit, this will be it. 75K in cash deposited will look like money laundring, so you better have a paper trail ready to prove this is legal or this won't end well.", "title": "" } ]	[ { "docid": "1969206b2133cfe3e0d1ff515eb4a770", "text": "Making a payment of any amount is usually legal, although of course the specific circumstances matter, and I'm not qualified to give legal advice. Just had to throw in that disclaimer not because I think there's a problem here, but because it is impossible to give a definite answer to a legal question in a specific situation on Stack Exchange. But the government will be involved. There are two parts to that. First, as part of anti-money-laundering laws, banks have to report all transactions above a certain limit; I believe $10k. When you use a check or similar to pay, that happens pretty much automatically. When making a cash payment, you may have to fill out some forms. An secondly, Edward Snowden revealed that the government also tapped into banking networks, so pretty much every transaction is recorded, even if it is not reportable.", "title": "" }, { "docid": "cfd81576bb7bf35d9fa0c764680262f3", "text": "\"No. The full text of the Landlord-Tenant Act (specifically, section 554.614 of Act 348 of the year 1972) makes no mention of this. Searching the law for \"\"interest\"\" doesn't yield anything of interest (pardon the pun). Specifically, section 554.604 of the same law states that: (1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond. (2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond. While it does sound like the landlord is required to deposit the money in a bank or other secured form, e.g. the Secretary of State, he/she isn't required to place it in an account that will earn interest.\"", "title": "" }, { "docid": "b5825b7937a3c46f4dad210d283bc7aa", "text": "Also see who has the authority to delete bills or items on bills. This was a huge scam with some servers I've worked with. If you can delete an entire bill that was paid in cash then that's money in your pocket.", "title": "" }, { "docid": "aaa7691ca4e8a234d85989b338da4378", "text": "\"It can be a money laundering scheme. The stranger gives you cash for free at first, then proposes to give you more but this time asks you to \"\"spend\"\" a fraction of it (like 80%). So on his side the money comes from a legitimate source. So you do it because after all you get to keep the rest of it and it is \"\"free\"\" money. But you are now involved in something illegal. Having money for which you cannot tell the origin is also something highly suspicious. You will not pay tax on it, and the fiscal administration of your country might give you a fine. Customs might also be able to confiscate the money if they suspect it comes from an illegal source.\"", "title": "" }, { "docid": "25865b998a68af259bbb602ce40e0cda", "text": "I know that many HSBC ATMs at branches in the US and Canada offer this service (they actually scan and shred checks as you deposit them). Perhaps they do same in Germany... but not all ATMs offer this feature.", "title": "" }, { "docid": "dbe15f136e1dacd59e65f9053a2451b7", "text": "\"There will be no police involved. The police do not care. Only the feds care, and they only care about large amounts (over $100,000). What will happen is that the teller will deposit the money like nothing is unusual, but the amount will trigger a \"\"Suspicious Transaction Report\"\" to be filed by the bank. This information goes to the US Treasury and is then circulated by the Treasury to basically every agency in the government: the Department of Defense, the FBI, the NSA, the CIA, the DEA, the IRS, etc. What happens next depends on your relationship with your bank and the personality of the bank. In my case I have made large cash transactions at two different banks, one that I had a long relationship with, and another that I had a long-standing but dormant account. The long-term one was a high end savings bank in a city. The dormant one was one of those bozo retail banks (think \"\"Citizens\"\" or \"\"Bank of America\"\") in a suburb. The long-term bank ignored my first deposit, but after I made some more including one over $50,000 in cash they summoned me via a letter. I went in, talked to the branch manager and explained why I was making the deposits. He said \"\"That sounds plausible.\"\" and that was the end of the interview. It is unlikely that they transferred the information. They probably just wrote it down. They did this because they have \"\"know your customer\"\" regulations and they wanted to be able to prove that they did \"\"due diligence\"\" in case anybody asked about it later. The suburban bank never asked any questions, but they did file the STRs. In general, there is no way to know if the bank will interview you or not. It depends on a lot of different factors. The basic factors are: how much money is it, are you doing a lot of business normally, and how well does the bank know you. If you refuse to answer the bank's questions to their satisfaction, it is a 100% chance that they will close your account. They can also file higher level reports that flag your activity as \"\"highly suspicious\"\" as opposed to just the normal \"\"suspicious\"\". As long as it is a bank employee, you should have no serious concerns unless the guy seems strange and asks really pointed questions. If you have any question whether the \"\"employee\"\" is legitimate, just verify that he/she is a bank employee. Obviously if the feds visit you, you should say nothing. The chance of this happening is 1 in a million.\"", "title": "" }, { "docid": "79cd15a7526baa7f02329f478dfe710e", "text": "Banks in the US have to report deposits of more than $10,000, so they'll contact you to complete form 8300 or something. It should not be a problem, though, if you specify that it's someone else's money, not your income.", "title": "" }, { "docid": "0c44e8add21de2cabf4f249a87937361", "text": "I do not think banks have an obligation to report any deposits to the IRS, however, they probably have an obligation to report deposits exceeding certain threshold amounts to FinCEN. At least that's how it works in Canada, and we're known to model our Big Brother-style activities after our neighbour to the South.", "title": "" }, { "docid": "d608f482e2617e674cae8ec514453434", "text": "\"There is no \"\"reason why this cannot be done\"\", but you can tell your friend that these actions are officially shady in the eyes of the US government. Any bank transactions with a value of $10,000 or more are automatically reported to the government as a way to prevent money laundering, tax evasion, and other criminal shenanigans. \"\"Structuring\"\" bank deposits to avoid this monetary limit is a crime in and of itself. https://en.wikipedia.org/wiki/Currency_transaction_report\"", "title": "" }, { "docid": "8f6d0075e62e2c655b39f049dba249df", "text": "Structuring, as noted in another answer, involves breaking up cash transactions to avoid the required reporting limits. There are a couple of important things to note. And, the biggest caveat - there have been many cases of perfectly legitimate transactions that have fallen foul of the reporting requirements. One case springs to mind of a small business that routinely deposited the previous day's receipts as cash, and due to the size of the business, those deposits typically fell in the $9,000-$9,500 range. This business ended up going through a lot of headaches and barely survived. Some don't. A single batch of transactions, if it is only 2 or 3 parts and they are separated by reasonable intervals, is not likely in and of itself to be suspicious. However, any set of such transactions does run the risk of being flagged. In your case, you also run afoul of the Know Your Customer rules, because it's not even you depositing the cash - it's your friend. (Why can your friend not simply write you a check? What is your friend doing with $5k of cash at a time? How do you know he's not generating illegal income and using you to launder it for him?) Were I your bank, you can be very certain I'd be reporting these transactions. Just from this description, this seems questionable to me. IRS seizes millions from law-abiding businesses", "title": "" }, { "docid": "d6e23a040a11669cd162671a3ea1a597", "text": "This is a case where you sit down with an advisor or two. There are legal, and tax issues. When you deposit the cash, or buy a car with it, the large cash transaction will trigger a notice to the US Government. So they will eventually find out. Before you get to that point you need to know what obligations and consequences you will be facing. Because you don't know if it was a gift, or found money, or if the owner will be back looking for you to return it; therefore you need expert advice.", "title": "" }, { "docid": "2c8994eda8bc5560355d5e4bd03d5914", "text": "\"The whole concept of \"\"spending a fraudulent check\"\" is misleading. Both in practice and legally there are two separate transactions - you (not) receiving funds by depositing a fraudulent check, and you sending a cash transfer further on. Regarding the fraudulent check, generally your bank is 'responsible' in the sense that it's their responsibility to recover the money from you - it will not receive any money from the bank that supposedly issued the fake check, and if they give it to you, you spend all that money and are unable to pay it back, that's their problem and not of the other institutions. Regarding the cash transfer, from the bank point of view it's solely your responsibility - it was really you who made that payment, you explicitly authorised/instructed the banks to deliver money to the recipient, and none of those banks have the duty to return it. You have been defrauded by the recipient of this payment, and may attempt to recover the money from the fraudster - but that's not particularly likely to happen even in the case of a successful arrest and conviction. Very fast reaction with involvement of police may block the \"\"vendor's\"\" account before they are able to withdraw the money. If that is the case, you might be able to recover your money or part of it.\"", "title": "" }, { "docid": "4611b10dcda9bdcf2a448ddfd061e57b", "text": "http://www.consumerismcommentary.com/buying-house-with-cash/ It looks like you can, but it's a bad idea because you lack protection of a receipt, there's no record of you actually giving the money over, and the money would need to be counted - bill by bill - which increases time and likelihood of error. In general, paying large amounts in cash won't bring up any scrutiny because there's no record. How can the IRS scrutinize something that it can't know about? Of course, if you withdraw 200k from your bank account, or deposit 200k into it then the government would know and it would certainly be flagged as suspicious.", "title": "" }, { "docid": "72a97bd80c973f71006330288f57bb1b", "text": "Ask your bank to write a letter asserting that you have $xxxxx on deposit with them, on their letterhead? Though realistically, the chance of your getting hit with identity theft In this situation, when you presumably know exactly who you're dealing with, are vanishingly small.", "title": "" }, { "docid": "ca59cf8fc80ad07e144659447feece7f", "text": "\"Subtracting the loan from a deposit is known as \"\"setting-off\"\", and in general whether you can do it would depend on the terms of your contract with the bank. It's quite likely that they wouldn't state it either way and at best you might end up with a legal fight. So I'd recommend assuming that it won't be possible.\"", "title": "" } ]	fiqa
f4c6c82dd854053318fe471f8b64357d	Why are estimated taxes due “early” for the 2nd and 3rd quarters only?	[ { "docid": "04468a78b190230604ded783ba3cbc6c", "text": "There are too many nuances to the question asked to explore fully but here are a few points to keep in mind. If you are a cash-basis taxpayer (most individuals are), then you are not required to pay taxes on the money that has been billed but not received as yet. If you operate on an accrual basis, then the income accrues to you the day you perform the service and not on the day you bill the client. You can make four equal payments of estimated tax on the due dates, and if these (together with any income tax withholding from wage-paying jobs) are at least 90% of your tax liability for that year, then you owe no penalties for underpayment of tax regardless of how your income varied over the year. If your income does vary considerably over the year (even for people who only have wages but who invest in mutual funds, the income can vary quite a bit since mutual funds typically declare dividends and capital gains in December), then you can pay different amounts in each quarterly installment of estimated tax. This is called the annualization method (a part of Form 2210 that is best avoided unless you really need to use it). Your annualized income for the payment due on June 15 is 2.4 = 12/5 times your taxable income through May 31. Thus, on Form 2210, you are allowed to assume that your average monthly taxable income through May 31 will continue for the rest of the year. You then compute the tax due on that annualized income and you are supposed to have paid at least 45% of that amount by June 15. Similarly for September 15 for which you look at income through August 31, you use a multiplier of 1.5 = 12/8 and need to pay 67.5% of the tax on the annualized income, and so on. If you miscalculate these numbers and pay too little tax in any installment, then you owe penalties for that quarter. Most people find that guesstimating the tax due for the entire year and paying it in equal installments is simpler than keeping track of nuances of the annualized method. Even simpler is to pay 100% of last year's tax in four equal installments (110% for high earners) and then no penalty is due at all. If your business is really taking off and your income is going to be substantially higher in one year, then this 100%/110% of last year's tax deal could allow you to postpone a significant chunk of your tax bill till April 15.", "title": "" }, { "docid": "f417854873f63cf92c832db578efa054", "text": "Here's an answer copied from https://www.quora.com/Why-is-the-second-quarter-of-estimated-quarterly-taxes-only-two-months Estimated taxes used to be paid based on a calendar quarter, but in the 60's the Oct due date was moved back to Sept to pull the third quarter cash receipts into the previous federal budget year which begins on Oct 1 every year, allowing the federal government to begin the year with a current influx of cash. That left an extra month that had to be accounted for in the schedule somewhere. Since individuals and most businesses report taxes on a calendar year, the fourth quarter needed to continue to end on Dec 31 which meant the Jan 15 due date could not be changed, that left April and July 15 dues dates that could change. April 15 was already widely known as the tax deadline, so the logical choice was the second quarter which had its due date changed from July 15 to June 15.", "title": "" }, { "docid": "7ffef3f15795d301785bb58e85f6fa15", "text": "I suspect that the payments were originally due near the end of each quarter (March 15, June 15, September 15, and December 15) but then the December payment was extended to January 15 to allow for end-of-year totals to be calculated, and then the March payment was extended to April 15 to coincide with Income Tax Return filing.", "title": "" }, { "docid": "d41d8cd98f00b204e9800998ecf8427e", "text": "", "title": "" } ]	[ { "docid": "4f99997d3bcbab87ed77d11efcbb9b49", "text": "Estimated tax payments should be a reasonable estimate of what you owe for that time period. If it seems reasonable to you, it is probably reasonable. Sure, you can adjust for varying-length periods. As long as, in the end, you can and do pay what you owe, and don't underpay the estimated/withholding by enough that you owe a penalty, the IRS isn't all that picky about how the money is actually distributed through the year.", "title": "" }, { "docid": "7dcc82bbb9e4ab6690ff1f44442fe6d8", "text": "\"The forms get updated every year, and the software providers need to get approved by the IRS every year. \"\"Form is not yet finalized\"\" means that this year form hasn't been approved yet. IRS starts accepting returns on January 31st anyway, nothing to be worried about. Why are you nearing a deadline? The deadline for 1120 (corporate tax return) is 2 and 1/2 months after your corp year end, which if you're a calendar year corp is March 15th. If your year end is in November/December - you can use the prior year forms, those are finalized.\"", "title": "" }, { "docid": "e5ce258c252eb127e48a7a588eb6ee11", "text": "You must pay your taxes at the quarterly intervals. For most people the withholding done by their employer satisfies this requirement. However, if your income does not have any withholding (or sufficient), then you must file quarterly estimated tax payments. Note that if you have a second job that does withhold, then you can adjust your W4 to request further withholding there and possibly reduce the need for estimated payments. Estimated tax payments also come into play with large investment earnings. The amount that you need to prepay the IRS is impacted by the safe harbor rule, which I am sure others will provide the exact details on.", "title": "" }, { "docid": "dbc2900dd925281d60d1f846130c6e5f", "text": "\"Everything is fine. If line 77 from last year is empty, you should leave this question blank. You made estimated tax payments in 2015. But line 77 relates to a different way to pay the IRS. When you filed your 2014 taxes, if you were owed a refund, and you expected to owe the IRS money for 2015, line 77 lets you say \"\"Hey IRS, instead of sending me a refund for 2014, just keep the money and apply it to my 2015 taxes.\"\" You can also ask them to keep a specified amount and refund the rest. Either way this is completely optional. It sounds like you didn't do that, so you don't fill in anything here. The software should ask you in a different question about your estimated tax payments.\"", "title": "" }, { "docid": "118c268c5016743d186602b1f6febbb0", "text": "They are four quarterly estimated tax payments. The IRS requires that you pay your taxes throughout the year (withholding in a W-2 job). You'll need to estimate how much taxes you think you might be owing and then pay roughly 1/4 at each of the 4 deadlines. From the IRS: How To Figure Estimated Tax To figure your estimated tax, you must figure your expected AGI, taxable income, taxes, deductions, and credits for the year. When figuring your 2011 estimated tax, it may be helpful to use your income, deductions, and credits for 2010 as a starting point. Use your 2010 federal tax return as a guide. You can use Form 1040-ES to figure your estimated tax. Nonresident aliens use Form 1040-ES (NR) to figure estimated tax. You must make adjustments both for changes in your own situation and for recent changes in the tax law. For 2011, there are several changes in the law. Some of these changes are discussed under What's New for 2011 beginning on page 2. For information about these and other changes in the law, visit the IRS website at IRS.gov. The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Keep the worksheet for your records. You may find some value from hiring a CPA to help you setup your estimated tax payments and amounts.", "title": "" }, { "docid": "b6302253c06243087d1f4e543d757815", "text": "Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0).", "title": "" }, { "docid": "348fe523b39695c11e4bb9e24392e524", "text": "If you're getting the same total amount of money every year, then the main issue is psychological. I mean, you may find it easier to manage your money if you get it on one schedule rather than another. It's generally better to get money sooner rather than later. If you can deposit it into an account that pays interest or invest it between now and when you need it, then you'll come out ahead. But realistically, if we're talking about getting money a few days or a week or two sooner, that's not going to make much difference. If you get a paycheck just before the end of the year versus just after the end of the year, there will be tax implications. If the paycheck is delayed until January, then you don't have to pay taxes on it this year. Of course you'll have to pay the taxes next year, so that could be another case of sooner vs later. But it can also change your total taxes, because, in the US and I think many other countries, taxes are not a flat percentage, but the more you make, the higher the tax rate. So if you can move income to a year when you have less total income, that can lower your total taxes. But really, the main issue would be how it affects your budgeting. Others have discussed this so I won't repeat.", "title": "" }, { "docid": "c03a09f06650bf57d78ea96446ea5f09", "text": "Usually you want two consecutive quarters before declaring a recession. This blog doesn't reference any seasonal adjustment; a one or two month decline may be to any number of reasons. E.g. labor numbers dropped this month largely attributed to weather. I only see screen shots of excel sheets, I'm not willing to invest any time into parsing that out :(", "title": "" }, { "docid": "fd07b9332ec0af4e8cddc1f4c558f5dc", "text": "\"From the IRS page on Estimated Taxes (emphasis added): Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. If the amount of income tax withheld from your salary or pension is not enough, or if you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments. If you are in business for yourself, you generally need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. I think that is crystal clear that you're paying income tax as well as self-employment tax. To expand a bit, you seem to be confusing self-employment tax and estimated tax, which are not only two different things, but two different kinds of things. One is a tax, and the other is just a means of paying your taxes. \"\"Self-employment tax\"\" refers to the Social Security and Medicare taxes that you must pay on your self-employment income. This is an actual tax that you owe. If you receive a W-2, half of it is \"\"invisibly\"\" paid by your employer, and half of it is paid by you in the form of visible deductions on your pay stub. If you're self-employed, you have to pay all of it explicitly. \"\"Estimated tax\"\" does not refer to any actual tax levied on anyone. A more pedantically correct phrasing would be \"\"estimated tax payment\"\". Estimated taxes are just payments that you make to the IRS to pay tax you expect to owe. Whether you have to make such payments depends on how much tax you owe and whether you've paid it by other means. You may need to pay estimated tax even if you're not self-employed, although this would be unusual. (It could happen, for instance, if you realized large capital gains over the year.) You also may be self-employed but not need to pay estimated tax (if, for instance, you also have a W-2 job and you reduce your withholding allowances to have extra tax withheld). That said, if you earn significant income from self-employment, you'll likely have to make estimated tax payments. These are prepayments of the income tax and Social Security/Medicare taxes you accrue based on your self-employment income. As Pete B. mentioned in his answer, a possible reason that your estiamtes are low is because some taxes have already been withheld from the paychecks you received so far during the year (while you were an employee). These represent tax payments you've already made; you don't need to pay that money a second time, but you may need to make estimated tax payments for your income going forward.\"", "title": "" }, { "docid": "38372658a2b0cb9eaee21ed8679d07cc", "text": "\"You don't actually have to make four equal payments on US federal taxes; you can pay different amounts each quarter. To avoid penalties, you must have paid \"\"enough\"\" at the end of each quarter. If you pay too much in an early quarter, the surplus counts towards the amount due in later quarters. If you have paid too little as of the end of a quarter, that deficit counts against you for interest and penalties until it is made up in later quarters (or at year-end settlement). How much is \"\"enough\"\"? There are a number of ways of figuring it. You can see the list of exceptions to the penalty in the IRS documentation. Using unequal payments may require more complicated calculation methods to avoid or reduce penalties at year-end. If you have the stomach for it, you may want to study the Annualized Income Installment Method to see how uneven income might affect the penalty.\"", "title": "" }, { "docid": "4cc980dd84c99df9e3ac48558af4987c", "text": "Either make your best guess, or set it low and then file quarterly Estimated Tax payments to fill in what's missing, or set it high and plan on getting a refund, or adjust it repeatedly through the year, or...", "title": "" }, { "docid": "0230fdf2990f65c209c70bf3251d2bbb", "text": "\"The short answer is - \"\"Your employer should typically deduct enough every paycheck so you don't owe anything on April 15th, and no more.\"\" The long answer is \"\"Your employer may make an error in how much to deduct, particularly if you have more than 1 job, or have any special deductions/income. Calculate your estimated total taxes for the year by estimating all your income and deductions on a paper copy of a tax return [I say paper copy so that you become familiar with what the income and deductions actually are, whereas plugging into an online spreadsheet makes you blind to what's actually going on]. Compare that with what your employer deducts every paycheck, * the number of paychecks in the year. This tells you how much extra you will pay / be refunded on April 15th, as accurately as you can estimate your income and deductions.\"\"\"", "title": "" }, { "docid": "e39a1801cbfa777e2fda516c1822da31", "text": "\"It's not quite as bad as the comments indicate. Form 1040ES has been available since January (and IME has been similarly for all past years). It mostly uses the prior year (currently 2016) as the basis, but it does have the updated (2017) figures for items that are automatically adjusted for inflation: bracket points (and thus filing threshhold), standard deductions, Social Security cap, and maybe another one or two I missed. The forms making up the actual return cannot be prepared very far in advance because, as commented, Congress frequently makes changes to tax law well after the year begins, and in some cases right up to Dec. 31. The IRS must start preparing forms and pubs -- and equally important, setting the specifications for software providers like Intuit (TurboTax) and H&RBlock -- several months ahead in order to not seriously delay filing season, and with it refunds, which nearly everyone in the country considers (at least publicly) to be worse than World War Three and the destruction of the Earth by rogue asteroids. I have 1040 series from the last 4 years still on my computer, and the download dates mostly range from late September to mid January. Although one outlier shows the range of possibility: 2013 form 1040 and Schedule A were tweaked in April 2014 because Congress passed a law allowing charitable contributions for Typhoon Haiyan to be deducted in the prior year. Substantive, but relatively minor, changes happen every year, including many that keep recurring like the special (pre-AGI) teacher supplies deduction (\"\"will they or won't they?\"\"), section 179 expensing (changes slightly almost every year), and formerly the IRA-direct-to-charity option (finally made permanent last year). As commented, the current Congress and President were elected on a platform with tax reform as an important element, and they are talking even more intensely than before about doing it, although whether they will actually do anything this year is still uncertain. However, if major reform is done it will almost certainly apply to future years only, and likely only start after a lag of some months to a year. They know it causes chaos for businesses and households alike to upend without advance warning the assumptions built in to current budgets and plans -- and IME as a political matter something that is enacted now and effective fairly soon but not now is just as good (but I think that part is offtopic).\"", "title": "" }, { "docid": "cf9d3194a23f0e9f668052dac979fcc2", "text": "If you have non-salary income, you might be required to file 1040ES estimated tax for the next year on a quarterly basis. You can instead pay some or all in advance from your previous year's refund. In theory, you lose the interest you might have made by holding that money for a few months. In practice it might be worth it to avoid needing to send forms and checks every quarter. For instance if you had a $1000 estimated tax requirement and the alternative was to get 1% taxable savings account interest for six months, you'd make about $3 from holding it for the year. I would choose to just pay in advance. If you had a very large estimation, or you could pay off a high-rate debt and get a different effective rate of return, the tradeoff may be different.", "title": "" }, { "docid": "669955e5acafee701a6cc0e6b6ab3e34", "text": "There actually are legitimate reasons, but they don't apply to most people. Here are a few that I know of: You're self-employed and have to pay quarterly estimated taxes. Rather than wait for the refund when you already have to pay 1/4 of next year's taxes at the same time, you just have the IRS apply to refund forward. (so you're not out the money you owe while waiting for your refund). You're filing an amended or late return, and so you're already into the next year, and have a similar situation as #1, where your next year's taxes have already come due. You're planning on declaring bankruptcy, and you're under the Tenth Circuit, those credits might be safe from creditors For almost any other situation, you're better off taking the money, and using it to pay down debt, or put it somewhere to make interest (although, at the current rates, that might not be very much).", "title": "" } ]	fiqa
a0530524d10ef7ea0ee5b3bf5865d35f	Is it a bad idea to buy a motorcycle with a lien on it?	[ { "docid": "5a8c4854be19e35e58b3c48e6c3c73c5", "text": "In the case of a vehicle with a lien, there is a specific place on the title to have a lien holder listed, and the holder of the lien will also hold the title until the lien is cleared. Usually this means you have to pay off the loan when you purchase the vehicle. If that loan is held by a bank, meet the seller at the bank and pay the loan directly with them and have them send the title directly to you when the loan is paid. This usually involves writing up a bill of sale to give to the bank when paying the loan. The only thing you're trying to avoid here is paying cash to the seller--who then keeps the cash without paying the lien holder--who then keeps the title and repossesses the motorcycle. Don't pay the seller if they don't have the title ready to sign over to you.", "title": "" }, { "docid": "860741c1147472716c04868705e6c53c", "text": "It's extra work for you to purchase a vehicle that has an outstanding lien on it. It's not uncommon, but there are things to take care of and watch out for. Really, all it means is that the vehicle you're trying to purchase hasn't been paid for in full by the current owner. Where things can get dodgy is ensuring that all outstanding debts are paid against the vehicle at the time you take ownership of it, otherwise the owners of those debts could still reclaim the vehicle. Here's a good article about making this kind of purchase.", "title": "" }, { "docid": "d569097755e9822ff9c32bd3e9cc5e86", "text": "A lien is a mechanism to impede legal title transfer of a vehicle, real property, or sometimes, expensive business equipment. That's why title companies exist - to make sure there are no liens against something before a buyer hands money to a seller. The lien can be attached to a loan, unpaid labor related to the item (a mechanic's lien) or unpaid taxes, and there are other scenarios where this could occur. The gist of all this is that the seller of the vehicle mentioned does not have clear title if there is a lien. This introduces a risk for the buyer. The buyer can pay the seller the money to cover the lien (in the case of a bank loan) but that doesn't mean the seller will actually pay off the loan (so the title is never clear!). This article recommends visiting the bank with the seller, and getting title on-the-spot. However, this isn't always an option, as a local bank branch isn't probably going to have the title document available, though the seller might be able to make some arrangement for a local branch to have the title available before a visit to pay off the loan. The low-risk approach is for the seller to have clear title before any money changes hands.", "title": "" } ]	[ { "docid": "665ceed51a7bbb56526f3444bbabbac6", "text": "> Am I over simplifying things? Yes. Insurance, property taxes, water/sewer taxes, legal fees, upkeep/maintenance, and mortgage insurance premiums should be included in your expense model. This is in addition to principal repayment at your loan's interest rate. > or could somebody with more experience clue me in to why this is a bad investment? The answer depends on your financial ability to pay and the area in which you are seeking to buy. A lot of factors, actually.", "title": "" }, { "docid": "0f3cc07afc72563ecf7740e84bc54c8f", "text": "Well, if someone who owes me money defaults, I lose the money he promised to pay me. To me that would be a huge moral obstacle for declaring myself bankrupt. I was raised in believing that you keep your promises.", "title": "" }, { "docid": "c17aff7f263c74b9a7f8eb3c8981ca68", "text": "Owing money to family members can create serious problems. Taking out a purchase-money mortgage to pay your sister for her share is the best way to avoid future friction and, possibly, outright alienation.", "title": "" }, { "docid": "655d2b842853d8697de36217ca6a120b", "text": "A mortgage will show as a lien on your property. Say your home is worth 400,000 (money units) but you only owe 200,000. A lender may be willing to be second in line, lending you another 100,000.", "title": "" }, { "docid": "2ca37ccaeb56e7276aa66a6183d66820", "text": "\"I really don't feel co-signing this loan is in the best interests of either of us. Lets talk about the amount of money you need and perhaps I can assist you in another way. I would be honest and tell them it isn't a good deal for anybody, especially not me. I would then offer an alternative \"\"loan\"\" of some amount of money to help them get financing on their own. The key here is the \"\"loan\"\" I offer is really a gift and should it ever be returned I would be floored and overjoyed. I wouldn't give more than I can afford to not have. Part of why I'd be honest to spread the good word about responsible money handling. Co-signed loans (and many loans themselves) probably aren't good financial policy if not a life & death or emergency situation. If they get mad at me it won't matter too much because they are family and that won't change.\"", "title": "" }, { "docid": "731e7426b1c10079a551d93a3bc2c00d", "text": "If you know that you have a reasonable credit history, and you know that your FICO score is in the 690-neighborhood, and the dealer tells you that you have no credit history, then you also know one of two things: Either way, you should walk away from the deal. If the dealer is willing to lie to you about your credit score, the dealer is also willing to give you a bad deal in other respects. Consider buying a cheaper used car that has been checked out by a mechanic of your choice. If possible, pay cash; if not, borrow as small an amount as possible from a credit union, bank, or even a very low-interest rate credit card. (Credit cards force you to pay off the loan quickly, and do not tie up your car title. I still have not managed to get my credit union loan off of my car title, ten years after I paid it off.)", "title": "" }, { "docid": "992490506e518280e7f33cc4ca1fdf5d", "text": "\"Seems to me you don't have a ton of great choices, but of them: Keep going as you are. If/when the car becomes unusable without significant expenses, stop using it. Buy another junker and use that to get by until your loan is paid off. From now until then, put aside a few hundred (or whatever you can, if more) each month towards the anticipated purchase. When you do buy this junker, pay in cash - no loan. Just get something that will take you to work, and that includes \"\"bike\"\" if that's a possibility. When you can, sell the no longer usable car to finish paying off the loan. Start aggressively paying off the current loan, with the eye of getting it down to where you're not underwater anymore. Then sell the car and dispose of the loan, and buy a better replacement. Scrimp and save and cut everything - eat cheaply (and never out), cut your personal expenses everywhere you can. If you get another $250 a month towards principal, you can probably be no-longer-underwater in about a year. Get a personal loan today for the amount that you're underwater, and immediately sell the car. This gets you out of the loan and car the quickest, and if you think the car will devalue significantly between now and when you might be not underwater anymore, this might be the best option. But it's the most expensive, likely - you'll pay 12% to 20% on the difference. Now, 12% of $5000 is less than 5% of 15000, so it might actually be a good financial deal - but you'll probably have to shop around to get 12-15% with a 660 (though it's probably possible). You'll still be without a car at this point, though, so you'd have to buy another one (or live without for a while), and you'd still have a payment of some sort, but perhaps a more manageable one ($5000 @ 12% @ 5 years means something a bit over $100 a month, for example.) I recommend that if you can get by without a car for a while, option 2 is your best bet. All of these will require some financial care for a while, and probably cutting back on expenses for a year or two; but realistically, you shouldn't expect anything else. Get a budgeting app if it will help see how to do this. As far as getting out of the loan without paying it, I don't recommend that at all. Your credit will be ruined for at least seven years, and 660 is not bad at all really, and then would take yet more years to recover. You will likely be sued for the balance plus collection costs, beyond repossession. The consequences would be far, far worse than just paying it off, and I mean that financially as well as ethically.\"", "title": "" }, { "docid": "79ee7e90db2f1e6040e314f243def684", "text": "Not a good idea, the bank is a lean holder unless you deduct the remainder of the loan from the purchase price you will end up paying much more. Tell the seller to pay off the loan and provide you a clean title. Btw unless you're getting the deal of the century I'd walk away until I saw a clean title", "title": "" }, { "docid": "5bfbab6e7601d5bb538b8c569ef36e01", "text": "What's really worrisome is that people are buying larger and more expensive vehicles. People look at longer terms as an opportunity to buy something they really shouldn't be since hey, I can take it for two more years for the same payment.", "title": "" }, { "docid": "f66e25bacedbdcc71660c7a8b122bb2e", "text": "The only issue I can see is that the stranger is looking to undervalue their purchase to save money on taxes/registration (if applicable in your state). Buying items with cash such as cars, boats, etc in the used market isn't all that uncommon* - I've done it several times (though not at the 10k mark, more along about half of that). As to the counterfeit issue, there are a couple avenues you can pursue to verify the money is real: *it's the preferred means of payment advocated by some prominent personal financial folks, including Dave Ramsey", "title": "" }, { "docid": "9998fe5551fdcc7029672487e60cc40f", "text": "The loan is private, so the business is more of a red-herring. The fact that you're closing it and lost a lot of money explains the loan, but is rather irrelevant otherwise as the loan is personal. Do consider potential tax benefits on writing off a loss, talk to a local tax adviser on that. Pros: Cons: I'm sure there are more considerations, of course, and I'm not familiar with the Canadian social safety nets to understand how much of a damage con #1 would be.", "title": "" }, { "docid": "500a2e4390c95d1355fd370b677acfd3", "text": "Possession is 9/10 of the law, and any agreement between you and your grandfather is covered under the uniform commercial code covering contracts. As long as your fulfilling your obligation of making payments, the contract stands as originally agreed upon between you and the lender. In short, the car is yours until you miss payments, sell it, or it gets totalled. The fact that your upside down on value to debt isn't that big of a deal as long as you have insurance that is covering what is owed.", "title": "" }, { "docid": "d4e8ca74f864038aaf29895aeae70394", "text": "If you need to procure of motorcycle shipping facilities, then look for the one that knows not only to render your motorcycle on the specified place and date, however even one that knows how to take proper care of it. In fact you would not like for your motorbike to have marks on it and certain dents during the transit.", "title": "" }, { "docid": "bee4d2ec69a0fd1cb331ff5ed33ed0ef", "text": "\"Any sensible lender will require a lean lien against your formerly-free-and-clear property, and will likely require an appraisal of the property. The lender is free to reject the deal if the house is in any way not fitting their underwriting requirements; examples of such situations would be if the house is in a flood/emergency zone, in a declining area, an unusual property (and therefore hard to compare to other properties), not in salable condition (so even if they foreclose on it they'd have a questionable ability to get their money back), and so forth. Some lenders won't accept mobile homes (manufactured housing) as collateral, for instance, and also if the lender agrees they may also require insurance on the property to be maintained so they can ensure that a terrible fate doesn't befall both properties at one time (as happens occasionally). On the downside, in my experience (in the US) lenders will often require a lower loan percentage than a comparable cash down deal. An example I encountered was that the lender would happily provide 90% loan-to-value if a cash down payment was provided, but would not go above 75% LTV if real estate was provided instead. These sort of deals are especially common in cases of new construction, where people often own the land outright and want to use it as collateral for the building of a home on that same land, but it's not uncommon in any case (just less common than cash down deals). Depending on where you live and where you want to buy vs where the property you already own is located, I'd suggest just directly talking to where you want to first consider getting a quote for financing. This is not an especially exotic transaction, so the loan officer should be able to direct you if they accept such deals and what their conditions are for such arrangements. On the upside, many lenders still treat the LTV% to calculate their rate quote the same no matter where the \"\"down payment\"\" is coming from, with the lower the LTV the lower the interest rate they'll be willing to quote. Some lenders might not, and some might require extra closing fees - you may need to shop around. You might also want to get a comparative quote on getting a direct mortgage on the old property and putting the cash as down payment on the new property, thus keeping the two properties legally separate and giving you some \"\"walk away\"\" options that aren't possible otherwise. I'd advise you to talk with your lenders directly and shop around a few places and see how the two alternatives compare. They might be similar, or one might be a hugely better deal! Underwriting requirements can change quickly and can vary even within individual regions, so it's not really possible to say once-and-for-all which is the better way to go.\"", "title": "" }, { "docid": "6f0be0fcccc3df7f7e18a5f1331b0aef", "text": "Your over-thinking this. As long as the owner has the title and the vehicle is titled in there name they can sign it over to you then you can take it to the DMV and put it in your name. If they do not own the vehicle because they are still making payments then you will also need the signature from their bank or lien holder. You can ask to see their ID to verify they are the owner marked on the title. I've bought ~10 vehicles in the last 5 years and never had a problem doing it this way, my experiences have all been in California.", "title": "" } ]	fiqa
39f806f40f2fe8c5c1e95e9da1aebb07	How to manage household finances (income & expenses) [duplicate]	[ { "docid": "390a360d0bb3922167f3e81f7d5d6c75", "text": "\"My wife and I have close to equal incomes, and are not young. What we have is this: Some people would classify our system as a bit draconian as we each have \"\"allowance\"\"; however, it makes sure spending does not get out of wack and we work together to meet our goals.\"", "title": "" }, { "docid": "f320b7a4dd6e73f41791713408ae9961", "text": "Obviously, there are many approaches. I’ll describe what we do and why we think it is successful. I have seen many couples having disagreements and even divorce over money; it seems that this is a typical reason to fight and sometimes fight badly. The realization is that different people have different preferences what to spend their money on, and if you are not rich, it continuously leads to disagreements - ‘did you really need another pair of shoes?’, etc. Our solution is a weekly allowance. First, all our money goes into one pot and is considered equal. Many couples find that a difficult step, but I never thought twice about it - I trust my spouse, and I share my life with her, so why not my money? From this, we agree on an ‘allowance’ that is used to cover any non-common cost; this includes all clothing, dining out, buying things, etc. The amount was chosen to match about what we spent for those things anyway, and then adjusted annually. The main point is that there is no critique allowed about what this is spent on - you can blow it all on shoes, or buy books, or wine and dine, or gamble it away, whatever. We are doing this since 23 years now, and we are very happy with the results; we never have financial ‘fights’ anymore. Disadvantages are the effort - you need to keep track of it somehow. Either you use a separate credit card, or hand it out in cash, or have a complete accounting (I do the latter, because I want to). Regarding all other spend, we use the accounting to plan ahead for at least a year on all cost and income that are expected, and that shows us the available cash flow and where it might get tight. It also shows you where the money goes, and where you could cut if cutting is needed (or wanted). Again, there is some effort in collecting the data, but it is worth it (for us).", "title": "" } ]	[ { "docid": "b17769ae176dec951f352f9edcad1a0c", "text": "\"According to your numbers, you just stated that you spend approximately $1500 in discretionary expenditures per month, yet are unable to save. I fully realize that living in a big city is usually expensive, but on your (presumably after-tax) salary, I think you can easily save a substantial portion of your income. As others have already noted, enforcing saving of a significant portion of your discretionary income is the most obvious step. It's easy to say, but I suspect that if you are like most people who have difficulty saving, the psychological impact of quitting your previous spending habits \"\"cold turkey\"\" is likely to be very harsh, all the more so if you have an active social life. You may find yourself becoming depressed or resentful at \"\"having\"\" to save. You may lose motivation to work as hard because you might think that you're putting away all this money for the distant future, whereas you are young now and want to enjoy life while you can. It is in this context, then, that I looked at your other financial obligations. Paying $1300/month to your parents is a lot. It's over 20% of your after-tax salary. You do not specify the reasons for doing this other than a vague sense of familial duty, but my recommendation is to see if this could be reduced somewhat. If you can bring it down to $1000/month, that $300 would go into your savings, and you would psychologically feel a lot better about putting, say, $600 of your own discretionary income into savings as well. Now you have, all told, about $1000/month of savings without severely curtailing your extra expenditures. But I would start with that $1500/month of luxury spending first. And yes, you do need to view it as luxury spending. The proper frame of mind is to compare your financial situation to someone who is truly unable to save because their entire income is spent on actual necessities: food and shelter; their effective tax rate is 0% because they earn too little; and they usually find themselves in debt because they cannot make ends meet. Now look back at that $1500/month. Can you honestly say that you cannot afford to cut that spending?\"", "title": "" }, { "docid": "8422693db687a36bf9cb06ee289c6cec", "text": "I don't think you need double-entry bookkeeping. To quote Robert Kiyosaki (roughly): Income is when money enters you pocket, and expenses are when money leaves your pocket. Income is an addition; expenses are subtractions. But if you want double-entry accounting, I'm not qualified to answer that. :)", "title": "" }, { "docid": "0f4799662e6609d40e0197bf2d5d1714", "text": "Other than the two answers (both of which recommend waiting until marriage to actually combine finances, and which I agree with), there's the general question: how does a couple choose to manage finances? In our marriage, it's me. I'm more numbers-minded than my spousal-unit. I'm also more a sticker for time. I work and spousal-unit does not. We had some good friends -- upon marriage, spouse1 felt like he should take on the role. He went on a several-week trip (leaving spouse2 at home), and upon returning home asked spouse2 about the late fees. Spouse2 was appalled. Spouse2 ended up keeping the job of managing household finances. There's enough pieces to the puzzle that it can be divided any way you choose -- any way that works for you and your spouse/virtual-spouse. One other point: talk about how to manage your money, before you marry. Dave Ramsey recommends a strict monthly budget. I like listening to Dave Ramsey, but we've never had a budget. Instead, we agreed during marriage counseling two things:", "title": "" }, { "docid": "0a6ec7acfcc016deaeedb5070d157e0a", "text": "I won't answer in a detailed manner because most people at this site like answers with certain bias' on these questions, like pool resources always relative to which partner is asking. If you follow the above advice, you are hoping things work out. Great! What if they don't? It will be very messy. Unlike most of my peers, I did NOT follow the above advice and had a very clean exit with both of us feeling very good (and no lawyers got involved either; win-win for both of us with all the money we saved). One assumption people make is the person with the lowest income has the strictest limits. This is not always true; I grew up in poverty, but have a very high income and detest financial waste. I can live on about €12,000 a year and even though my partner made a little less, my partner liked to spend. Counter intuitive, right? I was supposed to be the spender because I had a large income, but I wasn't. Also, think about an example with food - sharing expenses. Is it fair for one partner to split whey protein if one partner consumes it, but the other doesn't (answer: in my view, no)? My advice based on your questions: Balance the frugal vs. spendthrift mentality rather than income ratios. If you're both frugal, then focus on income ratios - but one may be more frugal than the other and the thought of spending €300 a month on housing is just insane to a person like me, whereas to most it's too little. Are you both exactly the same with this mentality - and be honest? Common costs that you both agree on can be easily split 50-50 and you can often benefit from economies of scale (like internet, cell phone). Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. This is so healthy for a relationship. My partner and I split and we both still really love each other. We're headed in different directions, but we did not want to end bitterly. What you wrote is part of why we ended so well; we both were very independent financially. Kids are going to be a challenge because they come with expenses that partners don't always agree on. What do you and her think of childcare, for instance? You really want to know all this upfront; again a frugal vs. spendthrift mindset could cause some big tensions.", "title": "" }, { "docid": "6719cd28cc9b851df3d1bdebb5deddb2", "text": "\"My own personal point of view. I earn about twice what my wife to be earns. We are planning on getting married next year. I ultimately do all the finances (basically because she hates that kind of thing) not because I'm in charge or whatever. To work out how we do this I wrote a spreadsheet: At the top it has my monthly pay in one column and her's in another. I add all our bills (against me initally). At the bottom I have a total of both of our \"\"spending money\"\". Spending money is wage - bills - savings I then move money out of my column into her column. My goal is that we pay all the bills and save a decent amount and have roughly the same amount to spend each month. So each persons spending money should be roughly equal. I then fine tune this as things change (if we get a pay rise we alter it, if a bill goes up or down we alter it) To manage this we have 4 accounts, a joint account to pay bills (both give a set amount to each mont), a savings acount (both give a set amount to each month) and our own accounts (where we get paid and where our spending money lives). Like everyone else says, this seems fair to me. I don't earn more, we both earn \"\"an amount\"\" and this should be split equally.\"", "title": "" }, { "docid": "904291c8790bd890b5644dd82a6e17d8", "text": "Your problem is one that has challenged many people. As you said there are two aspects to balancing a budget, reducing expenses or increasing income. And you state that you have done all the cost-cutting that you can find. Looking at ways to increase your income is a good way to balance your budget. How big is your problem? Do you need to find another $100/month, or do you need $1000/month? There are many part-time jobs you could obtain (fast food, retail, grocery), you could obtain a sales-job (cars, real estate, even working for a recruiting firm) where you could connect buyers and sellers. If your need is $100/month, a part-time job on weekends would fill the gap. When I was trying to solve my budget problems a few years ago, I thought that I needed to increase my income. And I did increase my income. But then I realized that my expenses were too high. And I re-evaluated my priorities. I challenge you to revisit your expenses. Often we assume that we need things that we really cannot afford. Consider a few of your (possible) expenses, My problems included mortgage debt, auto loans, high utilities, high car insurance, too much spending on kids activities, and a few other problems.", "title": "" }, { "docid": "e754092dce0e9259fb1f7f794e7fea88", "text": "\"Another way to look at budgeting: give yourself an explicit \"\"allowance\"\" -- possibly in a separate account -- and if something isn't a clear necessity it must be paid for out of your allowance, saving up first if necessary. You can get those concert tickets, but only if you cut down on expensive meals and toys and other entertainment for a while. You can have anything you want, but not everything and not immediately unless you learn to maintain an adequate balance in this account.\"", "title": "" }, { "docid": "fad2f2893d5c2be6029ac8d3af9dc96a", "text": "For any android device you can try: Daily Expense Manager - to track your expenses and a host of other apps to suit your specific needs.", "title": "" }, { "docid": "f58f8afc6afbfa9998c18fedb9aa1367", "text": "I agree with Option 3 from the accepted answer (His/Hers/Joint), but with one caveat (that my wife and I are finding out). Once you have children, if your income is in the mid-range where you are not paycheck to paycheck, but are not floating in excess money either (ie, you can have a vacation, but you have to plan for it and save up for a few months to do so), the child-relative expenses begin to be a huge factor in your overall budget, such that (particularly if one partner does more of the child-related buying) it can be hard to really keep up the 3 account separation, because those child-related expenses may end up being all of one earner's paycheck. We originally did the 3 way split, where we took rent, car, and utilities from joint (ie, each transferred a reasonable portion to the joint account to cover), and just bought groceries each occasionally such that it was generally a reasonable split (as we both shopped for groceries and both earned close enough to each other that it worked out). But once we had kids, it ended up being very different, and we eventually had to more properly budget all of our funds as if they were basically joint funds. While we still do have separate accounts (and, largely, separate credit cards/etc., except for one joint card), it's almost pro forma now due to the kids.", "title": "" }, { "docid": "f7c21c567f8858dae9181f8fb9ab5db7", "text": "My wife and I do this. We have one account for income and one for expenditures (and around 7 others for dedicated savings.) Doing this we are forcing ourselves to keep track of all expenditures as we have to manually transfer funds from one to the other, we try to do this periodically (every Wednesday) and then keep the expenditures within what is actually on the account. It is a really good way to keep track of everything. Bear in mind that our bank provides a fast handy smartphone app where we both can check our account as well as transfer funds in less than 10 seconds. (Fingerprint authentication, instant funds transfer as well as zero fees for transfers.) Right now we have a credit card each attached to the expenditures account, but earlier we only had a debit card each and no credit cards. Meaning that when the weekly funds ran out we where simply not able to pay. We did this to mimic living only on cash and when the cash runs out you simply have to stop buying stuff. And at the same time we could accrue quite a bit of savings. I would definitely recommend this if you have problems with over expenditures.", "title": "" }, { "docid": "a6fed25c052bb6f17e2cefe0c453afae", "text": "\"Make a list of all your expenses. I use an Excel spreadsheet but you can do it on the back of a napkin if you prefer. List fixed expenses, like rent, loan payments, insurance, etc. I include giving to church and charity as fixed expenses, but of course that's up to you. List regular but not fixed expenses, like food, heat and electricity, gas, etc. Come up with reasonable average or typical values for these. Keep records for at least a few months so you're not just guessing. (Though remember that some will vary with the season: presumably you spend a lot more on heat in the winter than in the summer, etc.) You should budget to put something into savings and retirement. If you're young and just starting out, it's easy to decide to postpone retirement savings. But the sooner you start, the more the money will add up. Even if you can't put away a lot, try to put away SOMETHING. And if you budget for it, you should just get used to not having this money to play with. Then total all this up and compare to your income. If the total is more than your income, you have a problem! You need to find a way to cut some expenses. I won't go any further with that thought -- that's another subject. Hopefully you have some money left over after paying all the regular expenses. That's what you have to play with for entertainment and other non-essentials. Make a schedule for paying your bills. I get paid twice a month, and so I pay most of my bills when I get a paycheck. I have some bills that I allocate to the first check of the month and some to the second, for others, whatever bills came in since my last check, I pay with the current check. I have it arranged so each check is big enough to pay all the bills that come from that check. If you can't do that, if you'll have a surplus from one check and a shortage from the next, then be sure to put money aside from the surplus check to cover the bills you'll pay at the next pay period. Always pay your bills before you spend money on entertainment. Always have a plan to pay your bills. Don't say, \"\"oh, I'll come up with the money somehow\"\". If you have debt -- student loans, car loans, etc -- have a plan to pay it off. One of the most common traps people fall into is saying, \"\"I really need to get out of debt. And I'm going to start paying off my debt. Next month, because this month I really want to buy this way cool toy.\"\" They put off getting out of debt until they have frittered away huge amounts of money on interest. Or worse, they keep accumulating new debt until they can't even pay the interest.\"", "title": "" }, { "docid": "84fc8436480e8a494420b0c68ea08c25", "text": "\"I think you misunderstand the purpose of the liability account. I would suggest you review the standard accounting model, but to give you a brief overview: Income and expenses are money coming into and out of your possession. They are the pipes flowing into and out of your \"\"box\"\". Inside your box, you have assets (bank, savings, cash, etc) and liabilities (credit cards, unpaid debts, etc). Money can flow into and out of either asset or liability accounts, for example: deposit a payment (income to asset), buy office supplies with cash (asset to expense), pay a bill with credit card (liability to expense), customer pays one of your debts directly (income to liability). Paying off a debt with an asset does not affect your overall net worth, so paying a check to your credit card bill (asset to liability) doesn't decrease your total balance, it merely moves the value from one bucket to another. Now to your question: Mandatory payments, such as taxes or insurance (or for that matter, utilities, rent, food- all things that \"\"must\"\" be bought occasionally) are not liabilities, instead they are all expenses. They might be paid FROM a liability account, if they are paid on credit for example, but the money still flows from liability to expense. In my own records I have Expense:Taxes and Expense:Insurance, with sub-accounts in each. Where the money comes from depends entirely on how I pay my bills, whether from cash or banks (asset) or whether it's a charge (liability). Sometimes you receive payments back from an insurance company. I find that rather than treating insurance premiums as a positive balance in a liability (with eventual payments as debits to the liability account), it is better to treat any payment from the insurance as income. Hope that helps!\"", "title": "" }, { "docid": "a3ac3834ecfdcdd0f6bcca73ae4e4620", "text": "First: great job on getting it together. This is good for your family in any respect I can think of. This is a life long process and skill, but it will pay off for you and yours if you work on it. Your problem is that you don't seem to know where you money goes. You can't decide how whacky your expenses are until you know what they are. Looking at just your committed expenses and ignore the other stuff might be the problem here. You state that you feel you live modestly, but you need to be able to measure it completely to decide. I would suggest an online tool like mint.com (if you can get it in your country) because it will go back for 90 days and get transactions for you. If you primarily work in cash, this isn't helpful, but based on your credit card debt I am hoping not. (Although, a cash lifestyle would be good if you tend to overspend.) Take the time and sort your transactions into categories. Don't setup a budget, just sort them out. I like to limit the number of categories for clarity sake, especially to start. Don't get too crazy, and don't get too detailed at first. If you buy a magazine at the grocery store, just call it groceries. Once you know what you spend, then you can setup a budget for the categories. If somethings are important, create new categories. If one category is a problem, then break it down and find the specific issue. The key is that you budget not be more than you earn but also representative of what you spend. Follow up with mint every other day or every weekend so the categorization is a quick and easy process. Put it on your iPhone and do it at every lunch break. Share the information with your spouse and talk about it often.", "title": "" }, { "docid": "c2f1af82ec34f7a5bba61ccb8a7d35d8", "text": "I concur with pretty much what everyone else said. Let me break it down in a concrete plan of action. First, though, note that at least the minimum payments for the credit cards needs to be on this list of fixed expenses. Also, you have $868 remaining in a normal month -- food could be $500 or more easily for a family, so find out how much! Adding in just those 2 things, and you're already at your max. And there are other expenses in life. Ok, cutting from the top: DirectTv -- gone. Pure luxury, and between netflix, hulu and your internet connection (hook your computer to the tv), there's no need for it. $80 savings. Cell phones -- you're already moving in the right direction, but not far enough. In a financial crunch why does your stay-at-home wife have a cell? Especially when she could just as easily use Google Voice for free? Both plans gone, replaced by one of the prepaids @$45. $105 savings, total $186 savings. 529 plans -- Of course you want to save for your kids college, but it doesn't help them for you to drown financially. Gone until your credit card debit is too. $50 savings, $236 total. Ok, we're already up to $236/month in savings just cutting items you don't need. That probably gets you back into the black, but why stop there? Trimming expenses Electric -- ok, I know it's summer, but can you cut this back? Is the thermostat set as high as you can comfortably bear? Are you diligent in turning of lights, especially incandescent? Do you turn off your computer when you're not using it? See if you can get the Electric down by 10%. That's $20/month savings. Doesn't seem like much, but it adds up. Gas -- same with gas. Do you have gas hot water? If so, cut shower length. Saves on water too. Food -- this one you didn't list. But as I said, you could be spending $500 or $600 a month easily for a family. Do you guys plan meals, and thus plan shopping trips? If not, do it. You'll be surprised how much you can save. Either way, 10% reduction should be doable. That's $50/month. If you don't plan now, 20% is within reach -- that's $100/month. Ok, that may have added as much as $130 or so. If so, you're now up to $366/month savings. That's like a 15% raise. Simply cutting, however, is only half the plan. You want to improve your situation, so you can get the Directtv back (assuming you'll even want it at that point), and the wife's cell phone, for starters. To do that, you've got to nail down that debt. I figure you've got minimum $567.23/month in debt payments. That's not including your mortgage, and including an assumed $80/month minimum credit card payments. You pay over 21% of your take-home to short term and consumer debt! Yea, that's why you're hurting. Here's what you do In both cases, apply the extra payments entirely to one balance at a time. Pick either the smallest balance (psychologically best because you quickly see a loan & it's payment dissappear), or the highest interest (mathematically the best). Roll each regular payment that's paid off into the extra debt payments. You didn't list total debt balances, but you did say you had $4000 in credit card debt. Applying an extra $250/month to debt (out of that $366 savings), plus two extra paychecks of $1300 each, is $5600/year paid off. In under a year, you could have those credit cards paid off, and likely that window loan too. Start the 529s again, but keep going paying down the rest. When you have the car paid off, bring back the wife's cell (you and I both know that's going to be #1 on the list :) ), then finish off those student loans. Then bask in the extra $567/month - 21% of your income - you'll have in sweet, sweet green cash!", "title": "" }, { "docid": "2fc79b65310eb6cba590a08089bf4016", "text": "Try the Envelope Budgeting System. It is a pretty good system for managing your discretionary outflows. Also, be sure to pay yourself first. That means treat savings like an expense (mortgage, utilities, etc.) not an account you put money in when you have some left over. The problem is you NEVER seem to have anything leftover because most people's lifestyle adjusts to fit their income. The best way to do this is have the money automatically drafted each month without any action required on your part. An employer sponsored 401K is a great way to do this.", "title": "" } ]	fiqa
c8012d835ea03344e46f27c639721f91	Can signing up at optoutprescreen.com improve my credit score?	[ { "docid": "1ddda70de337511f0f0ffc086d383ae8", "text": "If I had a business and was able to claim a feature, I would. It's simple marketing. If in fact, opting out helped your score, the site would promote that feature. Soft pulls for prescreened offers are not counted. No more than my constant peek at my score through Credit Karma. Opt out, if you wish. The benefit of course is less mail, which saves trees. Less risk of identity theft, someone can take the application and try to forge from there. Less risk of an infected paper cut opening this mail (don't ask.) I am a compulsive mail shredder, so I peek and these and shred. A year ago I received an offer of $30,000 zero interest, max transfer fee $50. I sent the entire sum to my 5% mortgage. Now I refinanced and paying that back. It saved me $1500 over the year. Too much trouble for some, but how long does it take to make $1500? For 40% of this country's families, that's a week's pay. The monthly extra bill didn't bother me. This last paragraph is an anecdote, not so much addressing question. I did that first.", "title": "" }, { "docid": "c803561568b67f80cf544bb6e9a77e2a", "text": "Sounds like a case of false causality. If somebody is taking the time to sign up at opt out sites, then that same person is probably making other smart decisions with their credit, causing scores to rise. Optoutprescreen.com does not help your score, the other actions taken might. People seeing different results can probably be tied to the timeframe they signed up. People who signed up then took care of their credit vs. people whose credit was already good and then signed up. A 10 pt bounce one way or the other is not significant.", "title": "" }, { "docid": "54a3e172d8094f26bd7c5bf0f788a1de", "text": "Some credit checks are ignored as part of the scoring process. Some companies will pull your info, to make sure you haven't become a risk. Others will inquire before they send you an offer. Since you didn't initiate the inquiry it can't impact your score.", "title": "" }, { "docid": "6441fcef6c61db1345c14d3330bfc4bb", "text": "Unsolicited credit checks like that don't affect your credit score. Those checks only count if they result from you applying for credit somewhere. So No.", "title": "" }, { "docid": "fe4dfb6aee2e80172a6ada4b541093e6", "text": "\"If you are the type of person that gets drawn in to \"\"suspect\"\" offers, then it is conceivable that if you are not signing the services offered your credit would be improved as your long term credit strengthens and the number of new lines of credit are reduced. But if you just throw it all away anyway then it is unlikely to help improve your score. But there is no direct impact on your credit score.\"", "title": "" } ]	[ { "docid": "6d9b3337e729789a861beafbf9167475", "text": "\"I wrote How Old is Your Credit Card? some time ago. The answer is yes, this helps the credit score, but this factor, age of accounts, is pretty minimal. Grabbing deals, as you did, I'm actually down to a \"\"C\"\" for this part of my score, but still maintain a 770 score.\"", "title": "" }, { "docid": "b7ebf0118a25197053642a73d8a221f2", "text": "Credit Score is rather misleading, each provider of credit uses their own system to decide if they wish to lend to you. They will also not tell you how the combine all the factoring together. Closing unused account is good, as it reduced the risk of identity theft and you have less paperwork to deal with. It looks good if a company that knows you will agrees to give you more credit, as clearly they think you are a good risk. Having more total credit allowed on account is bad, as you may use it and not be able to pay all your bills. Using all your credit is bad, as it looks like you are not in control. Using a “pay day lender” is VERY bad, as only people that are out of control do so. Credit cards should be used for short term credit paying them off in full most months, but it is OK to take advantage of some interest free credit.", "title": "" }, { "docid": "30896bb83843311d354c67952e993188", "text": "This is a good idea, but it will barely affect your credit score at all. Credit cards, while a good tool to use for giving a minor boost to your credit score and for purchasing things while also building up rewards with those purchases, aren't very good for building credit. This is because when banks calculate your credit report, they look at your long-term credit history, and weigh larger, longer-term debt much higher than short-term debt that you pay off right away. While having your credit card is better than nothing, it's a relatively small drop in the pond when it comes to credit. I would still recommend getting a credit card though - it will, if you haven't already started paying off a debt like a student or car loan, give you a credit identity and rewards depending on the credit card you choose. But if you do, do not ever let yourself fall into delinquency. Failing to pay off loans will damage your credit score. So if you do plan to get a credit card, it is much better to do as you've said and pay it all off as soon as possible. Edit: In addition to the above, using a credit card has the added benefit of having greater security over Debit cards, and ensures that your own money won't be stolen (though you will still have to report a fraudulent charge).", "title": "" }, { "docid": "7272a66bfcb146100e122085b2ec6a24", "text": "From what I have heard on Clark Howard if you pay your balance off before the statement's closing date it will help your utilization score. He has had callers confirm this but I don't have first hand knowledge for this to be true. Also this will take two months to make the difference. So it will be boarder line if you will get the benefit in time. Sign up for credit karma if you like. You can get suggestions on how to help your score.", "title": "" }, { "docid": "a9be848b4054ffe1f5af563fcd6422f6", "text": "\"First of all, whatever you do, DON'T PAY! Credit reporting agencies operate on aged records, and paying it now will most certainly not improve your score. For example, let's say that you had an unpaid debt that was reported as a \"\"charge-off\"\" to the credit bureaus. After, say, six months, the negative effect on your score is reduced. It is reduced even further after a year or two, and after two years, the negative effect on your score is negligible. Now, say you were to pay the debt after the two years. This would \"\"refresh\"\" the record, and show as a \"\"paid charge-off\"\". Sure, now it shows as paid, but it also shows the date of the record as being today, which increases the effect on your credit drastically. In other words, you would have just shot yourself in the foot, big-time. As others have noted, the best option is to dispute the item. If, for some reason, it isn't removed, you are allowed to submit an annotation to the item, explaining your side of the story. Anyone pulling your credit record would see this note, which can help you in some instances. In any case, these scam artists don't deserve your money. Finally, you should check who is the local ombusdman, and report this agent to them. She could lose her license for such a practice.\"", "title": "" }, { "docid": "c3fcbad362ce5138359e0b7103fc7650", "text": "\"The comments section to Dilip's reply is overflowing. First - the OP (Graphth) is correct in that credit scoring has become a game. A series of data points that predicts default probability, but of course, offers little chance to explain why you applied for 3 loans (all refinancing to save money on home or rentals) got new credit cards (to get better rewards) and have your average time with accounts drop like a rock (well, I canceled the old cards). The data doesn't dig that deep. To discuss the \"\"Spend More With Plastic?\"\" phenomenon - I have no skin in the game, I don't sell credit card services. So if the answer is yes, you spend more with cards, I'll accept that. Here's my issue - The studies are all contrived. Give college students $10 cash and $10 gift cards and send them into the cafeteria. Cute, but it produces no meaningful data. I can tell you that when I give my 13yr old $20 cash, it gets spent very wisely. A $20 Starbucks card, and she's treating friends and family to lattes. No study needed, the result is immediate and obvious. Any study worth looking at would first separate the population into two groups, those who pay in full each month and those who carry a balance. Then these two groups would need to be subdivided to study their behavior if they went all cash. Not a simply survey, and not cheap to get a study of the number of people you need for meaningful data. I've read quotes where The David claimed that card users spend 10% more than cash users. While I accept that Graphth's concern is valid, that he may spend more with cards than cash, there is no study (that I can find) which correlates to a percentage result as all studies appear to be contrived with small amounts to spend. As far as playing the game goes - I can charge gas, my cable bill, and a few other things whose dollar amounts can't change regardless. (Unless you're convinced I'll gas up and go joy-riding) Last - I'd love to see any link in the comments to a meaningful study. Quotes where conclusions are stated but no data or methodology don't add much to the discussion. Edit - Do You Spend More with Cash or Credit? is an article by a fellow Personal Finance Blogger. His conclusion is subjective of course, but along the same path that I'm on with this analysis.\"", "title": "" }, { "docid": "3b85b08073b6dc0ad228b21d9f058959", "text": "\"Go ahead, switch banks (and checking accounts) as often as you like. It won't affect your credit score since any credit check will be a \"\"soft pull\"\" (unless you're establishing a credit card or loan -- or overdraft protection, then it could be a \"\"hard pull\"\" that could affect your credit score). Bad karma? Hardly. Unethical? Absolutely not. You don't owe them anything. Practically speaking, it'd be easier just to switch once to a bank that has a fee structure you can live with -- as long as they don't change the rules on you.\"", "title": "" }, { "docid": "ce31e7752ac62c2cb7cf8c6e0c236329", "text": "Simply staying out of debt is not a good way of getting a good credit score. My aged aunt has never had a credit card, loan or mortgage, has always paid cash or cheque for everything, never failed to pay her utility bills on time. Her credit score is lousy because she has never had any debts to pay off so there is no credit history data for her. To the credit checking agencies she barely exists. To get a good score (UK) then get a few debts and pay them off on time.", "title": "" }, { "docid": "cd95920332a53490541978e50e20cf44", "text": "By reducing your debt you will increase your borrowing capability which will only increase your credit score. But before you start worrying about your credit score as JoeTaxpayer says I would first stop paying 18+% to the bank.", "title": "" }, { "docid": "d4a55441f0643fe2f93e33c622a185ad", "text": "Equifax has a Single Use offering for $20 for their own score or $30 for the three big guy's reports. I am a fan of Credit Karma which offers a free service that reflects the FICO score as good as any you'd pay for. Since each reporting agency can vary slightly, Credit Karma will have a score that's in the same range. And it's pretty much real time.", "title": "" }, { "docid": "88fde363be152b7f7dd7406505cf9fb2", "text": "FICO score tracks credit, not checking or savings. Unless there was a credit line attached, no impact at all.", "title": "" }, { "docid": "2066d688f94920e45e8dae06fa2e778f", "text": "\"Build your credit history by paying the credit accounts you have on time. Review these periodically and close the ones you do not need. Ignore your score until it is time to make a large purchase. Make decisions regarding credit on the basis of whether the debit would be better paid with cash or credit. Not on credit score. Keep in mind that if your income is invested in your future, your money is working for you. The income that is paying debt is working for the lenders. Mint is a financial services industry company (Intuit). You are their product. Intuit makes money from Mint by placing ads on the site where you visit frequently, and by gathering data about those who subscribe to their service. They also are paid to refer you to credit card companies to \"\"build credit.\"\"\"", "title": "" }, { "docid": "a12dc2b41b55d618c68e2edc37f26e08", "text": "Yes you did opt into it. When you applied and were approved for any loan or credit card the terms stated they would give your payment details to credit bureaus. You didn’t explicitly give an okay to Experian but by getting that credit card or loan, well, you pretty much did opt in.", "title": "" }, { "docid": "1cae8e2b9cd5029a7a8833398c4085bf", "text": "You should. The impact on the credit score is small, and probably not worth the money of the annual fee. I would only change that if you plan to get a mortgage or car loan the next month - then wait until afterwards.", "title": "" }, { "docid": "cfc23c6e3d2e087ba14307e90558851f", "text": "Credit Sesame monitors your credit score for free. My understanding is that they make their money off of credit card referrals.", "title": "" } ]	fiqa
9ebec194ca99b57068b89452db53e23b	Buy home and leverage roommates, or split rent?	[ { "docid": "146939b11f6b5588c7c46d9512c63c47", "text": "what I should think about. If you decide to do this - get everything in writing. Get lease agreements to enforce the business side of the relationship. If they are not comfortable with that much formality, it's probably best not to do it, I'm not saying that you should not do this - but that you need to think about these type of scenarios before committing to a house purchase.", "title": "" }, { "docid": "e011dc3ef7050eef49523dae333606da", "text": "\"...instead of all of us draining our money into a landlord... Instead, you are suggesting that still everyone (except you) will drain their money into a landlord, just that now the landlord is you. I guess what that really means is that you will need to have landlord tenant agreements between you and your roommates. When things break or need replacing you'll have to foot the bill and as your tenants, your \"\"roomies\"\" might not be too forgiving when things need fixing. When the fridge breaks down, you'll have to buy a new one immediately. Yard work is your sole responsibility, unless you offer discounted rent or other perks. What about service bills: energy, water, sewage, internet, television, etc?\"", "title": "" }, { "docid": "15d1ca497dfc22d7af0ebe893732281e", "text": "\"There is a term for this. If you google \"\"House Hacking\"\" you will get lots of articles and advice. Some of it will pertain to multifamily properties but a good amount should be owner occupied and renting bedrooms. I would play with a mortgage calculator like Whats My Payment. Include Principle, interest, taxes and insurance see how much it will cost. At 110k your monthly fixed payments will depend on a number of factors (down payment, interest, real estate tax rate and insurance cost) but $700-$1000 would be a decent guess in my area. Going off that with two roommates willing to pay $500 a month you would have no living expenses except any maintenance or utilities. With your income I would expect you could make the payment alone if needed (and it may be needed) so it seems fairly low risk from my perspective. You need somewhere to live you are used to roommates and you can pay the entire cost yourself in a worst case. Some more things to consider.. Insurance will be more expensive, you want to ensure you as the landlord you are covered if anything happens. If a tenant burns down your house or trips and falls and decides to sue you insurance will protect you. Capital Expenses (CapEx) replacing things as they wear out. On a home the roof, siding, flooring and all mechanicals(furnace, water heater, etc.) have a lifespan and will need to be replaced. On rental properties a portion of rent should be set aside to replace these things in the future. If a roof lasts 20yrs,costs $8,000 and your roof is 10years old you should be setting aside $70 a month so in the future when this know expense comes up it is not a hardship. Taxes Yes there is a special way to report income from an arrangement like this. You will fill out a Schedule E form in addition to your regular tax documents. You will also be able to write off a percent of housing expenses and depreciation on the home. I have been told it is not a simple tax situation and to consult a CPA that specializes in real estate.\"", "title": "" }, { "docid": "62e4e23c542eb03876d301f4dbd2584b", "text": "I've done this, both as one of the renters and (in a different house) as the landlord. I had roommates I had not lived with before though. It's definitely doable, but can get awkward. Some advice in no particular order Make sure you can afford the house on your own. This avoids the awkward situation of making you financially dependent on your friends. Also, it shouldn't be a problem for a 110k house on a 70k salary. Set the rent below market rates. The arrangement should be financially beneficial to everyone, not just yourself. Expect your roommates to leave eventually. These days people will go where job opportunities take them.", "title": "" }, { "docid": "3e9e86ac01d4a1cf9c385233bb713435", "text": "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.", "title": "" }, { "docid": "1386cee591652b86149fce9fc4447bfa", "text": "Mixing friendship and money, whether that's loans or landlording, is risky. Often things work out, but sometimes the unexpected happens, and it doesn't. If things go wrong, are you prepared to walk away from either the friendship or the money? After you've considered that, the next question is how your roommates feel about the deal. You're looking to charge your friends $2000 to rent part of a property that, from the sound of it, they could rent much cheaper from a stranger. Maybe the market is different in Cleveland, but in my area, I'd expect to pay $2000 in rent for a place worth closer to $300,000 than $100,000. Have your roommates expressed interest in the idea, and have you discussed dollar values with them? Are you still interested if they ended up paying $1600 in rent? $1000?", "title": "" } ]	[ { "docid": "9dcde1f44c58e9694cf6dd845c37d03b", "text": "Having someone else paying you rent is always going to be the better deal financially. The question is, what does $450k buy in the neighborhood in which you want to live, vs $800k? I'm going to assume you can afford either option (buying a $450k home and not selling, or an $800k home and selling your current one) whether someone's paying you rent or not. Let's make up some numbers here; a $450k home, financed 80/20 (360k principal) at 4% for 30 years will cost you about $1720 in P&I payments per year (plus escrows such as RE taxes, PMI, and homeowners insurance where applicable). An $800k home financed 80/20 (640k principal) at 4% for 30yr will give you payments of about $3,055/mo before taxes and insurance. So, the worst case overall is that you buy a 450k home in the new neighborhood and are not, at any given time, collecting rent on the old property. That would (assuming the mortgage terms on both home loans were comparable) cost you $3440/mo and you'd be living in a $450k home in a neighborhood where 450k may not buy a home as nice as the one you moved out of. The question as I stated above is this; assuming you had a reliable tenant in your home for the entire remaining life of the loan on your current home, which is more acceptable to you: buying $450k of home (which might be a downgrade in sqft or amenities) and paying $2020 in P&I, or paying about a grand more ($3055/mo) for a much nicer home in the new location? Strictly from a money perspective, the renter is going to be the best option, IF you get reliable tenancy for the entire life of the mortgage on that house; you'll be paying $2020/mo for 30 years, which is $727,200, to end up with $950k of total home value (plus adjustments for actual home value appreciation/depreciation). That's the only way you'll come out ahead on any mortgage; have someone else pay most of it for you. If you don't rent, the $800k home will cost you $1,099,800, while two $450k homes will cost you $1,454,400. The percentage of home value over total payments for the 800k home would be 72% (you will have paid 137% of the value of the home), while you will have paid 153% of the value of two 450k homes.", "title": "" }, { "docid": "c4e4d18eeb2f79ae8f96b4938e906628", "text": "\"all the other answers are spot on, but look at it this way. really all you mean when you say \"\"building equity\"\" is \"\"accumulating wealth\"\". if that is the goal, then having her invest the money in a brokerage (e.g. ira) account makes a lot more sense. if you can't afford the apartment without her, then you can't afford to pay out her portion of the equity in the future. which means she is not building equity, you are just borrowing money from her. the safest and simplest thing for you to do is to agree on a number that does not include \"\"equity\"\". to be really safe, you might want to both sign something in writing that says she will never have an equity stake unless you agree to it in writing. it doesn't have to be anything fancy. in fact, the shorter the better. i am thinking about 3 sentences should do the trick. if you feel you absolutely have to borrow money from her on a monthly basis to afford your mortgage, then i recommend you make it an unsecured loan. just be sure to specify the interest rate (even if it is zero), and the repayment terms (and ideally, late payment penalties). again, nothing fancy, 10 sentences maybe. e.g. \"\"john doe will borrow x$ per month, until jane doe vacates the apartment. after such time, john doe will begin repaying the loan at y$ per month....\"\" that said, borrowing money from friends and family almost never turns out well. at the very least, you need to save up a few months of rent so that if you do break up, you have time to find another roommate. disclaimer: i do not have any state-issued professional licenses.\"", "title": "" }, { "docid": "6950d92f340ffdb328d15afac8299aba", "text": "BLUF: Continue renting, and work toward financial independence, you can always buy later if your situation changes. Owning the house you live in can be a poor investment. It is totally dependent on the housing market where you live. Do the math. The rumors may have depressed the market to the point where the houses are cheaper to buy. When you do the estimate, don't forget any homeowners association fees and periodic replacement of the roof, HVAC system and fencing, and money for repairs of plumbing and electrical systems. Calculate all the replacements as cost over the average lifespan of each system. And the repairs as an average yearly cost. Additionally, consider that remodeling will be needful every 20 years or so. There are also intangibles between owning and renting that can tip the scales no matter what the numbers alone say. Ownership comes with significant opportunity and maintenance costs and is by definition not liquid, but provides stability. As long as you make your payments, and the government doesn't use imminent domain, you cannot be forced to move. Renting gives you freedom from paying for maintenance and repairs on the house and the freedom to move with only a lease to break.", "title": "" }, { "docid": "455e162cab382ba74e9f038ced8896a8", "text": "My primary concerns. There seems to still be a fair bit of distressed property (forclosures etc) on the market at current, which might well keep prices down for the next year or so that it takes to finish flushing that stuff out of the market. The gist I get from most experts/pundits is that There will be good deals around for while to come still I'd advise you wait. Go ahead and do the math to figure out what total you WOULD be paying would be, and charge yourself that much a mohth for rent in your current place, pocketing the difference in a savings account. You'll be able to get a feeling for what it's like to live with that kind of house payment, and if you can do it sans any room-mate (something you can't always count on) If you can manage it, then you have a much more realistic idea of what you can afford, AND you'll have saved up a bunch of money to help with a down-payment in the process. If for example your Mortgage plus taxes and insurance ends up running around say $1450 a month, plus another $150 for the HOA, well then, that's charging yourself $1600 a month for your 'rent' which means $1000 per month going into the bank, in two years that's nearly the same as what you have now in the $401K, and you'd have a really good idea if you can afford that much per month in housing costs. If you are bound and determined to do this now, then here's a few other things to consider. You might to shop around a bit to see how typical those HOA fees are. Yeah you don't have the expense and hassle of needing to mow the lawn, paint the place etc but still, 150 a month translates to around another 1.5 mortgage payments a year. You might be able to get around PMI by splitting the mortgage into two pieces and doing a 'purchase money second' of around 15-20% and 75-70% of the value for the main mortgage. That way the LoanToValue on your primary loan is under 80%, which could be worthwhile even if the interest rate on that second loan is a little higher (at least it's deductible, paying PMI is just money lost to you) although trying to do any kind of creative financing these days is a lot trickier", "title": "" }, { "docid": "26756dc751c14860d859dbceebb51ea4", "text": "\"Living in one unit of a multi-family while renting out the others, although not without its risks, can be a viable (if gradual) way to build wealth. It's been rebranded recently as \"\"house hacking\"\", but the underlying mechanics have been around for many years (many cities in the Northeast in particular remain chock full of neighborhoods of 3-family homes built and used for exactly that purpose for decades, though now frequently sub-divided into condos). It's true you'd need to borrow money, but there are a number of reasons why it's certainly at least worth exploring (which is what you seem to be asking -- should you bother doing the homework -- tl;dr: yes): And yes, you would be relying on tenants to meet your monthly expenses, including a mortgage bill that will arrive whether the other units are vacant or not. But in most markets, rental prices are far less volatile than home prices (from the San Francisco Federal Reserve): The main result from this decomposition is that the behavior of the price-rent ratio for housing mirrors that of the price-dividend ratio for stocks. The majority of the movement of the price-rent ratio comes from future returns, not rental growth rates. (Emphasis added) It's also important to remember that rental income must do more than just cover your mortgage -- there's lots of other expenses associated with a rental property, including insurance, taxes, maintenance, vacancy (an allowance for the periods when the property will be empty in between tenants), reserves for capital improvements, and more. As with any investment, it's all about whether the numbers work. (You mentioned not being interested in the \"\"upkeep work\"\", so that's another 8-10% off the top to pay for a property manager.) If you can find a property at an attractive price, secure financing on attractive terms, and can be reasonably confident that it will rent in the ballpark of 1.5-2% of the purchase price, then it might be a fine choice for you, assuming you are willing and able to handle the work of being a landlord -- something worth at least as much of your research time as the investment itself. It sounds like you're still a ways away from having enough for even an FHA down payment, which gives you a great opportunity to find and talk with some local folks who already manage rental properties in your area (for example, you might look for a local chapter of the national Real Estate Investment Association), to get a sense of what's really involved.\"", "title": "" }, { "docid": "638bd4fa6dd303bacc352bbf00a7f5bc", "text": "\"Let's start with income $80K. $6,667/mo. The 28/36 rule suggests you can pay up to $1867 for the mortgage payment, and $2400/mo total debt load. Payment on the full $260K is $1337, well within the numbers. The 401(k) loan for $12,500 will cost about $126/mo (I used 4% for 10 years, the limit for the loan to buy a house) but that will also take the mortgage number down a bit. The condo fee is low, and the numbers leave my only concern with the down payment. Have you talked to the bank? Most loans charge PMI if more than 80% loan to value (LTV). An important point here - the 28/36 rule allows for 8% (or more ) to be \"\"other than house debt\"\" so in this case a $533 student loan payment wouldn't have impacted the ability to borrow. When looking for a mortgage, you really want to be free of most debt, but not to the point where you have no down payment. PMI can be expensive when viewed that it's an expense to carry the top 15% or so of the mortgage. Try to avoid it, the idea of a split mortgage, 80% + 15% makes sense, even if the 15% portion is at a higher rate. Let us know what the bank is offering. I like the idea of the roommate, if $700 is reasonable it makes the numbers even better. Does the roommate have access to a lump sum of money? $700*24 is $16,800. Tell him you'll discount the 2yrs rent to $15000 if he gives you it in advance. This is 10% which is a great return with rates so low. To you it's an extra 5% down. By the way, the ratio of mortgage to income isn't fixed. Of the 28%, let's knock off 4% for tax/insurance, so a $100K earner will have $2167/mo for just the mortgage. At 6%, it will fund $361K, at 5%, $404K, at 4.5%, $427K. So, the range varies but is within your 3-5. Your ratio is below the low end, so again, I'd say the concern should be the payments, but the downpayment being so low. By the way, taxes - If I recall correctly, Utah's state income tax is 5%, right? So about $4000 for you. Since the standard deduction on Federal taxes is $5800 this year, you probably don't itemize (unless you donate over $2K/yr, in which case, you do). This means that your mortgage interest and property tax are nearly all deductible. The combined interest and property tax will be about $17K, which in effect, will come off the top of your income. You'll start as if you made $63K or so. Can you live on that?\"", "title": "" }, { "docid": "d4ac983d6ee94356118fbf13209c0313", "text": "\"Your lack of numbers makes the question a difficult read. What I'm hearing is \"\"I want a house requiring a mortgage 8X my income.\"\" This alone is enough to suggest it's a bad deal. On a personal note, when my wife and I bought our house, it was 2.5X our income. 20% down, so the mortgage was exactly 2X income. And my wife was convinced we were in over our heads. The use of a partner who will take a portion of the profit is interesting, but doesn't change the fact that you are proposing to live in a house that costs far too much for you. If you are determined to buy such a house, I'd suggest you do it with the plan to rent out a room or two to roommates. If you are living in an area where the cost of buying is so high, the demand for rentals is likely high as well. Absent a plan to bring ion more income, I see no good coming from this. Heed the warnings posted in the other two answers as well.\"", "title": "" }, { "docid": "a3296028085d2affa9301df284593e8e", "text": "\"Sister is putting down nothing, and paying sub-market rent. It looks to me like if she is assigned anything, it's a gift. You on the other hand, have put down the full downpayment, and instead of breaking even via fair rent, are feeding the property to the tune of $645/mo. In the old days, the days of Robert Allen's \"\"no money down\"\" it was common to see shared equity deals where the investor would put up the down payment, get 1/2 the equity build up, and never pay another dime. This deal reminds me of that, only you are getting the short end of the stick. \"\"you never think something will cause discourse\"\" - I hope you meant this sarcastically. The deal you describe? No good can come of it.\"", "title": "" }, { "docid": "ff94a74f6bff825a00d09b2a42624887", "text": "\"Have her chip in for the regular expenses, utilities, food, etc., and a bit for \"\"rent.\"\" Then tell her to be sure to deposit to her retirement account, preferably a matched 401(k). It's admirable to want her to build 'equity' but it's pretty convoluted. You can't actually give her ownership, and in the event you break up (I know you won't, but this is to help other readers) you'll have to pay her back a lump sum when she moves out. That might not be so easy.\"", "title": "" }, { "docid": "e5e682976d0a8348340ceb02e30e1170", "text": "\"I don't know how many people \"\"a ton\"\" is, but if you are getting more than, say, 6 people who are qualified to rent, you've priced it too low. Better to ask for $1200, and have a potential tenant haggle or ask you to reduce the price than to have 6 people want it for $900. It's worth it to run a credit report, and let that help you choose. I agree with Victor, a bidding war is appropriate for a house sale, not rental apartments. You didn't mention your country, but I'd be sure to find out the local laws regarding tenant choice. You may not (depending where you are) discriminate based on gender, sexual orientation, marital status, race, or religion.\"", "title": "" }, { "docid": "897b8449942ba103ae50e8cf868afa70", "text": "\"I will expand on Bacon's comment. When you are married, and you acquire any kind of property, you automatically get a legal agreement. In most states that property is owned jointly and while there are exceptions that is the case most of the time. When you are unmarried, there is no such assumption of joint acquisition. While words might be said differently between the two parties, if there is nothing written down and signed then courts will almost always assume that only one party owns the property. Now unmarried people go into business all the time, but they do so by creating legally binding agreements that cover contingencies. If you two do proceed with this plan, it is necessary to create those documents with the help of a lawyer. Although expensive paying for this protection is a small price in relation to what will probably be one of the largest purchases in your lives. However, I do not recommend this. If Clayton can and wants to buy a home he should. Emma can rent from Clayton. That rent could any amount the two agree on, including zero. If the two do get married, well then Emma will end up owning any equity after that date. If they stay together until death, it is likely that she (or her heirs) will own half of it anyway. Also if this house is sold, the equity pass into larger house they buy after marriage, then that will be owned jointly. If they do break up, the break up is clean and neat. Presumably she would have paid rent anyway, so nothing is lost. Many people run into trouble having to sell at a bad time in a relationship that coincides with a weak housing market. In that case, both parties lose. So much like Bacon's advice I would not buy jointly. There is no upside, and you avoid a lot of downside. Don't play \"\"house\"\" by buying a home jointly when you are unmarried.\"", "title": "" }, { "docid": "a32128b98056c92c64e095dc5a82e13e", "text": "\"Houses tend to appreciate more than condos. Houses are also more expensive. So it's a choice. You mention your girlfriend will be buying it with you. Take the time now to decide what will happen if you split up and put it in writing. Are you splitting the downpayment and mortgage 50/50? If not things can get complicated. Also consider home improvement costs, etc. If you think she is \"\"the one\"\" and you'll end up starting a family together, look at the location, nearby schools, etc. Sure, it may sound too early to be thinking about these things, but if you get a head start on finding a nice house you could save a lot of money and build a lot of equity with some smart decisions today.\"", "title": "" }, { "docid": "289ffa029d75f9233a18c3ccc3b0671f", "text": "\"I recommend reading What's the catch in investing in real estate for rent? and making a list of expenses. You have a known expense, the rent, and the assumption that it will rise a bit each year. If not each year, eventually the landlord will bump it, and on average, the rent should track inflation. The buy side is the complete unknown, especially to us here. The mortgage and taxes are just the beginning. My ongoing issue in the buy/rent debate is that it's easy to buy \"\"too big\"\" or at least far bigger that what you are renting. One extreme - a couple moves from their one bedroom apartment into their purchased 3BR home with far more space than they ever use. No need to paint the full picture of numbers, the house is a money pit, and they live for the house. Other end - Couple already renting a nice sized home, and they buy a similar one. They rent out the two spare bedrooms for 5 years until they have kids and want their privacy back. They bought smart, for less than market price, and from day one, the mortgage was lower than the rent they paid. By year 5, having sent the extra income to pay down the mortgage, they've paid down half the loan. As the kids come along, they refi to a new 30 yr fixed at 3.5%, and the payment is tiny compared to the rest of their budget. Simply put, the ratio of house price to rent for that same house is not a constant. When the ratio is high, it's time to rent. When it swings very low, it's worth considering a purchase. But the decision is never clear until every detail is known. The time may be perfect, and the day after you close, you lose your job, or in a good scenario, get a raise and are relocated. Just because you bought low yesterday, doesn't mean the market will pay you a good price today, it takes time for out-of-whack pricing to come back to normal. A simple question? Maybe. But we first need a lot of details to help you understand what you are considering.\"", "title": "" }, { "docid": "6cdc0588d6d9eead92d49ddb549ec3d1", "text": "\"I would strongly consider renting; as homes are often viewed by people as \"\"investments\"\" but in reality they are costs, just like renting. The time-frame for return is so long, the interest rate structure in terms of your mortgage payments; if you buy, you must be prepared to and willing to stay at minimum 7-10 years; because anything can happen. Hot markets turn cold. Or stale, and just the closing costs will cause it be less advantageous to renting. Before buying a property, ask yourself does it meet these 5 criteria: IDEAL I - Income; the property will provide positive cash flow through renters. D - Depreciation; tax savings. E - Equity; building equity in the property- the best way is through interest only loans. There is NO reason to pay any principle on any property purchase. You do 5 year interest only loans; keep your payments low; and build equity over time as the property price rises. Look how much \"\"principle\"\" you actually pay down over the first 7 years on a 30 year mortgage. Virtually Nil. A - Appreciation - The property will over time go up in value. Period. There is no need to pay any principle. Your Equity will come from this... time. L - Leverage; As the property becomes more valuable; you will have equity stake, enabling you to get higher credit lines, lines of equity credit, to purchase more properties that are IDEA. When you are RICH, MARRIED, and getting ready for a FAMILY, then buy your home and build it. Until then, rent, it will keep your options open. It will keep your costs low. It will protect you from market downturns as leases are typically only 1 year at most. You will have freedom. You will not have to deal with repairs. A new Water Heater, AC unit, the list goes on and on. Focus on making money, and when you want to buy your first house. Buy a duplex; rent it out to two tenants, and make sure it's IDEAL.\"", "title": "" }, { "docid": "92a7a528eaa4f83c37ae06739846b0d0", "text": "In international transfers there are quite a few charges that come into picture. 1. Your Bank's charges, you mentioned its GBP 20. 2. The Fx conversion margin. So your GBP 317.90 became 500 AUD 3. The Charges of St. George's. Normally it is recovered from Beneficiary. Typically it would show up as 2 entries, one credit for AUD 500 and second a debit. Typically in the range of AUD 10 to 25. However incaes of return, St George will deduct 2 charges from AUD 500; - The Original Charges for transfer that it would have recovered from Beneficiary. - Additional Return charges, again in the range of AUD 10 to 20. Thus the amount they would have sent back to your Bank would be less than AUD 500. Your Bank would have converted and possibly again charged you a return fee. Since these are cross border payments there is no regulation and Bank are free to charge as they please and at time do charge excess. What you can do is disptue with the Bank on the points that; - The Beneficiary account was not closed, and its a deficiency of service. - Request for an itemized statement as to what was the amount returned by St George.", "title": "" } ]	fiqa
92f1a0f03a23fec5fb5fe5b11b3e79ad	Auto Insurance: Adding another car to the existing policy (GEICO)	[ { "docid": "fea3ea7f147f19c235bfbfaee7241797", "text": "They'll refund your money (though maybe with a small service charge). I'm sure they regularly deal with new car sales gone wrong.", "title": "" }, { "docid": "f9c414bb0ddc3a7982c07c9669ca6805", "text": "tl;dr: Call them. I'd be very surprised if you have a problem. I used to have have a policy with Geico, and would pay for my car insurance 6 months at a time. About 2 months into my last period, I purchased a house. Unfortunately, Geico didn't offer homeowners insurance in my state, so I ended switching to another company that offered a better auto+home combined policy. Since I had already paid for 6 months of coverage, I figured I'd just be stuck being double-covered for 4 months. So, I didn't bother doing anything until the end of the 6 months and called them to cancel the auto-renewal thinking what I've already paid was a sunk cost. The asked me why I was canceling and I explained the situation and they backdated the cancellation to when I got my policy with the other company and Geico issued me a refund for the time there was overlap. Considering that they did that for a leaving customer, I'd expect them to be able to cancel the policy on a new car of a current paying customer with no issues.", "title": "" }, { "docid": "ba2f8787a328586887162d1b961d9d42", "text": "When adding a new or used car to the policy I have found that it is best to call the company in advance. I let them know I will be adding a car to the policy in the next few days, but I have no idea of the VIN or other info. I have a policy with a different company and they have told me that I am automatically covered as long as I provide the VIN and other details within 30 days. The next business day after the purchase I provide everything they need, and a new bill is generated. When removing a car from the policy it has worked the same way, a new bill is generated when removing the car. Depending on the timing and amounts they have either credited my account or sent a check. They should have no problem removing a car that was accidentally on the policy. It might be that they charge you a days coverage. When you call them about the refund, ask if the coverage for an additional vehicle is automatic, that way you don't have to provide the info until after you get the car home.", "title": "" } ]	[ { "docid": "2f86330a0791fa1a57fde3d4d94a2492", "text": "\"Without more specifics, yes, you should. The risk depends on your policy, but the impact is high. The actual requirement will depend on your state and the specific language in your policy. Some policies will provide full coverage if that driver has your permission to use the car. The cost of not complying can be substantial. If you live with your girlfriend, apply for a policy and fail to disclose her presence in your household, that could be construed as intent to fraud in some situations. Other companies will drop your coverage if they find out. You need to think long and hard before not answering a question posed by an insurance company with complete honesty. There are documented cases where families have lost out on thousands of dollars because someone checked the \"\"non-smoker\"\" box on a life insurance form, but the insurance company found a picture of the person smoking a cigar at a wedding.\"", "title": "" }, { "docid": "90e5c075808444b3079a84d19def23ea", "text": "\"There is an economic, a social and a psychological side to the decision whether to buy insurance or not, and if yes, which one. Economically, as you say already in your question, an insurance is on average a net loss for the insured. The key word here is \"\"average\"\". If you know that there are many cancer cases in your family buy health insurance by all means; it's a sound investment. If you are a reckless driver make sure you have extensive coverage on your liability insurance. But absent such extra risks: Independently of somebody's wealth insurance should be limited to covering catastrophic events. What is often overlooked is that the insurance by all means should really cover those catastrophic events. For example the car liability minimums in many states are not sufficient. The typical upper middle class person could probably pay the 15k/30k/10k required in Arizona with a loan on their house; but a really catastrophic accident is simply not covered and would totally ruin that person and their family. Insuring petty damage is a common mistake: economically speaking, all insurances should have deductibles which are as high as one could afford to pay without feeling too much pain. That \"\"pain\"\" qualification has an economical and a social aspect. Of course any risk which materialized is an economical damage of some kind; perhaps now I can't buy the PS4, or the diamond ring, or the car, or the house, or the island which had caught my eye. I could probably do all these things, just perhaps without some extras, even if I had paid for insurance; so if I don't want to live with the risk to lose that possibility I better buy insurance. Another economical aspect is that the money may not be available without selling assets, possibly on short notice and hence not for the best price. Then an insurance fee takes the role of paying for a permanent backup credit line (and should not be more expensive than that). The social aspect is that even events which wouldn't strictly ruin a person might still force them to, say, sell their Manhattan penthouse (no more parties!) or cancel their country club membership. That is a social pain which is probably to be avoided. Another socioeconomic aspect is that you may have a relationship to the person selling you the insurance. Perhaps he buys his car at your dealership? Perhaps he is your golf buddy? Then the insurance may be a good investment. It is only borderline bad to begin with; any benefits move the line into the profit zone. The psychological aspect is that an insurance buys peace of mind, and that often seems to be the most important benefit. A dart hits the flat screen? Hey, it was insured. Junior totals the Ferrari? Hey, it was insured. Even if the house burns down having fire insurance will be a consolation.\"", "title": "" }, { "docid": "bf6049ea982c6dc34eeb8fa8d6e68ac1", "text": "Some proportion of the costs of a policy have little to no relationship to miles driven. Think of costs of underwriting, and more especially sales/marketing/client acquisition costs (auto insurance isn't in the same league as non-term life insurance (where the commissions and other selling expenses typically exceed the first year's worth of premiums), but the funny TV ads and/or agent commissions aren't free), as well as general business overhead. Also, as noted by quid, some proportion of claim risk isn't correlated to distance covered (think theft, flood, fire, etc.). There are also differences in the miles that are likely to be driven by a non-commercial/vehicle-for-hire driver who puts 25k miles a year vs. one who puts 7k per year. The former is generally going to be doing more driving at higher speeds on less-congested freeways while the latter will be doing more of their driving on crowded urban roads. The former pattern generally has a lower expected value of claims both due to having fewer cars per road-mile, fewer intersections and driveways, and also having any given collision be more likely to result in a fatality (paralysis or other lifetime disability claims are generally going to exceed what the insurer would pay out on a fatality).", "title": "" }, { "docid": "58a6a39edd65caf7f2d8e61a547ac0ff", "text": "This answer should be taken as a counterpoint to Thevin S's excellent answer. I have comprehensive insurance on my vehicle. That is, if I crashed it and wrote it off, my insurance would cover the replacement costs. Now, if this happened, I would be able to deal with the replacement costs myself, even without insurance. It would not significantly impact my lifestyle and would not put my emergency funds at risk, though obviously I wouldn't be happy about this. As the insurance company is planning on making money off of me, it's clearly not in my financial best interests to carry this insurance. Statistically speaking, it's a cost to me, and a profit for the insurance company. So why do I do it? Because I find it easy to pay a small amount of money every month for the peace of mind that, if I crash my car, I will not have to cover the large expense. I am (perhaps irrationally) risk averse. I'm happier paying a small amount of money in exchange for a guarantee that I will not have to pay a large amount of money. I mitigate a potentially larger cost, albeit with low likelihood, for the certainty of a smaller cost (my monthly insurance payments). This is separate from the mandatory PL/PD (public liability, public damage) insurance that I am required to cover. That insurance fits into Thevin's definition of a devastating event.", "title": "" }, { "docid": "1b1b091ad3601294c8caa7e4d1470b73", "text": "Your current insurance, but at full price, is available to you via COBRA. You can also look on your states exchange or the federal exchange for insurance. You generally will not get your new company to provide money for COBRA or a policy not offered by your employer. But you can always ask. I have known of some companies that will provide money or vacation days to employees that get their insurance via TRICARE (for retired military). Also you will have to watch open seasons. When you start with the new company you have 30 days to join their program. If you don't signup in time, you have to wait for either a life event, or the next open season - which only happens once a year. If COBRA runs out before you get the new insurance in place you will have a problem. Note that open season may lead the start of the new policy by weeks or months.", "title": "" }, { "docid": "94879e15d3965ff10dffe5aaac5ff8f4", "text": "Auto insurance is a highly personalized item, so depending on your driving record and other factors, $600 a month for full coverage may be as good as you can get. Look at the premium for each category, and consider raising the deductible if you have some savings that could be used in the event that you have a claim. Also, you're not only buying insurance to cover the other person's damage and medical expenses, you're paying for insurance for your car. Brand-new cars are more expensive to replace (and thus insure) than used cars. Leasing is effectively renting a car for a long period of time. While the payments are less, when the lease expires you're going to have to decide whether to give up the car or buying it, usually at a price much higher than market value. I'm glad you discovered that the insurance would break your budget before it's too late. My suggestion would be to look for a 1-2 year old car that's less expensive to buy and to insure.", "title": "" }, { "docid": "77d149c0576756ae84bb1c642dfd213d", "text": "Hey I used to do this for a job. having two separate policies is a bad idea. If you decide you need more life insurance just increase the one you currently have. There are usually discounts for having higher levels of cover. Not only that but if you have multiple policies all you're getting is the task of doing multiple claims and maybe some additional policy fees depending on which companies you're looking at. What did you consider when deciding how much life insurance to take?", "title": "" }, { "docid": "88fe24cde05bf585956540896d85f314", "text": "There is nothing illegal about a vehicle being in one person's name and someone else using it. An illegal straw purchase usually applies to something where, for example, the purchaser is trying to avoid a background check (as with firearms) or is trying to hide assets, so they use someone else to make the purchase on their behalf to shield real ownership. As for insurance, there's no requirement for you to own a vehicle in order to buy insurance so that you can drive someone else's vehicle. In other words, you can buy liability coverage that applies to any vehicle you're operating. The long and short of it here is that you're not doing anything illegal or otherwise improper,but I give you credit for having the good morals for wanting to make sure you're doing the right thing.", "title": "" }, { "docid": "a126eabc0702abd8448d4555f3a2125b", "text": "I tend to agree with Rocky's answer. However it sounds like you want to look at this from the numbers side of things. So let's consider some numbers: I'm assuming you have the money to buy the new car available as cash in hand, and that if you don't buy the car, you'll invest it reasonably. So if you buy the new car today, you're $17K out of pocket. Let's look at some scenarios and compare. Assuming: If you buy the new car today, then after 1 year you'll have: If you keep the old car, after 1 year you get: After 2 years, you have: And after 3 years, you're at: Or in other words, nothing depletes the value of your assets faster than buying the new car. After 1 year, you've essentially lost $5K to depreciation. However, over the short term the immediate cost of the tires combined with the continued depreciation of the old car do reduce your purchasing power somewhat (you won't be able to muster $25K towards a new car without chipping in a bit of extra cash), and inflation will tend to drive the cost of the new car up as time goes on. So the relative gap between the value of your assets and the cost of the new car tends to increase, though it stays well below the $5k that you lose to depreciation if you buy the new car immediately. Which is something that you could potentially spin to support whichever side you prefer, I suppose. Though note that I've made some fairly pessimistic assumptions. In particular, the current U.S. inflation rate is under 1%, and a new car may depreciate by as much as 25% in the first year while older cars may depreciate by less than the 8% assumed. And I selected the cheapest new car price cited, and didn't credit the tires with adding any value to your old car. Each of those aspects tends to make continuing to drive the older car a better option than buying the new one.", "title": "" }, { "docid": "5d047c32af2e68df91707cccae2fdf08", "text": "Your basic point is correct; the savvy move is to use insurance only to cover losses that would be painful or catastrophic for you. Otherwise, self-insure. In the specific example of car insurance, you may be missing that it doesn't only cover replacement of the car, it also covers liability, which is a hundreds-of-thousands-of-dollars risk. The liability coverage may well be legally required; it may also be required as a base layer if you want to get a separate umbrella policy up to millions in liability. So you have to be very rich before this insurance stops making sense. In the US at least you can certainly buy car insurance that doesn't cover loss of the car, or that has a high deductible. And in fact, if you can afford to self-insure up to a high deductible, on average as you say that should be a good idea. Same is true of most kinds of insurance, a high deductible is best as long as you can afford it, unless you know you'll probably file a claim. (Health insurance in particular is weird in many ways, and one is that you often can estimate whether you'll have claims.) On our auto policy, the liability and uninsured motorist coverage is about 60% of the cost while damage to the car coverage is 40%. I'm sure this varies a lot depending on the value of your cars and how much you drive and driving record, etc. On an aging car the coverage for the car itself should get cheaper and cheaper since the car is worth less, while liability coverage would not necessarily get cheaper.", "title": "" }, { "docid": "f6d6d867df18c46705aed93236a501c2", "text": "\"In terms of how to make your decision, here are some considerations. Comprehensive insurance often covers other perils besides collision, including fire, theft, hail or other weather damage, additional liability coverage etc. It may be worth looking at your specific policy to see what is covered. No matter what you do, make sure you have some form of personal liability coverage in case you are sued (doesn't necessarily need to be through the auto policy). While it can make financial sense to drop comprehensive coverage once you can afford to self-insure against collision, this will only be the case if you are certain that you can set aside dedicated savings that you would only need to dip in to in the case of a collision or other major loss. For example, if you only have $5-$10,000 in the bank, and you happen to lose your job, and then the next month you happen to be hit in an accident and the car is totaled, could you afford to replace the car out of pocket? I would recommend looking at dropping comprehensive insurance as similar to a \"\"DNR\"\" (do not resuscitate) order for your car, i.e. under no circumstances would you choose repair the car were it totaled or damaged. For example, if your car's exterior were badly damaged in a hail storm (but still ran fine), would you pay $500 or more to repair it, or would you simply get a new car? Ultimately, this is going to be a judgement call based on how much financial risk you want to take on. Personally, I would continue to pay the extra $300 per year for now in order to insure a $6-8,000 asset (5% of the asset value) However, in the next few years the resale value of your car will continue to decline. If in a few years the car were worth $1,500, I would probably not pay the same $300 a year (or 20% of the asset's value). When you should make that choice depends on how many more years of service you expect to get from the car, which is a very localized question. Hope that helps!\"", "title": "" }, { "docid": "4b23ee969f1e4e4d90e43db4458c3090", "text": "\"The system of comparison and calculation of insurance rates seems completely and utterly flawed to me. Why would you group cars from different manufacturers together by arbitrarily defined factors such as weight and size? It is perfectly possible to have a big, heavy car with very low claims, while a small car can have a lot more claims. The response provided by Tesla seems similarly moronic. They claim that their car is being compared to the wrong types of car, but even if that were the case - so what? If the other cars you are being compared to are too cheap/slow/small, then you have obviously been assigned to the wrong group, and should be in another group with the bigger, more expensive cars, which I would gather are even more expensive to insure, and thus your car should be more expensive to insure. If an insurance company is providing insurance to 1000 Volvo XC 90 drivers and 1000 Tesla Model S drivers and they get 100 claims from the Volvo drivers costing them a total of $ 200,000, while they get 150 claims from the Tesla drivers totaling $ 300,000 during the same time period, obviously the Tesla should be 50 % more expensive to insure. That is literally how car insurance works. Here in Germany, every model of car is assigned a unique identifier (\"\"Typschlüsselnummer\"\", roughly translates as \"\"type number\"\" or \"\"type identifier\"\"). Insurance companies track which cars their clients own, and report condensed claims statistics for each model back to a central service provider, which then assigns an insurance group (Typklasse) to each car for each type of insurance (there are distinct, independent groups for liability, partial and comprehensive coverage) depending on the actual, measured per-car expenditures experienced by the insurance companies over the previous year. The insurance companies then feed that data back into their systems for their rate calculations.\"", "title": "" }, { "docid": "c9048eb76893166c8e8d1eacad92594e", "text": "Among the other fine answers, you might also consider that owning a vehicle outright will free you from the requirement to carry insurance on the vehicle (you must still carry insurance on yourself in most states).", "title": "" }, { "docid": "23e4a87d43219cca0d6b24be9ba1747d", "text": "If this happened, first you would be breaking the law for driving without insurance. Second, my uninsured motorists insurance would cover it. Third, your personal net worth is not zero. You are the owner of all those corporations which happen to own those assets. I could sue you and you would have to liquidate your stakes in those corporations. Your example is just saying someone doesn't have any assets if all their cash is tied up in stocks (equity ownership of corporations). If you're argument held true in court, no one could sue anyone successfully, because everyone would just put all their money in equities before a lawsuit.", "title": "" }, { "docid": "1dd8641f0761fc8c05b8578d0a237cb8", "text": "You could slip and fall in the shower tonight. Or you might never need it. Insurance is a hedge against risk. If the event has already occurred, you're uninsurable. If you and others would suffer if you have a bad accident and can't work, get it now.", "title": "" } ]	fiqa
e7b6c0359d7e0bb3240f62bb3e973fa9	Why might a brokerage firm stop offering a particular ETF commission free?	[ { "docid": "c2bdff4dc568acff61d69e43c42f0e50", "text": "\"Forbes has an article investigating this. Here are the key parts: On line at the bottom of the list of funds there is an entire screen of grey-faded micro print which includes this telling disclosure: TD Ameritrade receives remuneration from certain ETFs (exchange-traded funds) that participate in the commission-free ETF program for shareholder, administrative and/or other services. In other words, TD Ameritrade is now enforcing a pay-to-play for their so-called commission-free exchange-traded funds. They are willing to forego their $6.95 trading commission in favor of remuneration directly from the ETF vendors. Because Vanguard refuses to pay such money to custodians, they are no longer being allowed to play. and Joseph Giannone, a TD Ameritrade spokesman, was quoted as saying, \"\"With any business decision, client needs are paramount, but the underlying economics of programs can’t be ignored. ... In line with industry practices, certain providers pay servicing, administrative or other fees. Vanguard elected not to be a part of the new program.\"\" So basically it sounds like Vanguard, and presumably iShares as well, were unwilling to pay TD Ameritrade to continue offering their ETFs commission-free.\"", "title": "" } ]	[ { "docid": "4f0896b4114a3e414cf3926afd207f86", "text": "\"I'm not sure which article you are referring to- if you are talking about the convergex article.... it literally describes what they did in the article. Tradeworx and software company thesys(both founded by manoj narang) provide data to the sec and function as market makes- they are highly respected and handle over 5% of us equity by volume. Their \"\"head people\"\" is manoj narang. I don't think he \"\"bailed out\"\". As you can read [here](https://research-doc.credit-suisse.com/docView?sourceid=em&document_id=x569866&serialid=lZPbU6l0cgAqB%2B1gg4uZFLk14dBwhfSb9lZ3%2BdmPHV4%3D) they are willing 53% of the trades they place everyday and have He has stated in an interview he wants to explore options trading. They were debunking myths because of the regulators wanted answers and at the time hft was not understood very well. Narang also testified at a senate committee[video here](https://youtu.be/NG47K41Q7KA)\"", "title": "" }, { "docid": "3fb4054783d74edb5a5d34db8ab34a4d", "text": "The expense ratio reduces the return of the ETF; your scenario of paying 100.0015 is that of a load. Most (all?) ETFs can be bought without paying a load (sales charge as a percent of amount invested), and some ETFs can be bought without paying a brokerage fee (fixed or variable charge for a buy transaction just like buying any other stock through the brokerage) because the brokerage has waived it. Your broker might charge fees for both buying and selling shares in an ETF, but in any case, this is quite separate from the expense ratio.", "title": "" }, { "docid": "e60c30bb513745a94722a086cfa2fad4", "text": "\"What you seem to want is a dividend reinvestment plan (DRIP). That's typically offered by the broker, not by the ETF itself. Essentially this is a discounted purchase of new shares when you're dividend comes out. As noted in the answer by JoeTaxpayer, you'll still need to pay tax on the dividend, but that probably won't be a big problem unless you've got a lot of dividends. You'll pay that out of some other funds when it's due. All DRIPs (not just for ETFs) have potential to complicate computation of your tax basis for eventual sale, so be aware of that. It doesn't have to be a show-stopper for you, but it's something to consider before you start. It's probably less of a problem now than it used to be since brokers now have to report your basis on the 1099-B in the year of sale, reducing your administrative burden (if you trust them to get it right). Here's a list of brokerages that were offering this from a top-of-the-search-list article that I found online: Some brokerages, including TD Ameritrade, Vanguard, Scottrade, Schwab and, to a lesser extent, Etrade, offer ETF DRIPs—no-cost dividend reinvestment programs. This is very helpful for busy clients. Other brokerages, such as Fidelity, leave ETF dividend reinvestment to their clients. Source: http://www.etf.com/sections/blog/23595-your-etf-has-drip-drag.html?nopaging=1 Presumably the list is not constant. I almost didn't included but I thought the wide availability (at least as of the time of the article's posting) was more interesting than any specific broker on it. You'll want to do some research before you choose a broker to do this. Compare fees for sure, but also take into account other factors like how soon after the dividend they do the purchase (is it the ex-date, the pay date, or something else?). A quick search online should net you several decent articles with more information. I just searched on \"\"ETF DRIP\"\" to check it out.\"", "title": "" }, { "docid": "a8ee72108c419026f12d8b8afe5bcc1b", "text": "Pretty sure the major retail brokerage firms require 25k to daytrade. Read the top comment. You will get crushed by commissions. There are commission free ETFs, but that's not the kind of investing you seem to want to learn about.", "title": "" }, { "docid": "c0b1aab11f4c933674933f8bcf85508c", "text": "The commission is per trade, there is likely a different commission based on the type of security you're trading, stock, options, bonds, over the internet, on the phone, etc. It's not likely that they charge an account maintenance fee, but without knowing what kind of account you have it's hard to say. What you may be referring to is a fund expense ratio. Most (all...) mutual funds and exchange traded funds will charge some sort of expense costs to you, this is usually expressed as a percent of your holdings. An index fund like Vanguard's S&P 500 index, ticker VOO, has a small 0.05% expense ratio. Most brokers will have a set of funds that you can trade with no commission, though there will still be an expense fee charged by the fund. Read over the ETrade fee schedule carefully.", "title": "" }, { "docid": "9c8e35e35c5f8ae1c2031f9cc2fee911", "text": "While you are correct that no broker-dealer ever qualifies for FDIC and it could be sufficient for customers to know that general rule, for broker-dealers located at or 'networked' with a bank -- and nowadays many probably most are -- these explicit statements that non-bank investments are not guaranteed by the bank or FDIC and may lose principal (often stated as 'may lose value') are REQUIRED; see http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=9093 .", "title": "" }, { "docid": "1b3a1c261d53dd4ae8b8a5c040be3858", "text": "Exactly. There's not unlimited points out there. Classic innovation cycle where at the end the returns are ultimately directly correlated to capital and it is not particularly profitable for most market participants. Incidentally, never understood why retail investors care about HFT. IF they squeeze a few basis points out of you getting in and out of a position, it's still way less than what brokers are taking you for. And if you're wearing it for years, should be basically noise relative to the overall performance.", "title": "" }, { "docid": "1c2fb38a15c99bf28d50cb7d0d6e7c5a", "text": "Merrill charges $500 flat fee to (I assume purchase) my untraded or worthless security. In my case, it's an OTC stock whose management used for a microcap scam, which resulted in a class action lawsuit, etc. but the company is still listed on OTC and I'm stuck with 1000s of shares. (No idea about the court decision)", "title": "" }, { "docid": "4b6b44831c59cf35dcdf3a81a0cb0e62", "text": "Where are you planning on buying this ETF? I'm guessing it's directly through Vanguard? If so, that's likely your first reason - the majority of brokerage accounts charge a commission per trade for ETFs (and equities) but not for mutual funds. Another reason is that people who work in the financial industry (brokerages, mutual fund companies, etc) have to request permission for every trade before placing an order. This applies to equities and ETFs but does not apply to mutual funds. It's common for a request to be denied (if the brokerage has inside information due to other business lines they'll block trading, if a mutual fund company is trading the same security they'll block trading, etc) without an explanation. This can happen for months. For these folks it's typically easier to use mutual funds. So, if someone can open an account with Vanguard and doesn't work in the financial industry then I agree with your premise. The Vanguard Admiral shares have a much lower expense, typically very close to their ETFs. Source: worked for a brokerage and mutual fund company", "title": "" }, { "docid": "893682084a5cd9dc30d884eb4ca6a379", "text": "\"Usually the new broker will take care of this for you. It can take a couple of weeks. If you are planning to go with Vanguard, you probably want to actually get an account at Vanguard, as Vanguard funds usually aren't \"\"No Transaction Fee\"\" funds with many brokers. If you are planning to invest in ETFs, you'll get more flexibility with a broker.\"", "title": "" }, { "docid": "328e74021b0c102be7c14691dbc428b8", "text": "What rules are being violated? What specific rule changes do you propose? The reason I ask is, because rule changes put into effect to prevent certain activities often have unintended and unforseen consequences. Several exchanges are enacting fees that will curb this activity. Essentially if you send over X number of quotes today, and get filled on less than Y% of them, you will be charged a fee of Z for each quote sent over X. The number of quotes X is in the six figure range, the fill rate Y is around 80%, and the fee is a mil or so. This effectively curbs behavior like this.", "title": "" }, { "docid": "9799afb70efd4be307d2728b08ac21ec", "text": "There usually would be a SEC investigation if this kind of behavior is noticed. One thing that bothers me about this article is that, in the midst of all the fear mongering, the author doesn't mention that quote stuffing is designed to screw over other HFT algorithms* and doesn't have any real impact on investors. Firms doing HFT frequently report this stuff to the SEC; for all we know, Goldman already did.", "title": "" }, { "docid": "c2071f544cb210bcd86f115eb46929cc", "text": "There is no margin call. Inverse ETFs use derivatives that would lose value in the case you describe though this doesn't force a margin call as you may be misunderstanding how these funds are constructed.", "title": "" }, { "docid": "4e81a16d71ce9afded1354fb5f5592f9", "text": "\"It looks like these types of companies have to disclose the health of their accounts to CFTC (Commodity Futures Trading Commission). That is the gist I get at least from this article about the traders that lost money due to the Swiss removing the franc’s cap against the euro. The article says about the U.S. retail FOREX brokerage: Most of FXCM’s retail clients lost money in 2014, according to the company’s disclosures mandated by the CFTC. The percentage of losing accounts climbed from 67 percent in the first and second quarters to 68 percent in the third quarter and 70 percent in the fourth quarter. Side note: The Swiss National Bank abandoned the cap on the currency's value against the euro in mid-January 2015. But above paragraph provides data on FXCM’s retail clients in 2014. It could consequently be concluded that, even without \"\"freak events\"\" (such as Switzerland removing the franc cap), it is more likely for an investor to NOT make a profit on the FOREX market. This is also in line with what \"\"sdfasdf\"\" and \"\"Dario Fumagalli\"\" say in their answers.\"", "title": "" }, { "docid": "071df86f32434f8df1a73e00cec448e1", "text": "It really depends on the hedge fund, my hedge fund gives back all rebates for routes that are public knowledge back to the client. Also the rebate is based on the route, not the stock, so it may not offset all expenses on each ETFs. Most of the BATS IEX and other routes have public websites where you can get the infos on what are the rebates for each.", "title": "" } ]	fiqa
34ab284fe0fb53801fd9f115ba35eb62	Can an S-Corp write off work and merchandise expenses donated to a non-profit organization?	[ { "docid": "bf38dce82645ae04c92ffe7f51c40d0a", "text": "An S-corp doesn't pay income tax -- taxation is pass-through. This being the case, there are no tax deductions it could take for charitable giving. The solution would be for you to make the contribution out of your own pocket and then personally claim the deduction on your own taxes.", "title": "" }, { "docid": "3ecb3c403e3a3186ddfa2c51db2b0c14", "text": "Yes. The S-Corp can deduct up to the amount it actually incurred in expenses. If your actual expenses to build the carport were $1000, then the $1000 would be deductible, and your business should be able to show $1000 in receipts or inventory changes. Note you cannot deduct beyond your actual expenses even if you would normally charge more. For example, suppose you invoiced the non-profit $2000 for the carport, and once the bill was paid you turned around and donated the $2000 back to the non-profit. In that case you would be deducting $1000 for your cost + $2000 donation for a total of $3000. But, you also would have $2000 in income so in the end you would end up with a $1000 loss which is exactly what your expenses were to begin with. It would probably be a good idea to be able to explain why you did this for free. If somehow you personally benefit from it then it could possibly be considered income to you, similar to if you bought a TV for your home with company funds. It would probably be cleaner from an accounting perspective if you followed through as described above- invoice the non-profit and then donate the payment back to them. Though not necessary, it could lesson any doubt about your motives.", "title": "" } ]	[ { "docid": "a59b47296b44e76628dfc4c7e943030e", "text": "The good news is that your parent organization is tax exempt and your local organization might be. The national organization even has guidelines and even more details. Regarding donations they have this to say: Please note: The law requires charities to furnish disclosure statements to donors for such quid pro quo donations in excess of $75.00. A quid pro quo contribution is a payment made partly as a contribution and partly for goods or services provided to the donor by the charity. An example of a quid pro quo contribution is when the donor gives a charity $100.00 in consideration for a concert ticket valued at $40.00. In this example, $60.00 would be deductible because the donor’s payment (quid pro quo contribution) exceeds $75.00. The disclosure statement must be furnished even though the deductible amount does not exceed $75.00. Regarding taxes: Leagues included under our group exemption number are responsible for their own tax filings with the I.R.S. Leagues must file Form 990 EZ with Schedule A if gross receipts are in excess of $50,000 but less than $200,000. Similar rules also apply to other youth organizations such as scouts, swim teams, or other youth sports.", "title": "" }, { "docid": "577e71f18a181d82dd8514aef826d53e", "text": "\"When you say \"\"donate\"\", it usually assumes charitable donation with, in this context, tax benefit. That is not what happens in your scenario. Giving someone money with the requirement of that someone to spend that money at your shop is not donation. It is a grant. You can do that, but you won't be able to deduct this as charitable donation, but the money paid to you back would be taxable income to you. I respectfully disagree with Joe that its a wash. It is not. You give them money that you cannot deduct as an expense (as it is not business expense) or donation (as strings are attached). But you do give them the money, it is no longer yours. When they use the money to pay you back - that same money becomes your taxable income. End result: you provide service, and you're the one paying (taxes) for it. Why would you do that?\"", "title": "" }, { "docid": "4a03266c8bf735a7316fe2d58e988bf6", "text": "Of course not. You had another job for which you earned money. What does the corporation have to do with it? Corporation is a separate entity from your person, and since it was in no way involved in the transaction - there's no justification to funnel money through it. Doing so may pierce the corporate veil and expose you to liability which you created the corporation to shield yourself from. Not to mention the tax evasion, which is the reason you are asking the question to begin with....", "title": "" }, { "docid": "69cae92454c28e2e4d04cda5494408f7", "text": "That's really not something that can be answered based on the information provided. There are a lot of factors involved: type of income, your wife's tax bracket, the split between Federal and State (if you're in a high bracket in a high income-tax rate State - it may even be more than 50%), etc etc. The fact that your wife didn't withdraw the money is irrelevant. S-Corp is a pass-through entity, i.e.: owners are taxed on the profits based on their personal marginal tax rates, and it doesn't matter what they did with the money. In this case, your wife re-invested it into the corp (used it to pay off corp debts), which adds back to her basis. You really should talk to a tax adviser (EA/CPA licensed in your State) to learn how S-Corps work and how to use them properly. Your wife, actually, as she's the owner.", "title": "" }, { "docid": "6b4a8a58510c0a359f5cf29ba9cb6373", "text": "I don't do corporate tax exclusively, but I don't think you're correct. The idea of pre-tax and post-tax earnings is significantly different from corporations than individuals since individuals see their taxes come out when they earn it and corporations pay taxes quarterly. At the very least, it's certainly not equivalent to a charitable contribution.", "title": "" }, { "docid": "4d9bdb78150f5089baeab672332d02d2", "text": "Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.", "title": "" }, { "docid": "abe8b5b68a0c31cf7d1413d9103a608d", "text": "\"The relevant IRS publication is 526, Charitable Contributions. The section titled \"\"Contributions you cannot deduct\"\" begins on page 6; item 4 reads: \"\"The value of your time or services.\"\" I read that to mean that, if the website you built were a product, you could deduct its value. I don't understand the legal distinction between goods and services I originally said that I believe that a website is considered a service. Whether a website is a service or a product appears to be much more controversial that I originally thought. I cannot find a clear answer. I'm told that the IRS has a phone number you can call for rulings on this type of question. I've never had to use it, so I don't know how helpful it is. The best I can come up with is the Instructions for Form 1120s, the table titled \"\"Principal Business Activity Codes,\"\" starting on page 39. That table suggests to me that the IRS defines things based on what type of business you are in. Everything I can find in that table that a website could plausibly fall under has the word \"\"service\"\" in its name. I don't really feel like that's a definitive answer, though. Almost as an afterthought, if you were able to deduct the value of the website, you would have to subtract off whatever the value of the advertisement is. You said that it's not much, but there's probably a simple way of estimating that.\"", "title": "" }, { "docid": "3a24e8c7fb56eacce57030b2d4d34c3c", "text": "For stocks, bonds, ETF funds and so on - Taxed only on realised gain and losses are deductible from the gain and not from company's income. Corporate tax is calculated only after all expenses have been deducted. Not the other way around. Real estate expenses can be deducted because of repairs and maintenance. In general all expenses related to the operation of the business can be deducted. But you cannot use expenses as willy nilly, as you assume. You cannot deduct your subscription to Playboy as an expense. Doing it is illegal and if caught, the tours to church will increase exponentially. VAT is only paid if you claim VAT on your invoices. Your situation seems quite complicated. I would suggest, get an accountant pronto. There are nuances in your situation, which an accountant only can understand and help.", "title": "" }, { "docid": "559b05e48a817e0e9841d2cc181a9a71", "text": "\"You are confusing entirely unrelated things. First the \"\"profit distribution\"\" issue with Bob's S-Corp which is in fact tax evasion and will probably trigger a very nasty audit. Generally, if you're the sole employee of your own S-Corp, and the whole S-Corp income is from your own personal services, as defined by the IRS - there's no profit there. All the net income from such a S-Corp is subject to SE tax, either through payroll or through your K-1. Claiming anything else would be lying and IRS is notorious for going after people doing that. Second - the reclassification issue. The reason employers classify employees as contractors is to avoid payroll taxes (which the IRS gets through Bob's S-Corp, so it doesn't care) and providing benefits (that is Bob's problem, not the IRS). So in the scenario above, the IRS wouldn't care whose employee Bob is since Bob's S-Corp would have to pay all the same payroll taxes. The reclassification is an issue when employees are abused. See examples of Fedex drivers, where they're classified as contractors and are not getting any benefits, spend their own money on the truck and maintenance, etc. The employees are the ones who sued for reclassification, but in this case the IRS would be interested as well since a huge chunk of payroll taxes was not paid (driver's net is after car maintenance and payments, not before as it would be if he was salaried). So in your scenario reclassification is not as much a concern to Bob as his tax evasion scheme claiming earnings from performing personal services as \"\"profits from S-Corp\"\". A precedent to look at, as I mentioned elsewhere, would be the Watson v Commissioner case.\"", "title": "" }, { "docid": "b2ec0e4cfbb63734217e34fd4fd9f04d", "text": "You are in business for yourself. You file Schedule C with your income tax return, and can deduct the business expenses and the cost of goods sold from the gross receipts of your business. If you have inventory (things bought but not yet sold by the end of the year of purchase), then there are other calculations that need to be done. You will have to pay income tax as well as Social Security and Medicare taxes (both the employee's share and the employer's share) on the net profits from this business activity.", "title": "" }, { "docid": "ac59ace4d85551d12cfedf3a65cd4df0", "text": "\"Your corporation would file a corporate income tax return on an annual basis. One single month of no revenue doesn't mean much in that annual scheme of things. Total annual revenue and total annual expenses are what impact the results. In other words, yes, your corporation can book revenues in (say) 11 of 12 months of the year but still incur expenses in all months. Many seasonal businesses operate this way and it is perfectly normal. You could even just have, say, one super-awesome month and spend money the rest of the year. Heck, you could even have zero revenue but still incur expenses—startups often work like that at first. (You'd need investment funding, personal credit, a loan, or retained earnings from earlier profitable periods to do that, of course.) As long as your corporation has a reasonable expectation of a profit and the expenses your corporation incurs are valid business expenses, then yes, you ought to be able to deduct those expenses from your revenue when figuring taxes owed, regardless of whether the expenses were incurred at the same approximate time as revenue was booked—as long as the expense wasn't the acquisition of a depreciable asset. Some things your company would buy—such as the computer in your example—would not be fully deductible in the year the expense is incurred. Depreciable property expenses are deducted over time according to a schedule for the kind of property. The amount of depreciation expense you can claim for such property each year is known as Capital Cost Allowance. A qualified professional accountant can help you understand this. One last thing: You wrote \"\"write off\"\". That is not the same as \"\"deduct\"\". However, you are forgiven, because many people say \"\"write off\"\" when they actually mean \"\"deduct\"\" (for tax purposes). \"\"Write off\"\", rather, is a different accounting term, meaning where you mark down the value of an asset (e.g. a bad loan that will never be repaid) to zero; in effect, you are recognizing it is now a worthless asset. There can be a tax benefit to a write-off, but what you are asking about are clearly expense deductions and not write-offs. They are not the same thing, and the next time you hear somebody using \"\"write off\"\" when they mean \"\"deduction\"\", please correct them.\"", "title": "" }, { "docid": "c11d1781a910fe53b160db6f0ac43cb5", "text": "The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate", "title": "" }, { "docid": "f348457c71a3f110b33448af70a9348d", "text": "Yes, the business can count that as an expense but you will need to count that as income because a computer = money.", "title": "" }, { "docid": "789c6ee5519a98310ca80232d15d7573", "text": "\"S-Corp is a corporation. I.e.: you add a \"\"Inc.\"\" or \"\"Corp.\"\" to the name or something of that kind. \"\"S\"\" denotes a specific tax treatment which may change during the lifetime of the corporation. It doesn't refer to a legal status.\"", "title": "" }, { "docid": "be257fcb0ae0253e58681c0f96f3d63a", "text": "\"The answer is \"\"Yes\"\", You can deduct them. As long as you showed that you put in effort to make a profit then you can deduct business expenses.\"", "title": "" } ]	fiqa
1cca99b5b560a4d662bf23b194d62527	What happens to my stocks when broker goes bankrupt?	[ { "docid": "593170265c0be45062f766d0aa0113b8", "text": "Here is my perception of the situation, obtained from reading Degiro's Client Agreement. If Degiro shuts down, it will notify you about the fact at least one month in advance, and you will have enough time to order a transfer of your positions to a different broker. If Degiro shuts down unexpectedly, your assets will remain to be held at SPV, a separate legal entity which Degiro uses to hold the financial instruments belonging to the clients. Since SPV does nothing else but holding the assets, it is very unlikely that something bad will happen with it on its own. With some help from Degiro and/or the regulator (AFM) you should be able to transfer your assets from SPV to a different custodian and broker and thus regain control over them. If you have a non-Custody account, you have slightly higher chances of losing your assets, because Degiro can borrow your securities held at SPV. If both the client for whom Degiro borrowed a security and Degiro itself go bankrupt at the same time, the lent security will not be returned to SPV, there will arise a shortage, which will be proportionally distributed among the accounts of the clients holding this particular security. However, then the investor compensation scheme should kick in and help you recover up to 20000 EUR of your losses.", "title": "" }, { "docid": "edd7c58449073fbfca72e3ec8921e2a8", "text": "If you are using a US broker, you are protected by SIPC up to $500,000. SIPC also oversees the liquidation of the broker itself, either by appointing a trustee, or by directly contacting clients. If they are able to transfer accounts to a healthy broker before bankruptcy, they will do so, but if not, you will need to file a claim with them.", "title": "" }, { "docid": "f801652ae312cec1b606290fab1e0261", "text": "+1 to YosefWeiner. Let me add: Legally, technically, or at least theoretically, when you buy stock through a broker, you own the stock, not the broker. The broker is just holding it for you. If the broker goes bankrupt, that has nothing to do with the value of your stock. That said, if the broker fails to transfer your shares to another broker before ceasing operation, it could be difficult to get your assets. Suppose you take your shoes to a shoe repair shop. Before you can pick them up, the shop goes bankrupt. The shoes are still rightfully yours. If the shop owner was a nice guy he would have called you and told you to pick up your shoes before he closed the shop. But if he didn't, you may have to go through legal gyrations to get your shoes back. If as his business failed the shop owner quit caring and got sloppy about his records, you might have to prove that those shoes are yours and not someone else's, etc.", "title": "" } ]	[ { "docid": "880dc263d442e52e728d24edec9faac6", "text": "\"When they entered Bankruptcy they changed their stock symbol from AAMR to AAMRQ. The Q tells investors that the company i in Bankruptcy. This i what the SEC says about the Q: \"\"Q\"\" Added To Stock Ticker Symbol When a company is involved in bankruptcy proceedings, the letter \"\"Q\"\" is added to the end of the company's stock ticker symbol. In most cases, when a company emerges from bankruptcy, the reorganization plan will cancel the existing equity stock and the old shares will be worthless. Given that risk, before purchasing stock in a bankrupt company, investors should read the company's proposed plan of reorganization. For more information about the impact of bankruptcy proceedings on securities, please read our online publication, Corporate Bankruptcy. The risks are they never recover, or that the old shares have nothing to do with new company. Many investors don't understand this. Recently some uninformed investors(?) tried to get a jump on the Twitter IPO by purchasing share of what they thought was Twitter but was instead the bankrupt company Tweeter Home Entertainment. Shares of Tweeter Home Entertainment, a Boston-based consumer electronics chain that filed for bankruptcy in 2007, soared Friday in a case of mistaken identity on Wall Street. Apparently, some investors confused Tweeter, which trades under the symbol TWTRQ, with Twitter and piled into the penny stock. Tweeter, which trades over the counter, opened at 2 cents a share and jumped as much as 15 cents — or 1,800 percent — before regulators halted trading. Almost 15 million shares had changed hands at that point, while the average daily volume is closer to 150,000. Sometimes it does happen that the new company does give some value to the old investors, but more often then not the old investors are completely wiped out.\"", "title": "" }, { "docid": "8a6619ef11534ca2524d1abac32a4a5c", "text": "The economic effect of a CFD from your point of view is very close to the effect of owning the stock. If the stock goes up, you make money. If it goes down you lose money. If it pays a dividend, you get that dividend. You'll typically pay commission for buying and selling the CFDs in a similar way to the commission on stock purchases, though one of the advertised advantages of CFDs is that the commission will be lower. They also often have tax advantages, for example in the UK you don't have to pay stamp duty on CFDs. In theory you are exposed to credit risk on the CFD issuer, which you aren't with the real stocks: if the issuer goes bankrupt, you may lose any money you have invested regardless of how well the stock has performed. It's certainly similar to a bet, but not much more so than investing directly in the stock. In practice the issuer of the CFDs is likely to hedge its own exposure by actually buying the underlying stocks directly, but they can aggregate across lots of contracts and they would tolerate some unhedged exposure to the stock, so they can cut down on the transaction fees. You also won't get the same voting rights as the underlying stock would grant you.", "title": "" }, { "docid": "5e2f5699a504ea2e548d65c08031701e", "text": "What drives the stock of bankrupt companies? The company's potential residual assets. When a company goes bankrupt it is required to sell its assets to pay off its debts. The funds raised from selling assets go to the following entities: The usual order of debt repayment, in terms of the lender, will be the government, financial institutions, other creditors (i.e. suppliers and utility companies), bondholders, preferred shareholders and, finally, common shareholders. Depending on the amount of debt and the value of a company's assets, the common shareholders may receive some left over from liquidated assets. This would drive the stock price of a bankrupt company.", "title": "" }, { "docid": "f744364c976f38ef461e3449e043a277", "text": "You seem to think that stock exchanges are much more than they actually are. But it's right there in the name: stock exchange. It's a place where people exchange (i.e. trade) stocks, no more and no less. All it does is enable the trading (and thereby price finding). Supposedly they went into mysterious bankruptcy then what will happen to the listed companies Absolutely nothing. They may have to use a different exchange if they're planning an IPO or stock buyback, that's all. and to the shareholder's stock who invested in companies that were listed in these markets ? Absolutley nothing. It still belongs to them. Trades that were in progress at the moment the exchange went down might be problematic, but usually the shutdown would happen in a manner that takes care of it, and ultimately the trade either went through or it didn't (and you still have the money). It might take some time to establish this. Let's suppose I am an investor and I bought stocks from a listed company in NYSE and NYSE went into bankruptcy, even though NYSE is a unique business, meaning it doesn't have to do anything with that firm which I invested in. How would I know the stock price of that firm Look at a different stock exchange. There are dozens even within the USA, hundreds internationally. and will I lose my purchased stocks ? Of course not, they will still be listed as yours at your broker. In general, what will happen after that ? People will use different stock exchanges, and some of them migth get overloaded from the additional volume. Expect some inconveniences but no huge problems.", "title": "" }, { "docid": "0494bdb49d2eeaa27c5df7da34298d7f", "text": "A market crash won't affect your cash held with your broker - however if the broker defaults (goes bankrupt), you may lose some or all of that cash. If you read the customer agreement that you signed when opening the account, it's very likely that there's a clause that stipulates that under certain circumstances, the broker has the right to use your cash and/or your positions without notice. If the broker default you may not be able to recover the assets they've been using. As an example, look at clause 14 of the Interactive Brokers US customer agreement. This is a fairly standard clause. Depending on your jurisdiction, you may have a partial or full legal protection against such an event (e.g. the SIPC protection for US-based brokers which would apply to you if your broker is IB LLC, even if you are not a US resident/citizen).", "title": "" }, { "docid": "86e438b21751aec4fe7f59a7bf147172", "text": "\"The only thing that makes a stock worthless is when the company goes out of business. Note that bankruptcy, by itself, does not mean the company is closing. It could successfully restructure its affairs and come out of bankruptcy with a better outlook. Being a small or unprofitable business may cause a company's to trade in the \"\"penny stock\"\" range, but there is still some value there. Since most dying companies will pass through the penny stock phase, you may be able to track down what you're looking for by finding companies who have been (or are about to be) delisted. Delisting is not death, it's just the point at which the company's shares no longer meet the qualifications to be traded on a particular exchange. If you find old stock certificates in your grandmother's sock drawer, they may be a treasure, or they may be worthless pieces of paper if the company changed its ownership and Grandma didn't know about it.\"", "title": "" }, { "docid": "c8573a8d7fb74832b7b1cc1f8d917b10", "text": "You are asking about what happens when an ETF/mutual fund company goes bankrupt. If you were asking about a bank account you would be asking about FDIC coverage. Investment funds are different, the closest thing to FDIC protection is provided by Securities Investors Protection Corporation (SIPC) SIPC was created under the Securities Investor Protection Act as a non-profit membership corporation. SIPC oversees the liquidation of member broker-dealers that close when the broker-dealer is bankrupt or in financial trouble, and customer assets are missing. In a liquidation under the Securities Investor Protection Act, SIPC and the court-appointed Trustee work to return customers’ securities and cash as quickly as possible. Within limits, SIPC expedites the return of missing customer property by protecting each customer up to $500,000 for securities and cash (including a $250,000 limit for cash only). SIPC is an important part of the overall system of investor protection in the United States. While a number of federal and state securities agencies and self-regulatory organizations deal with cases of investment fraud, SIPC's focus is both different and narrow: restoring customer cash and securities left in the hands of bankrupt or otherwise financially troubled brokerage firms. SIPC was not chartered by Congress to combat fraud. Although created under a federal law, SIPC is not an agency or establishment of the United States Government, and it has no authority to investigate or regulate its member broker-dealers. It is important to understand that SIPC is not the securities world equivalent of the Federal Deposit Insurance Corporation (FDIC), which insures depositors of insured banks.", "title": "" }, { "docid": "2c0d471b4475311dc5888b973e1ae327", "text": "\"Market makers, traders, and value investors would be who I'd suspect for buying the stock that is declining. Some companies stocks can come down considerably which could make some speculators buy the stock at the lower price thinking it may bounce back soon. \"\"Short sellers\"\" are out to sell borrowed stocks that if the stock is in free fall, unless the person that shorted wants to close the position, they would let it ride. Worthless stocks are a bit of a special case and quite different than the crash of 1929 where various blue chip stocks like those of the Dow Jones Industrials had severe declines. Thus, the companies going down would be like Apple, Coca-Cola and other large companies that people would be shocked to see come down so much yet there are some examples in recent history if one remembers Enron or Worldcom. Stocks getting delisted tend to cause some selling and there are some speculators may buy the stock believing that the shares may be worth something only to lose the money possibly as one could look at the bankrupt cases of airlines and car companies to study some recent cases here. Circuit breakers are worth noting as these are cases when trading may be halted because of a big swing in prices that it is believed stopping the market may cause things to settle down.\"", "title": "" }, { "docid": "962ea288290efde34f5522ca7d5171a9", "text": "Michael gave a good answer describing the transaction but I wanted to follow up on your questions about the lender. First, the lender does charge interest on the borrowed securities. The amount of interest can vary based on a number of factors, such as who is borrowing, how much are they borrowing, and what stock are they trying to borrow. Occasionally when you are trying to short a stock you will get an error that it is hard to borrow. This could be for a few reasons, such as there are already a large amount of people who have shorted your broker's shares, or your broker never acquired the shares to begin with (which usually only happens on very small stocks). In both cases the broker/lender doesnt have enough shares and may be unwilling to get more. In that way they are discriminating on what they lend. If a company is about to go bankrupt and a lender doesnt have any more shares to lend out, it is unlikely they will purchase more as they stand to lose a lot and gain very little. It might seem like lending is a risky business but think of it as occurring over decades and not months. General Motors had been around for 100 years before it went bankrupt, so any lender who had owned and been lending out GM shares for a fraction of that time likely still profited. Also this is all very simplified. JoeTaxpayer alluded to this in the comments but in actuality who is lending stock or even who owns stock is much more complicated and probably doesnt need to be explained here. I just wanted to show in this over-simplified explanation that lending is not as risky as it may first seem.", "title": "" }, { "docid": "45d30b6b15c3c64709ec89acf0a3ee0a", "text": "\"The correct answer to this question is: the person who the short sells the stock to. Here's why this is the case. Say we have A, who owns the stock and lends it to B, who then sells it short to C. After this the price drops and B buys the stock back from D and returns it to A. The outcome for A is neutral. Typically stock that is sold short must be held in a margin account; the broker can borrow the shares from A, collect interest from B, and A has no idea this is going on, because the shares are held in a street name (the brokerage's name) and not A. If A decides during this period to sell, the transaction will occur immediately, and the brokerage must shuffle things around so the shares can be delivered. If this is going to be difficult then the cost for borrowing shares becomes very high. The outcome for B is obviously a profit: they sold high first and bought (back) low afterwards. This leaves either C or D as having lost this money. Why isn't it D? One way of looking at this is that the profit to B comes from the difference in the price from selling to C and buying from D. D is sitting on the low end, and thus is not paying out the profit. D bought low, compared to C and this did not lose any money, so C is the only remaining choice. Another way of looking at it is that C actually \"\"lost\"\" all the money when purchasing the stock. After all, all the money went directly from C to B. In return, C got some stock with the hope that in the future C could sell it for more than was paid for it. But C literally gave the money to B, so how could anybody else \"\"pay\"\" the loss? Another way of looking at it is that C buys a stock which then decreases in value. C is thus now sitting on a loss. The fact that it is currently only a paper loss makes this less obvious; if the stock were to recover to the price C bought at, one might conclude that C did not lose the money to B. However, in this same scenario, D also makes money that C could have made had C bought at D's price, proving that C really did lose the money to B. The final way of seeing that the answer is C is to consider what happens when somebody sells a stock which they already hold but the price goes up; who did they lose out on the gain to? The person again is; who bought their stock. The person would buys the stock is always the person who the gain goes to when the price appreciates, or the loss comes out of if the price falls.\"", "title": "" }, { "docid": "de1c3721708671a47ab4ef8409f51c16", "text": "If the underlying is currently moving as aggressively as stated, the broker would immediately forcibly close positions to maintain margin. What securities are in fact closed depends upon the internal algorithms. If the equity in the account remains negative after closing all positions if necessary, the owner of the account shall owe the broker the balance. The broker will close the account and commence collections if the owner of the account does not pay the balance quickly. Sometimes, brokers will impose higher margin requirements than mandated to prevent the above eventuality. Brokers frequently close positions that violate internal or external margin requirements as soon as they are breached.", "title": "" }, { "docid": "bf9cc8de0e634c9df89f85e3e6c46311", "text": "Different brokerages have different house rules for margin requirements and margin calls. You will likely get a margin call giving you a small amount of time to deposit the required funds to bring your account balance up to the required margin requirements. In reality, a stock that falls from $50 to $4 in a short period will probably become unmarginable. In short, yes, you will owe the broker for the loss.", "title": "" }, { "docid": "843db0456e443311227525c4f76b1fb7", "text": "ETFs are legally separate from their issuer, so the money invested should (the lines can get blurry in a massive crisis) be inaccessible to any bankruptcy claims. The funds assets (its shares in S&P500 companies) are held by a custodian who also keeps these assets separate from their own book. That said, if no other institution takes over the SPY funds the custodian will probably liquidate the fund and distribute the proceeds to the ETF holders, this is likely a less than ideal situation for the holders as the S&P500 would probably not be at its highest levels if State Street is going bankrupt (not to mention the potential taxation).", "title": "" }, { "docid": "3bfc351c9143b98206dae397687e2531", "text": "\"Some stocks do fall to zero. I don't have statistics handy, but I'd guess that a majority of all the companies ever started are now bankrupt and worth zero. Even if a company does not go bankrupt, there is no guarantee that it's value will increase forever, even in a general, overall sense. You might buy a stock when it is at or near its peak, and then it loses value and never regains it. Even if a stock will go back up, you can't know for certain that it will. Suppose you bought a stock for $10 and it's now at $5. If you sell, you lose half your money. But if you hold on, it MIGHT go back up and you make a profit. Or it might continue going down and you lose even more, perhaps your entire investment. A rational person might decide to sell now and cut his losses. Of course, I'm sure many investors have had the experience of selling a stock at a loss, and then seeing the price skyrocket. But there have also been plenty of investors who decided to hold on, only to lose more money. (Just a couple of weeks ago a stock I bought for $1.50 was selling for $14. I could have sold for like 900% profit. Instead I decided to hold on and see if it went yet higher. It's now at $2.50. Fortunately I only invested something like $800. If it goes to zero it will be annoying but not ruin me.) On a bigger scale, if you invest in a variety of stocks and hold on to them for a long period of time, the chance that you will lose money is small. The stock market as a whole has consistently gone up in the long term. But the chance is not zero. And a key phrase is \"\"in the long term\"\". If you need the money today, the fact that the market will probably go back up within a few months or a year or so may not help.\"", "title": "" }, { "docid": "68091295b7fb6720774adf3dda051fda", "text": "It might be easiest to think of stock exchanges like brokers. If you buy a home, and your broker goes bankrupt, you still own your home, but you could not sell it without the aid of another broker. Same with stocks, you own the stocks you buy, but you would be unable to either purchase new stocks or sell your stock holdings without an exchange.", "title": "" } ]	fiqa
159c328c3a575f4d11c6c05135ae6d52	If a stock doesn't pay dividends, then why is the stock worth anything?	[ { "docid": "cfc47ffc8876a35795d33d3b1eec2905", "text": "It's important to remember what a share is. It's a tiny portion of ownership of a company. Let's pretend we're talking about shares in a manufacturing company. The company has one million shares on its register. You own one thousand of them. That means that you own 1/1000th of the company. These shares are valued by the market at $10 per share. The company has machinery and land worth $1M. That means that for every dollar of the company you own, 10c of that value is backed by the physical assets of the company. If the company closed shop tomorrow, you could, in theory at least, get $1 back per share. The other $9 of the share value is value based on speculation about the future and current ability of the company to grow and earn income. The company is using its $1M in assets and land to produce goods which cost the company $1M in ongoing costs (wages, marketing, raw cost of goods etc...) to produce and make $2M per year in sales. That means the company is making a profit of $1M per annum (let's assume for the sake of simplicity that this profit is after tax). Now what can the company do with its $1M profit? It can hand it out to the owners of the company (which means you would get a $1 dividend each year for each share that you own) or it can re-invest that money into additional equipment, product lines or something which will grow the business. The dividend would be nice, but if the owners bought $500k worth of new machinery and land and spent another $500k on ongoing costs and next year we would end up with a profit of $1.5M. So in ten years time, if the company paid out everything in dividends, you would have doubled your money, but they would have machines which are ten years older and would not have grown in value for that entire time. However, if they reinvested their profits, the compounding growth will have resulted in a company many times larger than it started. Eventually in practice there is a limit to the growth of most companies and it is at this limit where dividends should be being paid out. But in most cases you don't want a company to pay a dividend. Remember that dividends are taxed, meaning that the government eats into your profits today instead of in the distant future where your money will have grown much higher. Dividends are bad for long term growth, despite the rather nice feeling they give when they hit your bank account (this is a simplification but is generally true). TL;DR - A company that holds and reinvests its profits can become larger and grow faster making more profit in the future to eventually pay out. Do you want a $1 dividend every year for the next 10 years or do you want a $10 dividend in 5 years time instead?", "title": "" }, { "docid": "9842075b4cdeb667729dec1ebc42f941", "text": "Stephen's answer is the 100% correct one made with the common Economics assumption, that people are rational. A company that never has paid dividends, is still worth something to people because of its potential to start paying dividends later and it is often better to grow now and payoff later. However, the actual answer is much more disapointing, because people are not rational and the stock market is no longer about investing in companies or earning dividends. Most of the value of a stock is for the same reason that gold, stamps, coins and bitcoins, and Australian houses are worth anything, that is, because enough people say it is worth something. Even stocks that pay dividends, very few people buy it for dividends. They buy it because they believe someone else will be willing to buy it for slightly more, shortly after. Different traders have different timeframes, ranging from seconds to months. Houses and stock are of course partially valuable due to the fundamentals, but the major reason they are purchased is just to resell at a profit.", "title": "" }, { "docid": "597ca1be1e42819544c011da5e3bc91e", "text": "It seems to me that your main question here is about why a stock is worth anything at all, why it has any intrinsic value, and that the only way you could imagine a stock having value is if it pays a dividend, as though that's what you're buying in that case. Others have answered why a company may or may not pay a dividend, but I think glossed over the central question. A stock has value because it is ownership of a piece of the company. The company itself has value, in the form of: You get the idea. A company's value is based on things it owns or things that can be monetized. By extension, a share is a piece of all that. Some of these things don't have clear cut values, and this can result in differing opinions on what a company is worth. Share price also varies for many other reasons that are covered by other answers, but there is (almost) always some intrinsic value to a stock because part of its value represents real assets.", "title": "" }, { "docid": "f48115d3d43eea8f5b9323be4de730af", "text": "\"This is an excellent question, one that I've pondered before as well. Here's how I've reconciled it in my mind. Why should we agree that a stock is worth anything? After all, if I purchase a share of said company, I own some small percentage of all of its assets, like land, capital equipment, accounts receivable, cash and securities holdings, etc., as others have pointed out. Notionally, that seems like it should be \"\"worth\"\" something. However, that doesn't give me the right to lay claim to them at will, as I'm just a (very small) minority shareholder. The old adage says that \"\"something is only worth what someone is willing to pay you for it.\"\" That share of stock doesn't actually give me any liquid control over the company's assets, so why should someone else be willing to pay me something for it? As you noted, one reason why a stock might be attractive to someone else is as a (potentially tax-advantaged) revenue stream via dividends. Especially in this low-interest-rate environment, this might well exceed that which I might obtain in the bond market. The payment of income to the investor is one way that a stock might have some \"\"inherent value\"\" that is attractive to investors. As you asked, though, what if the stock doesn't pay dividends? As a small shareholder, what's in it for me? Without any dividend payments, there's no regular method of receiving my invested capital back, so why should I, or anyone else, be willing to purchase the stock to begin with? I can think of a couple reasons: Expectation of a future dividend. You may believe that at some point in the future, the company will begin to pay a dividend to investors. Dividends are paid as a percentage of a company's total profits, so it may make sense to purchase the stock now, while there is no dividend, banking on growth during the no-dividend period that will result in even higher capital returns later. This kind of skirts your question: a non-dividend-paying stock might be worth something because it might turn into a dividend-paying stock in the future. Expectation of a future acquisition. This addresses the original premise of my argument above. If I can't, as a small shareholder, directly access the assets of the company, why should I attribute any value to that small piece of ownership? Because some other entity might be willing to pay me for it in the future. In the event of an acquisition, I will receive either cash or another company's shares in compensation, which often results in a capital gain for me as a shareholder. If I obtain a capital gain via cash as part of the deal, then this proves my point: the original, non-dividend-paying stock was worth something because some other entity decided to acquire the company, paying me more cash than I paid for my shares. They are willing to pay this price for the company because they can then reap its profits in the future. If I obtain a capital gain via stock in as part of the deal, then the process restarts in some sense. Maybe the new stock pays dividends. Otherwise, perhaps the new company will do something to make its stock worth more in the future, based on the same future expectations. The fact that ownership in a stock can hold such positive future expectations makes them \"\"worth something\"\" at any given time; if you purchase a stock and then want to sell it later, someone else is willing to purchase it from you so they can obtain the right to experience a positive capital return in the future. While stock valuation schemes will vary, both dividends and acquisition prices are related to a company's profits: This provides a connection between a company's profitability, expectations of future growth, and its stock price today, whether it currently pays dividends or not.\"", "title": "" }, { "docid": "1fc75f7221b7f6989bcfc65a0566b4e9", "text": "\"If so, then if company A never pays dividends to its shareholders, then what is the point of owning company A's stock? The stock itself can go up in price. This is not necessarily pure speculation either, the company could just reinvest the profits and grow. Since you own part of a company, your share would also increase in value. The company could also decide to start paying dividend. I think one rule of thumb is that growing companies won't pay out, since they reinvest all profit to grow even more, but very large companies like McDonalds or Microsoft who don't really have much room left to grow will pay dividends more. Surely the right to one vote for company A's Board can't be that valuable. Actually, Google for instance neither pays dividend nor do you get to vote. Basically all you get for your money is partial ownership of the company. This still gives you the right to seize Google assets if you go bankrupt, if there's any asset left once the creditors are done (credit gets priority over equity). What is it that I'm missing? What you are missing is that the entire concept of the dividend is an illusion. There's little qualitative difference between a stock that pays dividend, and a stock that doesn't. If you were going to buy the stock, then hold it forever and collect dividend, you could get the same thing with a dividend-less stock by simply waiting for it to gain say 5% value, then sell 4.76% of your stock and call the cash your dividend. \"\"But wait,\"\" you say, \"\"that's not the same - my net worth has decreased!\"\" Guess what, stocks that do pay dividend usually do drop in value right after the pay out, and they drop by about the relative value of the dividend as well. Likewise, you could take a stock that does pay dividend, and make it look exactly like a non-paying stock by simply taking every dividend you get and buying more of the same stock with it. So from this simplistic point of view, it is irrelevant whether the stock itself pays dividend or not. There is always the same decision of whether to cut the goose or let it lay a few more eggs that every shareholder has to make it. Paying a dividend is essentially providing a different default choice, but makes little difference with regards to your choices. There is however more to it than simple return on investment arithmetic: As I said, the alternative to paying dividend is reinvesting profits back into the enterprise. If the company decided to pay out dividend, that means they think all the best investing is done, and they don't really have a particularly good idea for what to do with the extra money. Conversely, not paying is like management telling the shareholders, \"\"no we're not done, we're still building our business!\"\". So it can be a way of judging whether the company is concentrating on generating profit or growing itself. Needless to say the, the market is wild and unpredictable and not everyone obeys such assumptions. Furthermore, as I said, you can effectively overrule the decision by increasing or decreasing your position, regardless of whether they have decided to pay dividend to begin with. Lastly, there may be some subtle differences with regards to things like how the income is taxed and so on. These don't really have much to do with the market itself, but the bureaucracy tacked onto the market.\"", "title": "" }, { "docid": "abb4cdd47e8ddd5e34572e51cc065730", "text": "Shareholders can [often] vote for management to pay dividends Shareholders are sticking around if they feel the company will be more valuable in the future, and if the company is a target for being bought out. Greater fool theory", "title": "" }, { "docid": "34bbcb90aefee6b1b90f85ab10a1b6d5", "text": "While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time.", "title": "" }, { "docid": "0ca1c1d902376642b2036114196a52f8", "text": "Imagine that a company never distributes any of its profits to its shareholders. The company might invest these profits in the business to grow future profits or it might just keep the money in the bank. Either way, the company is growing in value. But how does that help you as a small investor? If the share price never went up then the market value would become tiny compared to the actual value of the company. At some point another company would see this and put a bid in for the whole company. The shareholders wouldn't sell their shares if the bid didn't reflect the true value of the company. This would mean that your shares would suddenly become much more valuable. So, the reason why the share price goes up over time is to represent the perceived value of the company. As this could be realised either by the distribution of dividends (or a return of capital) to shareholders, or by a bidder buying the whole company, the shares are actually worth something to someone in the market. So the share price will tend to track the value of the company even if dividends are never paid. In the short term a share price reflects sentiment, but over the long term it will tend to track the value of the company as measured by its profitability.", "title": "" }, { "docid": "8251000cc2c3e8b95abfb04205e6fcc7", "text": "\"The answer is Discounted Cash Flows. Companies that don't pay dividends are, ostensibly reinvesting their cash at returns higher than shareholders could obtain elsewhere. They are reinvesting in productive capacity with the aim of using this greater productive capacity to generate even more cash in the future. This isn't just true for companies, but for almost any cash-generating project. With a project you can purchase some type of productive assets, you may perform some kind of transformation on the good (or not), with the intent of selling a product, service, or in fact the productive mechanism you have built, this productive mechanism is typically called a \"\"company\"\". What is the value of such a productive mechanism? Yes, it's capacity to continue producing cash into the future. Under literally any scenario, discounted cash flow is how cash flows at distinct intervals are valued. A company that does not pay dividends now is capable of paying them in the future. Berkshire Hathaway does not pay a dividend currently, but it's cash flows have been reinvested over the years such that it's current cash paying capacity has multiplied many thousands of times over the decades. This is why companies that have never paid dividends trade at higher prices. Microsoft did not pay dividends for many years because the cash was better used developing the company to pay cash flows to investors in later years. A companies value is the sum of it's risk adjusted cash flows in the future, even when it has never paid shareholders a dime. If you had a piece of paper that obligated an entity (such as the government) to absolutely pay you $1,000 20 years from now, this $1,000 cash flows present value could be estimated using Discounted Cash Flow. It might be around $400, for example. But let's say you want to trade this promise to pay before the 20 years is up. Would it be worth anything? Of course it would. It would in fact typically go up in value (barring heavy inflation) until it was worth very close to $1,000 moments before it's value is redeemed. Imagine that this \"\"promise to pay\"\" is much like a non-dividend paying stock. Throughout its life it has never paid anyone anything, but over the years it's value goes up. It is because the discounted cash flow of the $1,000 payout can be estimated at almost anytime prior to it's payout.\"", "title": "" }, { "docid": "0e80debd630aed2f9bc1a63c7aade6a6", "text": "I haven't seen any of the other answers address this point – shares are (a form of) ownership of a company and thus they are an entitlement to the proceeds of the company, including proceeds from liquidation. Imagine an (extreme, contrived) example whereby you own shares in a company that is explicitly intended to only exist for a finite and definite period, say to serve as the producers of a one-time event. Consider a possible sequence of major events in this company's life: So why would the shares of this hypothetical company be worth anything? Because the company itself is worth something, or rather the stuff that the company owns is worth something, even (or in my example, especially) in the event of its dissolution or liquidation. Besides just the stuff that a company owns, why else would owning a portion of a company be a good idea, i.e. why would I pay for such a privilege? Buying shares of a company is a good idea if you believe (and are correct) that a company will make larger profits or capture more value (e.g. buy and control more valuable stuff) than other people believe. If your beliefs don't significantly differ from others then (ideally) the price of the companies stock should reflect all of the future value that everyone expects it to have, tho that value is discounted based on time preference, i.e. how much more valuable a given amount of money or a given thing of value is today versus some time in the future. Some notes on time preference: But apart from whether you should buy shares in a specific company, owning shares can still be valuable. Not only are shares a claim on a company's current assets (in the event of liquidation) but they are also claims on all future assets of the company. So if a company is growing then the value of shares now should reflect the (discounted) future value of the company, not just the value of its assets today. If shares in a company pays dividends then the company gives you money for owning shares. You already understand why that's worth something. It's basically equivalent to an annuity, tho dividends are much more likely to stop or change whereas the whole point of an annuity is that it's a (sometimes) fixed amount paid at fixed intervals, i.e. reliable and dependable. As CQM points out in their answer, part of the value of stock shares, to those that own them, and especially to those considering buying them, is the expectation or belief that they can sell those shares for a greater price than what they paid for them – irrespective of the 'true value' of the stock shares. But even in a world where everyone (magically) had the same knowledge always, a significant component of a stock's value is independent of its value as a source of trading profit. As Jesse Barnum points out in their answer, part of the value of stocks that don't pay dividends relative to stocks that do is due to the (potential) differences in tax liabilities incurred between dividends and long-term capital gains. This however, is not the primary source of value of a stock share.", "title": "" }, { "docid": "b48723be4cfd22c056c3bd1f60c6f2b5", "text": "Remember that long term appreciation has tax advantages over short-term dividends. If you buy shares of a company, never earn any dividends, and then sell the stock for a profit in 20 years, you've essentially deferred all of the capital gains taxes (and thus your money has compounded faster) for a 20 year period. For this reason, I tend to favor non-dividend stocks, because I want to maximize my long-term gain. Another example, in estate planning, is something called a step-up basis:", "title": "" }, { "docid": "a634c15180a16af1d8b1f91c2d4ef48e", "text": "Not sure how this has got this far with no obvious discussion about the huge tax advantages of share buy backs vs dividend paying. Companies face a very simple choice with excess capital - pay to shareholders in the form of a taxable dividend, invest in future growth where they expect to make more than $1 for every $1 invested, or buy back the equivalent amount of stock on the market, thus concentrating the value of each share the equivalent amount with no tax issues. Of these, dividends are often by far the worst choice. Virtually all sane shareholders would just rather the company put the capital to work or concentrate the value of their shares by taking many off the market rather than paying a taxable dividend.", "title": "" }, { "docid": "17afa73737a789d0d8c3f1ddca93da58", "text": "\"Stock has value to the buyer even if it does not currently pay dividends, since it is part ownership of the company (and the company's assets). The owners (of which you are now a part) hire managers to make a \"\"dividend policy decision.\"\" If the company can reinvest the profits into a project that would earn more than the \"\"minimum acceptable rate of return,\"\" then they should do so. If the company has no internal investment opportunities at or above this desired rate, then the company has an obligation to declare a dividend. Paying out a dividend returns this portion of profit to the owners, who can then invest their money elsewhere and earn more. For example: The stock market currently has, say, a 5% rate of return. Company A has a $1M profit and can invest it in a project with an expected 10% rate of return, so they should do so. Company B has a $1M profit, but their best internal project only has an expected 2% rate of return. It is in the owners' best interest to receive their portion of their company's profit as a dividend and re-invest it in other stocks. (Others have pointed out the tax deferrment portion of dividend policy, so I skipped that)\"", "title": "" }, { "docid": "55765f7687c9396197d73e17d5c30658", "text": "Since I'm missing the shortest and simplest answer, I'll add it: A car also doesn't offer dividends, yet it's still worth money. A $100 bill doesn't offer dividends, yet people are willing to offer services, or goods, or other currencies, to own that $100 bill. It's the same with a stock. If other people are willing to buy it off you for a price X, it's worth at least close to price X to you. In theory the price X depends on the value of the assets of the company, including unknown values like expected future profits or losses. Speaking from experience as a trader, in practice it's very often really just price X because others pay price X.", "title": "" }, { "docid": "66b78ec6a2bc58a7f7fcd823363ec278", "text": "\"You are missing the fact that the company can buy back its own shares. For simplicity, imagine the case that you own ALL of the shares of XYZ corporation. XYZ is very profitable, and it makes $1M per year. There are two ways to return $1M to you, the shareholder: 1) The company could buy back some fraction of your shares for $1M, or 2) The company could pay you a $1M dividend. After (1) you'd own ALL of the shares and have $1M. After (2) you'd own ALL of the shares and have $1M. After (1) the total number of shares would be fewer, but saying you owned less of XYZ would be like complaining that you are shorter when your height is measured in inches than in centimeters. So indeed, a buyback is an alternative to a dividend. Furthermore, buybacks have a number of tax advantages over dividends to taxable shareholders (see my answer in Can I get a dividend \"\"free lunch\"\" by buying a stock just before the ex-dividend date and selling it immediately after?). That said, it is important to recognize the shareholders who are less savvy about knowing when to accept the buyback (by correctly valuing the company) can get burned at the profit of the savvy shareholders. A strategy to avoid being burned if you aren't price savvy is simply to sell a fraction in order to get your pro rata share of the buyback, in many respects simulating a dividend but still reaping some (but not all) of the tax advantages of a buyback.\"", "title": "" }, { "docid": "0d133fdf8af7ed7e81a929aefa9fb736", "text": "The company gets it worth from how well it performs. For example if you buy company A for $50 a share and it beats its expected earnings, its price will raise and lets say after a year or two it can be worth around $70 or maybe more.This is where you can sell it and make more money than dividends.", "title": "" }, { "docid": "9a45963e72902ae54c1c2fc3a481ed44", "text": "Stocks represent partial ownership of the company. So, if you owned 51% of the stock of the company (and therefore 51% of the company itself), you could decide to liquidate all the assets of the company, and you would be entitled to 51% of the proceeds from that sale. In the example above, it would have to be Common Stock, as preferred stock does not confer ownership. In a situation where it is not possible to buy 51% or more of the company (for example, it's not for sale), this is not possible, so the value of the stock could be much less.", "title": "" }, { "docid": "d4f69ccdb76cbda9b9628b622c45fcca", "text": "There are two ways that an asset can generate value. One is that the asset generates some revenue (e.g. you buy a house for $100,000 and rent it out for $1,000 per month) and the second way is that the asset appreciates (e.g you buy a house for $100,000, you don't rent it out and 5 years later you sell it for $200,000). Stocks are the same.", "title": "" }, { "docid": "79bf429bfc703ac7f8068574ba1704cf", "text": "\"Most companies get taken over eventually. More to the point, ANY company with a public float over 50 percent that's large and viable enough to fall on people's radar screens will get taken over if its stock price is \"\"too low\"\" relative to its long term prospects. It is the possibility of a takeover, as much as anything else, that bolsters the stock prices of many companies, particularly those that don't pay dividends. In essence, the takeover price is just one large liquidating \"\"dividend.\"\"\"", "title": "" }, { "docid": "5ee820eda84b17c1564e86100cc24e34", "text": "Securities change in prices. You can buy ten 10'000 share of a stock for $1 each one day on release and sell it for $40 each if you're lucky in the future for a gross profit of 4010000 = 400'0000", "title": "" }, { "docid": "13741d54162a9c82b58e040a60a81243", "text": "There are two main ways you can make money through shares: through dividends and through capital gains. If the company is performing well and increasing profits year after year, its Net Worth will increase, and if the company continues to beat expectations, then over the long term the share price will follow and increase as well. On the other hand, if the company performs poorly, has a lot of debt and is losing money, it may well stop paying dividends. There will be more demand for stocks that perform well than those that perform badly, thus driving the share price of these stocks up even if they don't pay out dividends. There are many market participants that will use different information to make their decisions to buy or sell a particular stock. Some will be long term buy and hold, others will be day traders, and there is everything in between. Some will use fundamentals to make their decisions, others will use charts and technicals, some will use a combination, and others will use completely different information and methods. These different market participants will create demand at various times, thus driving the share price of good companies up over time. The annual returns from dividends are often between 1% and 6%, and, in some cases, up to 10%. However, annual returns from capital gains can be 20%, 50%, 100% or more. That is the main reason why people still buy stocks that pay no dividends. It is my reason for buying them too.", "title": "" } ]	[ { "docid": "3dec538745a844791c0d29d2cf8504b1", "text": "The market is not stupid. It realises that a company is worth less after paying out dividends than before paying them. (It's obvious, since that company has just given out part of its earnings.) So after a company pays out dividends, its stock price normally drops approximately by the amount paid. Therefore if you buy, get the dividend, and immediately sell, under normal conditions you won't make any profit.", "title": "" }, { "docid": "d03319e7e10d7777ab0af425341562df", "text": "Originally, stocks were ownership in a company just like any other business- you expected to make a profit from your investment, which is what we call dividends to stock holders. Since these dividends had real value, the stock price was based on what this return rate was, factoring in what it might be expected to be in the future, etc. Nowdays many companies never issue any dividends, so you have to consider the full value of the company and what benefit could be gained by another company if it were to acquire it. the market will likely adjust the share price to factor in what the value of the company might be to an acquirer. But otherwise, some companies today trading at an astronimical price, and which nevers pays a dividend- chalk it up to market stupidity. In this investor'd mind, there is no logical reason for these prices, except based on the idea that someone else might pay you more for it later... for what reason? I can't figure it out. Take it back to it's roots and imagine pitching a new business idea to you uncle to invest in- it will make almost nothing compared to it's share price, and even what it does make it won't pay anything to him for his investment. Why wouldn't he just laugh at you?", "title": "" }, { "docid": "f62a9c3ee1993096a454a0ac9195c842", "text": "\"Different stocks balance dividend versus growth differently. Some have relatively flat value but pay a strong dividend -- utility stocks used to be examples of that model, and bonds are in some sense an extreme version of this. Some, especially startups, pay virtually no dividends and aim for growth in the value of the stock. And you can probably find a stock that hits any point between these. This is the \"\"growth versus income\"\" spectrum you may have heard mentioned. In the past, investors took more of their return on investment as dividends -- conceptually, a share of the company's net profits for the year reflecting the share's status as partial ownership. If you wanted to do so, you could use the dividend to purchase more shares (via a dividend reinvestment plan or not), but that was up to you. These days, with growth having been strongly hyped, many companies have shifted much more to the growth model and dividends are often relatively wimpy. Essentially, this assumes that everyone wants the money reinvested and will take their profit by having that increase the value of their shares. Of course that's partly because some percentage of stockholders have been demanding growth at all costs, not always realistically. To address your specific case: No, you probably aren't buying Microsoft because you like its dividend rate; you're buying it in the hope it continues to grow in stock value. But the dividend is a bit of additional return on your investment. And with other companies the tradeoff will be different. That's one of the things, along with how much you believe in the company, that would affect your decision when buying shares in specific companies. (Personally I mostly ignore the whole issue, since I'm in index funds rather than individual stocks. Picking the fund sets my overall preference in terms of growth versus income; after that it's their problem to maintain that balance.)\"", "title": "" }, { "docid": "ba22f2742f109ebad589fa5564b85d94", "text": "1) What's the point of paying a dividend if the stock price automatically decreases? Don't the shareholders just break even? When the company earns cash beyond what is needed for expenses, the value of the firm increases. As a shareholder, you own a piece of that increased value as soon as the company earns it. When the dividend is paid, the value of the firm decreases, but you break even on the dividend transaction. The benefit to you in holding the company's shares is the continually increasing value, whether paid out to you, or retained. Be careful not to confuse the value of the firm with the stock price. The stock price is ever-changing, in the short-term driven mostly by investor emotion. Over the long term, by far the largest effect on stock price is earnings. Take an extreme, and simplistic example. The company never grows or shrinks, earnings are always the same, there is no inflation :) , and they pay everything out in dividends. By the reasoning above, the firm value never changes, so over the long-term the stock price will never change, but you still get your quarterly dividends.", "title": "" }, { "docid": "6202d7f2fffaf7bd921b783fa5b62878", "text": "The stock will slowly gain that $1 during the year. Suppose we have the highly theoretical situation that a company's stock is worth exactly $10 right after it paid its dividend, its dividend is always $1 per stock, and the company and everything else is so stable that its value never changes. Then the stock value right before the next dividend is paid will be close to $11 -- after all, it's worth a certain $1 dividend the next day, plus the $10 stock. And in between, half a year after the dividend was paid, it will be in between, say $10.50, or actually slightly less than that (because people like to buy in late so they can make money some other way with the money first). But the point holds -- the price decrease on the day that dividend is paid had been building up the whole period before that decrease. So stock dividends do make you money.", "title": "" }, { "docid": "a441a35f5ea8b2a32692d8b7d32d6a20", "text": "\"In financial theory, there is no reason for a difference in investor return to exist between dividend paying and non-dividend paying stocks, except for tax consequences. This is because in theory, a company can either pay dividends to investors [who can reinvest the funds themselves], or reinvest its capital and earn the same return on that reinvestment [and the shareholder still has the choice to sell a fraction of their holdings, if they prefer to have cash]. That theory may not match reality, because often companies pay or don't pay dividends based on their stage of life. For example, early-stage mining companies often have no free cashflow to pay dividends [they are capital intensive until the mines are operational]. On the other side, longstanding companies may have no projects left that would be a good fit for further investment, and so they pay out dividends instead, effectively allowing the shareholder to decide where to reinvest the money. Therefore, saying \"\"dividend paying\"\"/\"\"growth stock\"\" can be a proxy for talking about the stage of life + risk and return of a company. Saying dividend paying implies \"\"long-standing blue chip company with relatively low capital requirements and a stable business\"\". Likewise \"\"growth stocks\"\" [/ non-dividend paying] implies \"\"new startup company that still needs capital and thus is somewhat unproven, with a chance for good return to match the higher risk\"\". So in theory, dividend payment policy makes no difference. In practice, it makes a difference for two reasons: (1) You will most likely be taxed differently on selling stock vs receiving dividends [Which one is better for you is a specific question relying on your jurisdiction, your current income, and things like what type of stock / how long you hold it]. For example in Canada, if you earn ~ < $40k, your dividends are very likely to have a preferential tax treatment to selling shares for capital gains [but your province and specific other numbers would influence this]. In the United States, I believe capital gains are usually preferential as long as you hold the shares for a long time [but I am not 100% on this without looking it up]. (2) Dividend policy implies differences in the stage of life / risk level of a stock. This implication is not guaranteed, so be sure you are using other considerations to determine whether this is the case. Therefore which dividend policy suits you better depends on your tax position and your risk tolerance.\"", "title": "" }, { "docid": "972477431e58893d9d8e5cb7f9dea618", "text": "\"Most companies are taken over. One can reasonably guess that company X will be taken over for a price P, at some future point in time. Then the company has a value today, that is less than price P, by a large enough margin so that the investor will likely \"\"make out\"\" when the company finally is taken over at some unknown point in time. The exception is a company like Microsoft or Apple that basically grow too large to be taken over. But then they eventually start paying dividends when they become \"\"mature.\"\" Again, the trick, during the non-dividend paying period (e.g. ten or fifteen years ago) is to guess what dividends will be paid in some future time, and price the stock low enough today so that it will be worthwhile for the buyer.\"", "title": "" }, { "docid": "74f1a239bcc0d9bbad7d9f5ed35dbb9c", "text": "Dividends are normally paid in cash, so don't generally affect your portfolio aside from a slight increase to 'cash'. You get a check for them, or your broker would deposit the funds into a money-market account for you. There is sometimes an option to re-invest dividends, See Westyfresh's answer regarding Dividend Re-Investment Plans. As Tom Au described, the dividends are set by the board of directors and announced. Also as he indicated just before the 'record' date, a stock which pays dividends is worth slightly more (reflecting the value of the dividend that will be paid to anyone holding the stock on the record date) and goes down by the dividend amount immediately after that date (since you'd now have to hold the stock till the next record date to get a dividend) In general unless there's a big change in the landscape (such as in late 2008) most companies pay out about the same dividend each time, and changes to this are sometimes seen by some as 'indicators' of company health and such news can result in movement in the stock price. When you look at a basic quote on a ticker symbol there is usually a line for Div/yeild which gives the amount of dividend paid per share, and the relative yeild (as a percentage of the stock price). If a company has been paying dividends, this field will have values in it, if a company does not pay a dividend it will be blank or say NA (depending on where you get the quote). This is the easiest way to see if a company pays a dividend or not. for example if you look at this quote for Google, you can see it pays no dividend Now, in terms of telling when and how much of a dividend has been paid, most financial sites have the option when viewing a stock chart to show the dividend payments. If you expand the chart to show at least a year, you can see when and how much was paid in terms of dividends. For example you can see from this chart that MSFT pays dividends once a quarter, and used to pay out 13 cents, but recently changed to 16 cents. if you were to float your mouse over one of those icons it would also give the date the dividend was paid.", "title": "" }, { "docid": "a0562393c7da826282faa99246a978d7", "text": "You didn't identify the fund but here is the most obvious way: Some of the stocks they owned could had dividends. Therefore they would have had to pass them on to the investors. If the fund sold shares of stocks, they could have capital gains. They would have sold stocks to pay investors who sold shares. They also could have sold shares of stock to lock in gains, or to get out of positions they no longer wanted. Therefore a fund could have dividends, and capital gains, but not have an increase in value for the year. Some investors look at how tax efficient a fund is, before investing.", "title": "" }, { "docid": "3f55bb3f3499c894a67cb3c1ac0d20ce", "text": "If you assume the market is always 100% rational and accurate and liquid, then it doesn't matter very much if a company pays dividends, other than how dividends are taxed vs. capital gains. (If the market is 100% accurate and liquid, it also doesn't really matter what stock you buy, since they are all fairly priced, other than that you want the stock to match your risk tolerance). However, if you manage to find an undervalued company (which, as an investor, is what you are trying to do), your investment skill won't pay off much until enough other people notice the company's value, which might take a long time, and you might end up wanting to sell before it happens. But if the company pays dividends, you can, slowly, get value from your investment no matter what the market thinks. (Of course, if it's really undervalued then you would often, but not always, want to buy more of it anyway). Also, companies must constantly decide whether to reinvest the money in themselves or pay out dividends to owners. As an owner, there are some cases in which you would prefer the company invest in itself, because you think they can do better with it then you can. However, there is a decided tendency for C level employees to be more optimistic in this regard than their owners (perhaps because even sub-market quality investments expand the empires of the executives, even when they hurt the owners). Paying dividends is thus sometimes a sign that a company no longer has capital requirements intense enough that it makes sense to re-invest all of its profits (though having that much opportunity can be a good thing, sometimes), and/or a sign that it is willing, to some degree, to favor paying its owners over expanding the business. As a current or prospective owner, that can be desirable. It's also worth mentioning that, since stocks paying dividends are likely not in the middle of a fast growth phase and are producing profit in excess of their capital needs, they are likely slower growth and lower risk as a class than companies without dividends. This puts them in a particular place on the risk/reward spectrum, so some investors may prefer dividend paying stocks because they match their risk profile.", "title": "" }, { "docid": "8902641dac8b7763b3e5507219519d2c", "text": "\"You are overlooking the fact that it is not only supply & demand from investors that determines the share price: The company itself can buy and sell its own shares. If company X is profitable over the long haul but pays 0 dividends then either Option (2) is pretty ridiculous, so (1) will hold except in an extreme \"\"man bites dog\"\" kind of fluke. This is connected with the well-known \"\"dividend paradox\"\", which I discussed already in another answer.\"", "title": "" }, { "docid": "0ccdc6551bab3d553a85e58f297e935e", "text": "A share is more than something that yields dividends, it is part ownership of the company and all of its assets. If the company were to be liquidated immediately the shareholders would get (a proportion of) the net value (assets - liabilities) of the company because they own it. If a firm is doing well then its assets are increasing (i.e. more cash assets from profits) therefore the value of the underlying company has risen and the intrinsic value of the shares has also increased. The price will not reflect the current value of the firms assets and liabilities because it will also include the net present value of expected future flows. Working out the expected future flows is a science on par with palmistry and reading chicken entrails so don't expect to work out why a company is trading at a price so much higher than current assets - liabilities (or so much lower in companies that are expected to fail). This speculation is in addition to price speculation that you mention in the question.", "title": "" }, { "docid": "d17d924c5b82e1f761143e2f7cd919da", "text": "\"There is no numerical convention in finance that I have ever seen. If you look at statements or reports that measure growth when the starting value is negative or zero, you typically see \"\"n/a\"\" or \"\"-\"\" or \"\"*\"\" as the result. Any numerical result would be meaningless. Suppose you used 100% and another company had a legitimate 150% gain - where would the 100% change rank? What do my manager and investors expect to see? As a financial analyst - I would not want to see 100%. I would instead rather see something that indicates that the % change is meaningless. As an example, here's the WSJ documentation on change in Net Income: Net Income percent change is the change from the same period from a year ago. Percent change is not provided if either the latest period or the year-ago period contains a net loss. Thinking about it in another context: Yesterday you and your friend had no apples. Today you have 1 and your friend has 20. What percentage increase did you both have? Did you both have a 100% increase? How can you indicate that your friend had a larger \"\"increase\"\"? In that case (and in finance), the context needs to turn from a percentage increase to an absolute increase. A percentage increase is that scenario is meaningless.\"", "title": "" }, { "docid": "8b58cf19afffa931f223dcdf2e6a57a6", "text": "At this time I would say that the electric car industry as a whole is too new to be able to invest in it as a sector. There are only a handful of companies that focus solely on electric cars to create a moderately diverse portfolio, let alone a mutual fund. You can invest in mutual funds that include EV stocks as part of an auto sector or clean energy play, for example, but there's just not enough for an EV-only fund at this point. At this point, perhaps the best you can do if you want an exclusively EV portfolio is add some exposure to the companies that are the biggest players in the market and review the market periodically to see if any additional investments could be made to improve your diversification. Look at EV-only car makers, battery makers, infrastructure providers, etc. to get a decent balance of stocks. I would not put any more than 10% of your entire investment portfolio into any one stock, and not more than 20% or so in this sector.", "title": "" } ]	fiqa
ea2a374d00528fc949e5c29b3e8d2117	What are the primary investment strategies people use and why do they use them?	[ { "docid": "43efa4f1ce571c7f5ce6531d28dfee39", "text": "\"There are two umbrellas in investing: active management and passive management. Passive management is based on the idea \"\"you can't beat the market.\"\" Passive investors believe in the efficient markets hypothesis: \"\"the market interprets all information about an asset, so price is equal to underlying value\"\". Another idea in this field is that there's a minimum risk associated with any given return. You can't increase your expected return without assuming more risk. To see it graphically: As expected return goes up, so does risk. If we stat with a portfolio of 100 bonds, then remove 30 bonds and add 30 stocks, we'll have a portfolio that's 70% bonds/30% stocks. Turns out that this makes expected return increase and lower risk because of diversification. Markowitz showed that you could reduce the overall portfolio risk by adding a riskier, but uncorrelated, asset! Basically, if your entire portfolio is US stocks, then you'll lose money whenever US stocks fall. But, if you have half US stocks, quarter US bonds, and quarter European stocks, then even if the US market tanks, half your portfolio will be unaffected (theoretically). Adding different types of uncorrelated assets can reduce risk and increase returns. Let's tie this all together. We should get a variety of stocks to reduce our risk, and we can't beat the market by security selection. Ideally, we ought to buy nearly every stock in the market so that So what's our solution? Why, the exchange traded fund (ETF) of course! An ETF is basically a bunch of stocks that trade as a single ticker symbol. For example, consider the SPDR S&P 500 (SPY). You can purchase a unit of \"\"SPY\"\" and it will move up/down proportional to the S&P 500. This gives us diversification among stocks, to prevent any significant downside while limiting our upside. How do we diversify across asset classes? Luckily, we can purchase ETF's for almost anything: Gold ETF's (commodities), US bond ETF's (domestic bonds), International stock ETFs, Intl. bonds ETFs, etc. So, we can buy ETF's to give us exposure to various asset classes, thus diversifying among asset classes and within each asset class. Determining what % of our portfolio to put in any given asset class is known as asset allocation and some people say up to 90% of portfolio returns can be determined by asset allocation. That pretty much sums up passive management. The idea is to buy ETFs across asset classes and just leave them. You can readjust your portfolio holdings periodically, but otherwise there is no rapid trading. Now the other umbrella is active management. The unifying idea is that you can generate superior returns by stock selection. Active investors reject the idea of efficient markets. A classic and time proven strategy is value investing. After the collapse of 07/08, bank stocks greatly fell, but all the other stocks fell with them. Some stocks worth $100 were selling for $50. Value investors quickly snapped up these stocks because they had a margin of safety. Even if the stock didn't go back to 100, it could go up to $80 or $90 eventually, and investors profit. The main ideas in value investing are: have a big margin of safety, look at a company's fundamentals (earnings, book value, etc), and see if it promises adequate return. Coke has tremendous earnings and it's a great company, but it's so large that you're never going to make 20% profits on it annually, because it just can't grow that fast. Another field of active investing is technical analysis. As opposed to the \"\"fundamental analysis\"\" of value investing, technical analysis involves looking at charts for patterns, and looking at stock history to determine future paths. Things like resistance points and trend lines also play a role. Technical analysts believe that stocks are just ticker symbols and that you can use guidelines to predict where they're headed. Another type of active investing is day trading. This basically involves buying and selling stocks every hour or every minute or just at a rapid pace. Day traders don't hold onto investments for very long, and are always trying to predict the market in the short term and take advantage of it. Many individual investors are also day traders. The other question is, how do you choose a strategy? The short answer is: pick whatever works for you. The long answer is: Day trading and technical analysis is a lot of luck. If there are consistent systems for trading , then people are keeping them secret, because there is no book that you can read and become a consistent trader. High frequency trading (HFT) is an area where people basically mint money, but it s more technology and less actual investing, and would not be categorized as day trading. Benjamin Graham once said: In the short run, the market is a voting machine but in the long run it is a weighing machine. Value investing will work because there's evidence for it throughout history, but you need a certain temperament for it and most people don't have that. Furthermore, it takes a lot of time to adequately study stocks, and people with day jobs can't devote that kind of time. So there you have it. This is my opinion and by no means definitive, but I hope you have a starting point to continue your study. I included the theory in the beginning because there are too many monkeys on CNBC and the news who just don't understand fundamental economics and finance, and there's no sense in applying a theory until you can understand why it works and when it doesn't.\"", "title": "" }, { "docid": "bda3ef90192a9c5903b02085137489e8", "text": "Your question seems to be making assumptions around “investing”, that investing is only about stock market and bonds or similar things. I would suggest that you should look much broader than that in terms of your investments. Investment Types Your should consider (and include) some or all of the following for your investments, depending on your age, your attitude towards risk, the number of dependents you have, your lifestyle, etc. I love @Blackjack’s explanation of diversification into other asset classes producing a lower risk portfolio. Excellent! All the above need to be considered in this spread of risk, depending as I said earlier on your age, your attitude towards risk, the number of dependents you have, your lifestyle, etc. Stock Market Investment I’ll focus most of the rest of my post on the stock markets, as that is where my main experience lies. But the comments are applicable to a greater or lesser extent to other types of investing. We then come to how engaged you want to be with your investments. Two general management styles are passive investment management versus active investment management. @Blackjack says That pretty much sums up passive management. The idea is to buy ETFs across asset classes and just leave them. The difficulty with this idea is that profitability is very dependent upon when the stocks are purchased and when they are sold. This is why active investing should be considered as a viable alternative to passive investment. I don’t have access to a very long time frame of stock market data, but I do have 30 or so years of FTSE data, so let’s say that we invest £100,000 for 10 years by buying an ETF in the FTSE100 index. I know this isn't de-risking across a number of asset classes by purchasing a number of different EFTs, but the logic still applies, if you will bear with me. Passive Investing I have chosen my example dates of best 10 years and worst 10 years as specific dates that demonstrate my point that active investing will (usually) out-perform passive investing. From a passive investing point of view, here is a graph of the FTSE with two purchase dates chosen (for maximum effect), to show the best and worst return you could receive. Note this ignores brokerage and other fees. In these time frames of data I have … These are contrived dates to illustrate the point, on how ineffective passive investing can be, depending if there is a bear/bull market and where you buy in the cycle. One obviously wouldn’t buy all their stocks in one tranche, but I’m just trying to illustrate the point. Active Investing Let’s consider now active investing. I use the following rules for selling and buying:- This is obviously a very simple technical trading system and I would not recommend using it to trade with, as it is overly simplistic and there are some flaws and inefficiencies in it. So, in my simulation, These beat the passive stock market profit for their respective dates. Summary Passive stock market investing is dependent upon the entry and exit prices on the dates the transactions are made and will trade regardless of market cycles. Active stock market trading or investing engages with the market using a set of criteria, which can change over time, but allows one’s investments to be in or out of the market at any point in time. My time frames were arbitrary, but with the logic applied (which is a very simple technical trading methodology), I would suggest that any 10 year time frame active investing would beat passive investing.", "title": "" } ]	[ { "docid": "577d32a6386ae00278c2b00cdf53fbc9", "text": "\"I would change that statement to \"\"very few people can CONSISTENTLY beat the market \"\". Successful strategies will get piled into and reduce returns. Markets will pick up inefficiencies, but at the same time they do exists. Tons of interesting reading especially in regards to value. Is there a risk premium that we don't know for value? Or is it a market behavior thing?\"", "title": "" }, { "docid": "fca05efbdc5641fa55c112669d696760", "text": "I think the list could have added: - Save in regular intervals using the same strategy. Just to make sure that good old dollar cost averaging is thrown in. That's probably where most people go way wrong. Save money all year, dump it on a stock they like because some family friend investment expert said that 'apple prices will go up' with out explaining that you need to take advantage of mean reversion to help spread the risk.", "title": "" }, { "docid": "4e12ed80eefb5bca7e5891e488a49432", "text": "This is a very interesting question. I'm going to attempt to answer it. Use debt to leverage investment. Historically, stock markets have returned 10% p.a., so today when interest rates are very low, and depending on which country you live in, you could theoretically borrow money at a very low interest rate and earn 10% p.a., pocketing the difference. This can be done through an ETF, mutual funds and other investment instruments. Make sure you have enough cash flow to cover the interest payments! Similar to the concept of acid ratio for companies, you should have slightly more than enough liquid funds to meet the monthly payments. Naturally, this strategy only works when interest rates are low. After that, you'll have to think of other ideas. However, IMO the Fed seems to be heading towards QE3 so we might be seeing a prolonged period of low interest rates, so borrowing seems like a sensible option now. Since the movements of interest rates are political in nature, monitoring this should be quite simple. It depends on you. Since interest rates are the opportunity cost of spending money, the lower the interest rates, the lower the opportunity costs of using money now and repaying it later. Interest rates are a market mechanism so that people who prefer to spend later can lend to people who prefer to spend now for the price of interest. *Disclaimer: Historically stocks have returned 10% p.a., but that doesn't mean this trend will continue indefinitely as we have seen fixed income outperform stocks in the recent past.", "title": "" }, { "docid": "2b3d7a7c4d8d36118d82262283492883", "text": "\"Ah I got ya. I partially agree with you, but it's far more complex. I think that is simplifying the debate a bit too much. When people go \"\"passive\"\" you are making the assumption that they are able to stay fully invested the full time period (say 30-40 years until retirement when you might change the asset allocation). This is not a fair assumption because many studies on behavioral finance have shown that people (90% plus) are not able to sit tight through a full market cycle and often sell out during a bear market. I'm not debating you're point that passive often outperforms due to the fees (although there are many managers that do outperform), but the main issue with self-managing and passive investing is people usually make emotional decisions, which then hurts their long-term performance. This would be the reason to hire an adviser. Assuming that people are able to stay passive the entire time and not make a single \"\"active\"\" decision is a very unfair assumption. There was a good study on this referenced in Forbes article below: https://www.forbes.com/sites/advisor/2014/04/24/why-the-average-investors-investment-return-is-so-low/#5169be2b111a Another issue is that there are a lot \"\"active managers\"\" that really just replicate their benchmarks and don't actually actively manage. If you look at active managers who really do have huge under-weights and over-weights relative to their benchmarks they actually tend to outperform them (look at the study below by martin cremers, he's one of the most highly respected researchers when it comes to investment performance research and the active vs passive debate) http://www.cfapubs.org/doi/pdf/10.2469/faj.v73.n2.4 I guess what I'm trying to say is that for most people having an adviser (and paying them a 1% fee) is usually better than going it alone, where they are going to A. chase heat (I bet they always choose the hottest benchmark from the past few years) and B. make poor emotional decisions relating their finances.\"", "title": "" }, { "docid": "1c007d2f764ed54de2b635b1ceb950c4", "text": "\"(Leaving aside the question of why should you try and convince him...) I don't know about a very convincing \"\"tl;dr\"\" online resource, but two books in particular convinced me that active management is generally foolish, but staying out of the markets is also foolish. They are: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk by William Bernstein, and A Random Walk Down Wall Street: The Time Tested-Strategy for Successful Investing by Burton G. Malkiel Berstein's book really drives home the fact that adding some amount of a risky asset class to a portfolio can actually reduce overall portfolio risk. Some folks won a Nobel Prize for coming up with this modern portfolio theory stuff. If your friend is truly risk-averse, he can't afford not to diversify. The single asset class he's focusing on certainly has risks, most likely inflation / purchasing power risk ... and that risk that could be reduced by including some percentage of other assets to compensate, even small amounts. Perhaps the issue is one of psychology? Many people can't stomach the ups-and-downs of the stock market. Bernstein's also-excellent follow-up book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio, specifically addresses psychology as one of the pillars.\"", "title": "" }, { "docid": "a9aa4ec6f87b8f797f24108808a2ab3b", "text": "What you are suggesting would be the correct strategy, if you knew exactly when the market was going to go back up. This is called market timing. Since it has been shown that no one can do this consistently, the best strategy is to just keep your money where it is. The market tends to make large jumps, especially lately. Missing just a few of these in a year can greatly impact your returns. It doesn't really matter what the market does while you hold investments. The important part is how much you bought for and how much you sold for. This assumes that the reasons that you selected those particular investments are still valid. If this is not the case, by all means sell them and pick something that does meet your needs.", "title": "" }, { "docid": "e72405e4b94676de0eaf1aac18d330f2", "text": "In my IRA I try to find stocks that are in growing sectors but have are undervalued by traditional metrics like PE or book value; I make sure that they have lower debt levels than their peers, are profitable, and at least have comparable margins. I started trading options to make better returns off of indices or etfs. It seems overlooked but it's pretty good, in another thread I was telling someone about my strategy buy applying it to thier portfolio: https://www.reddit.com/r/options/comments/77bt17/ive_been_trading_stocks_for_a_year_and_am/dolydu8/?context=3 I double checked, I told him/her I would buy the DIA Jan 19 2018 call 225 for 795. 8 days later it's trading for 1085. Nearly 50% in a week. It'll never be 300% earnings returns, but I'm happy to take it slow. Shorting is a very different animal it takes a lot to get things right.", "title": "" }, { "docid": "5efc6c902e24c8e389569c5dc1e4bf6e", "text": "What's the best strategy? Buy low and sell high. Now. A lot of people try to do this. A few are successful, but for the most part, people who try to time the market end up worse. A far more successful strategy is to save over your entire lifetime, put the money into a very low-cost market fund, and just let the average performance take you to retirement. Put another way, if you think that there is an obvious, no-fail, double-your-money-due-to-a-correction strategy, you're wrong. Otherwise everyone would do it. And someone who tells you that there is such a strategy almost surely will be trying to separate you from a good amount of your money. In the end, $80K isn't a life-altering, never-have-to-work-again amount of money. What I think you ought to do with it is: pay off any credit card debts you may have, pay a significant chunk of student loan or other personal loan debts you may have, make sure you have a decent emergency fund set aside, and then put the rest into diversified low-cost mutual funds. Think of it as a nice leg-up towards your retirement.", "title": "" }, { "docid": "cab6f29603421ac01a73951b5efaa1ac", "text": "\"The article \"\"Best Stock Fund of the Decade: CGM Focus\"\" from the Wall Street Journal in 2009 describe the highest performing mutual fund in the USA between 2000 and 2009. The investor return in the fund (what the shareholders actually earned) was abysmal. Why? Because the fund was so volatile that investors panicked and bailed out, locking in losses instead of waiting them out. The reality is that almost any strategy will lead to success in investing, so long as it is actually followed. A strategy keeps you from making emotional or knee-jerk decisions. (BTW, beware of anyone selling you a strategy by telling you that everyone in the world is a failure except for the few special people who have the privilege of knowing their \"\"secrets.\"\") (Link removed, as it's gone dead)\"", "title": "" }, { "docid": "733bdfd0269c974184d15a1ad82c5f9a", "text": "For a non-technical investor (meaning someone who doesn't try to do all the various technical analysis things that theoretically point to specific investments or trends), having a diverse portfolio and rebalancing it periodically will typically be the best solution. For example, I might have a long-term-growth portfolio that is 40% broad stock market fund, 40% (large) industry specific market funds, and 20% bond funds. If the market as a whole tanks, then I might end up in a situation where my funds are invested 30% market 35% industry 35% bonds. Okay, sell those bonds (which are presumably high) and put that into the market (which is presumably low). Now back to 40/40/20. Then when the market goes up we may end up at 50/40/10, say, in which case we sell some of the broad market fund and buy some bond funds, back to 40/40/20. Ultimately ending up always selling high (whatever is currently overperforming the other two) and buying low (whatever is underperforming). Having the industry specific fund(s) means I can balance a bit between different sectors - maybe the healthcare industry takes a beating for a while, so that goes low, and I can sell some of my tech industry fund and buy that. None of this depends on timing anything; you can rebalance maybe twice a year, not worrying about where the market is at that exact time, and definitely not targeting a correction specifically. You just analyze your situation and adjust to make everything back in line with what you want. This isn't guaranteed to succeed (any more than any other strategy is), of course, and has some risk, particularly if you rebalance in the middle of a major correction (so you end up buying something that goes down more). But for long-term investments, it should be fairly sound.", "title": "" }, { "docid": "52dfd7c00f4651032be5d7f3fdf3a5a6", "text": "Kiyosaki says his methods of actions are not suitable for the average investor. They are meant for those wanting to excel at investing, and are willing to work for it. Personally, I wouldn't want to own ten apartments, because it sounds like a terrible headache. I would much rather have a huge portfolio of index funds. I believe that Kiyosaki's method allegedly perform better than the passive 'invest-diversify-hold' strategy, but would require a new mindset and dedication, and are risky unless you are willing to invest a lot of time learning the fine details. I prefer to dedicate my time elsewhere.", "title": "" }, { "docid": "7ede31fcc47e5b8ff627c7d2387e5796", "text": "Why is that? With all the successful investors (including myself on a not-infrequent basis) going for individual companies directly, wouldn't it make more sense to suggest that new investors learn how to analyse companies and then make their best guess after taking into account those factors? I have a different perspective here than the other answers. I recently started investing in a Roth IRA for retirement. I do not have interest in micromanaging individual company research (I don't find this enjoyable at all) but I know I want to save for retirement. Could I learn all the details? Probably, as an engineer/software person I suspect I could. But I really don't want to. But here's the thing: For anyone else in a similar situation to me, the net return on investing into a mutual fund type arrangement (even if it returns only 4%) is still likely considerably higher than the return on trying to invest in stocks (which likely results in $0 invested, and a return of 0%). I suspect the overwhelming majority of people in the world are more similar to me than you - in that they have minimal interest in spending hours managing their money. For us, mutual funds or ETFs are perfect for this.", "title": "" }, { "docid": "123f22352603dbe74e27a43eaabc775e", "text": "There are really two answers, depending on your goal. You're either trying to preserve wealth, or increase wealth. In the case of preserving wealth, undervalued blue chip stocks are always a great move. Bonus points if they have a history of increasing dividend payments. The best example I have is bank stocks - the continuously change their dividend payouts (usually to the benefit of investors), and at the same time, many have been undervalued, or over-whelped during the downturn. Alternatively, you can let things sit, and buy high quality corporate bonds. I'm seeing (daily) offers from my brokerage's new issues list for high quality bonds paying 5.75%-7.25%. While you have to lock in your money for the period, the rate of return tends to offset lock-in worries, and you can still usually sell the shares in a secondary market, or through your broker.", "title": "" }, { "docid": "6e4f01017045a7b9ef74ebae91eacf5a", "text": "\"I actually love this question, and have hashed this out with a friend of mine where my premise was that at some volume of money it must be advantageous to simply track the index yourself. There some obvious touch-points: Most people don't have anywhere near the volume of money required for even a $5 commission outweigh the large index fund expense ratios. There are logistical issues that are massively reduced by holding a fund when it comes to winding down your investment(s) as you get near retirement age. Index funds are not touted as categorically \"\"the best\"\" investment, they are being touted as the best place for the average person to invest. There is still a management component to an index like the S&P500. The index doesn't simply buy a share of Apple and watch it over time. The S&P 500 isn't simply a single share of each of the 500 larges US companies it's market cap weighted with frequent rebalancing and constituent changes. VOO makes a lot of trades every day to track the S&P index, \"\"passive index investing\"\" is almost an oxymoron. The most obvious part of this is that if index funds were \"\"the best\"\" way to invest money Berkshire Hathaway would be 100% invested in VOO. The argument for \"\"passive index investing\"\" is simplified for public consumption. The reality is that over time large actively managed funds have under-performed the large index funds net of fees. In part, the thrust of the advice is that the average person is, or should be, more concerned with their own endeavors than they are managing their savings. Investment professionals generally want to avoid \"\"How come I my money only returned 4% when the market index returned 7%? If you track the index, you won't do worse than the index; this helps people sleep better at night. In my opinion the dirty little secret of index funds is that they are able to charge so much less because they spend $0 making investment decisions and $0 on researching the quality of the securities they hold. They simply track an index; XYZ company is 0.07% of the index, then the fund carries 0.07% of XYZ even if the manager thinks something shady is going on there. The argument for a majority of your funds residing in Mutual Funds/ETFs is simple, When you're of retirement age do you really want to make decisions like should I sell a share of Amazon or a share of Exxon? Wouldn't you rather just sell 2 units of SRQ Index fund and completely maintain your investment diversification and not pay commission? For this simplicity you give up three basis points? It seems pretty reasonable to me.\"", "title": "" }, { "docid": "23b15c62d167248077f59ce49ce98344", "text": "In summary, you are correct that the goal of investing is to maximize returns, while paying low management fees. Index investing has become very popular because of the low fees. There are many actively traded mutual funds out there with very high management fees of 2.5% and up that do not beat the market. This begs the question of why you are paying high management fees and not just investing in index funds. Consider maxing out your tax sheltered accounts (401(k) and ROTH IRA) to avoid even more fees on your returns. Also consider having a growth component of your portfolio which is generally filled with equity, along with a secure component for assets such as bonds. Bonds may not have the exciting returns of equity, but they help to smooth out the volatility of your portfolio, which may help to keep peace of mind when the market dips.", "title": "" } ]	fiqa
1dacc49b5740e95ad2b1dcbf65cb269b	Make punctual contributions to IRS based on earnings	[ { "docid": "0dae50b5d6c8199652419e5dd726b2aa", "text": "I will answer this question broadly for various jurisdictions, and also specifically for the US, given the OP's tax home: Generally, for any tax jurisdiction If your tax system relies on periodic prepayments through the year, and a final top-up/refund at the end of the year (ie: basically every country), you have 3 theoretical goals with how much you pre-pay: Specifically, for the U.S. All information gathered from here: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes. In short, depending on your circumstance, you may need to pay quarterly estimated tax payments to avoid penalties on April 15th. Even if you won't be penalized, you, may benefit from doing so anyway (to force yourself to save the money necessary by April 15th). I have translated the general goals above, into US-specific advice:", "title": "" } ]	[ { "docid": "d42f309a482e9853bffb38d3a8d21e7c", "text": "Be ruthlessly meticulous about the IRS regulations for deducting a home office. If it's allowed, it's allowed.", "title": "" }, { "docid": "2759de95b6e4abc47e93cbccb708395a", "text": "\"There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like \"\"tax estimator calculator\"\", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below.\"", "title": "" }, { "docid": "45f7684814dbac7f3eed5ce793c0413b", "text": "The purpose of making sure you met the safe harbor was to avoid the penalty. Having achieved that goal the tax law allows you to wait until April 15th to pay the balance. So do so. Put enough money aside to make sure you can easily make that payment. I was in this exact situation a few years ago. I planned my w4 to make the safe harbor, and then slept easy even though the house settlement was in May and I didn't have to make the IRS payment unti 11 months later in April.", "title": "" }, { "docid": "9c9b09427bf59ac4ea866460fe930c7e", "text": "Very grey area. You can't pay them to run errands, mow the lawn, etc. I'd suggest that you would have to have self employment income (i.e. your own business) for you to justify the deduction. And then the work itself needs to be applicable to the business. I've commented here and elsewhere that I jumped on this when my daughter at age 12 started to have income from babysitting. I told her that in exchange for her taking the time to keep a notebook, listing the family paying her, the date, and amount paid, I'd make a deposit to a Roth IRA for her. I've approaches taxes each year in a way that would be audit-compliant, i.e. a paper trail that covers any and all deductions, donations, etc. In the real world, the IRS isn't likely to audit someone for that Roth deposit, as there's little for them to recover.", "title": "" }, { "docid": "f8c569996a42b57bb6a892abe0f18a17", "text": "Your annual contributions are capped at the maximum of $5500 or your taxable income (wages, salary, tips, self employment income, alimony). You pay taxes by the regular calculations on Form 1040 on your earned income. In this scenario, you earn the income, pay taxes on the amount you earn, and put money in the Roth IRA. The alternative, a Traditional IRA, up to certain income levels, allows you to put the amount you contribute on line 32 of Form 1040, which subtracts the Traditional IRA contribution amount from your Adjusted Gross Income (line 37) before tax is calculated on line 44. In this scenario, you earn the income, put the money in the Traditional IRA, reduce your taxable income, and pay taxes on the reduced amount.", "title": "" }, { "docid": "96be169c2db8ab9588b647f3b54e964b", "text": "By definition, this is a payroll deduction. There's no mechanism for you to tell the 401(k) administrator that a Jan-15 deposit is to be credited for 2016 instead of 2017. (As is common for IRAs where you do have the 'until tax time' option) If you are paid weekly, semi-monthly, or monthly, 12/31 is a Saturday this year and should leave no ambiguity about the date of your last check. The only unknown for me if if one is paid bi-weekly, and has a check covering 12/25 - 1/7. Payroll/HR will need to answer whether that check is considered all in 2016, all in 2017 or split between the two.", "title": "" }, { "docid": "25faeedfce4fc9db142bcf1af0d49817", "text": "Assuming that what you want to do is to counter the capital gains tax on the short term and long term gains, and that doing so will avoid any underpayment penalties, it is relatively simple to do so. Figure out the tax on the capital gains by determining your tax bracket. Lets say 25% short term and 15% long term or (0.25x7K) + (0.158K) or $2950. If you donate to charities an additional amount of items or money to cover that tax. So taking the numbers in step 1 divide by the marginal tax rate $2950/0.25 or $11,800. Money is easier to donate because you will be contributing enough value that the IRS may ask for proof of the value, and that proof needs to be gathered either before the donation is given or at the time the donation is given. Also don't wait until December 31st, if you miss the deadline and the donation is counted for next year, the purpose will have been missed. Now if the goal is just to avoid the underpayment penalty, you have two other options. The safe harbor is the easiest of the two to determine. Look at last years tax form. Look for the amount of tax you paid last year. Not what was withheld, but what you actually paid. If all your withholding this year, is greater than 110% of the total tax from last year, you have reached the safe harbor. There are a few more twists depending on AGI Special rules for farmers, fishermen, and higher income taxpayers. If at least two-thirds of your gross income for tax year 2014 or 2015 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. If your AGI for 2014 was more than $150,000 ($75,000 if your filing status for 2015 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. See Figure 4-A and Publication 505, chapter 2 for more information.", "title": "" }, { "docid": "67bbd14128eadd93b30815a6c969ca14", "text": "Just from my own experience (I am not an accountant): In addition to counting as 'business income' (1040 line 12 [1]) your $3000 (or whatever) will be subject to ~15% self-employment tax, on Schedule SE. This carries to your 1040 line ~57, which is after all your 'adjustments to income', exemptions, and deductions - so, those don't reduce it. Half of the 15% is deductible on line ~27, if you have enough taxable income for it to matter; but, in any case, you will owe at least 1/2 of the 15%, on top of your regular income tax. Your husband could deduct this payment as a business expense on Schedule C; but, if (AIUI) he will have a loss already, he'll get no benefit from this in the current year. If you do count this as income to you, it will be FICA income; so, it will be credited to your Social Security account. Things outside my experience that might bear looking into: I suspect the IRS has criteria to determine whether spousal payments are legit, or just gaming the tax system. Even if your husband can't 'use' the loss this year, he may be able to apply it in the future, when/if he has net business income. [1] NB: Any tax form line numbers are as of the last I looked - they may be off by one or two.", "title": "" }, { "docid": "a13a67170ffc59dbf2ae2485ac4f2bd9", "text": "I do something pretty simple when figuring 1099 income. I keep track of my income and deductible expenses on a spreadsheet. Then I do total income - total expenses .25. I keep that amount in a savings account ready to pay taxes. Given that your estimates for the quarterly payments are low then expected, that amount should be more then enough to fully fund those payments. If you are correct, and they are low, then really what does it matter? You will have the money, in the bank, to pay what you actually owe to the IRS.", "title": "" }, { "docid": "406353e863d43c9bb95e9139290c1653", "text": "Scenario: Ken contributes $20,000 in 2015 when the 402(g) limit is $18,000. Ken is not old enough to make catch-up contributions. Ken made $2,000 in excess deferrals which the plan must correct by refunding the excess and any allocable earnings. If the correction is made prior to April 15th, 2016: No penalty. The excess + earnings is refunded to Ken and basically becomes income. Ken will receive 2 1099-R's one for the excess deferral in 2015, and one for the allocable earnings in 2016. The refund is taxed at Ken's income tax rate. If the correction is made after April 15th, 2016: Double taxation! The excess contribution is taxable in 2015, and again in the year it is distributed. Allocable earnings are taxed in the year distributed. The excess + allocable earnings may also be subject to 10% early withdrawal penalty.", "title": "" }, { "docid": "360448724a2cebca4bbfeff2001f9da6", "text": "The principal of the contribution can definitely be withdrawn tax-free and penalty-free. However, there is a section that makes me think that the earnings part may be subject to penalty in addition to tax. In Publication 590-A, under Traditional IRAs -> When Can You Withdraw or Use Assets? -> Contributions Returned Before Due Date of Return -> Early Distributions Tax, it says: The 10% additional tax on distributions made before you reach age 59½ does not apply to these tax-free withdrawals of your contributions. However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59½ rule, it will be subject to this tax. This section is only specifically about the return of contributions before the due date of return, not a general withdrawal (as you can see from the first sentence that the penalty doesn't apply to contributions, which wouldn't be true of general withdrawals). Therefore, the second sentence must be about the earnings part of the withdrawal that you must make together with the contribution part as part of the return of contributions before the due date of the return. If the penalty it is talking about is only about other types of withdrawals and doesn't apply to the earnings part of the return of contribution before the due date of the return, then this sentence wouldn't make sense as it's in a part that's only about return of contribution before the due date of the return.", "title": "" }, { "docid": "6680baf685557a9bde7d1dc30b851ff3", "text": "You elected to defer paying taxes by contributing to an IRA. Lawmakers simply want to make sure that they collect those taxes by requiring you to either withdraw the money (incurring a tax liability) or pay a penalty (tax).", "title": "" }, { "docid": "58017c0a2c7a33f0f09e62d12ebcacf7", "text": "Yes you can. This is known as a short selling against the box. In the old days, this was used to delay a taxable event. You could lock in a gain without triggering a taxable event. Any loss on one side of the box would be offset by a loss on the other side, and vice versa. However, the IRS clamped down on this, and you will realize the gain on your long position as soon as you go short on the other side. See http://www.investopedia.com/terms/s/sellagainstthebox.asp. As to how to initiate the short cover, just transfer the long position to the same account as your short position and make sure your broker covers the short. Should be relatively easy.", "title": "" }, { "docid": "9e1bd20e6583336a2a461705b9cd9eba", "text": "\"The heart of the question is: why can't Bill just pay whatever he owes based on his income in that quarter? If Q2 is gang busters, he'll increase his tax payment. Then if Q3 is surprisingly slow, he'll pay less than he paid in Q2. I think what's most interesting about this question is that the other answers are geared towards how a taxpayer is supposed to estimate taxes. But that's not my objective -- nor is it Bill's objective. My [his] real objective is: In other words, the answer to this question either needs to deal with not overpaying, or it needs to deal with mitigating the underpayment penalty. AFAICT, there are 2 solutions: Solution 1 Figure your estimated taxes based on last year's tax. You won't owe a penalty if your withholding + estimated tax payments in each quarter are 25% or more of your previous year's tax liability. Here's the section that I am basing this on: http://www.irs.gov/publications/p505/ch04.html Minimum required each period. You will owe a penalty for any 2011 payment period for which your estimated tax payment plus your withholding for the period and overpayments for previous periods was less than the smaller of: 22.5% of your 2011 tax, or 25% of your 2010 tax. (Your 2010 tax return must cover a 12-month period.) Solution 2 Use the \"\"Annualized Income Installment Method\"\". This is not a method for calculating estimated taxes, per se. It's actually a method for reducing or eliminating your underpayment penalty. It's also intended to assist tax payers with unpredictable incomes. If you did not receive your income evenly throughout the year (for example, your income from a shop you operated at a marina was much larger in the summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Emphasis added. In order to take advantage of this, you'll need to send in a Schedule AI at the end of the year along with a Form 2210. The downside to this is that you're basically racking up underpayment penalties throughout the year, then at the end of the year you're asking the IRS to rescind your penalty. The other risk is that you still pay estimated taxes on your Q2 - Q4 earnings in Q1, you just pay much less than 25%. So if you have a windfall later in the year, I think you could get burned on your Q1 underpayment.\"", "title": "" }, { "docid": "5d25e0544d7c8f33c5e088114db9e920", "text": "\"You must have $x of taxable income that year in order to make a contribution of $x to IRA for that year. It doesn't matter where the actual \"\"money\"\" that you contribute comes from -- for tax purposes, all that matters is the total amount of taxable income and the total amount of contributions; how you move your money around or divide it up is irrelevant.\"", "title": "" } ]	fiqa
931af261c9e848a584453977e12470e5	Pensions, why bother?	[ { "docid": "fbcc31b3b194bb4a06218bfa4438d6f3", "text": "The stock market at large has about a 4.5% long-term real-real (inflation-fees-etc-adjusted) rate of return. Yes: even in light of the recent crashes. That means your money invested in stocks doubles every 16 years. So savings when you're 25 and right out of college are worth double what savings are worth when you're 41, and four times what they're worth when you're 57. You're probably going to be making more money when you're 41, but are you really going to be making two times as much? (In real terms?) And at 57, will you be making four times as much? And if you haven't been saving at all in your life, do you think you're going to be able to start, and make the sacrifices in your lifestyle that you may need? And will you save enough in 10 years to live for another 20-30 years after retirement? And what if the economy tanks (again) and your company goes under and you're out of a job when you turn 58? Having tons of money at retirement isn't the only worthy goal you can pursue with your money (ask anyone who saves money to send kids to college), but having some money at retirement is a rather important goal, and you're much more at risk of saving too little than you are of saving too much. In the US, most retirement planners suggest 10-15% as a good savings rate. Coincidentally, the standard US 401(k) plan provides a tax-deferred vehicle for you to put away up to 15% of your income for retirement. If you can save 15% from the age of 20-something onward, you probably will be at least as well-off when you retire as you are during the rest of your life. That means you can spend the rest on things which are meaningful to you. (Well, you should also keep around some cash in case of emergencies or sudden unemployment, and it's never a good idea to waste money, but your responsibilities to your future have at least been satisfied.) And in the UK you get tax relief on your pension contribution at your income tax rate and most employers will match your contributions.", "title": "" }, { "docid": "a0ee72e0f45538a89c714aff65edec8b", "text": "James, money saved over the long term will typically beat inflation. There are many articles that discuss the advantage of starting young, and offer: A 21 year old who puts away $1000/yr for 10 years and stops depositing will be ahead of the 31 yr old who starts the $1000/yr deposit and continues through retirement. If any of us can get a message to our younger selves (time travel, anyone?) we would deliver two messages: Start out by living beneath your means, never take on credit card debt, and save at least 10%/yr as soon as you start working. I'd add, put half your raises to savings until your rate is 15%. I can't comment on the pension companies. Here in the US, our accounts are somewhat guaranteed, not for value, but against theft. We invest in stocks and bonds, our funds are not mingled with the assets of the investment plan company.", "title": "" }, { "docid": "57a8790fe6738fd8ce55d4f0baeaa10f", "text": "Your gut feeling is absolutely spot on - you shouldn't be worrying about pension now, not at the age of 25. Assuming that you're not a footballer in the middle of the most productive part of your career and already have a fat wad of crunchy banknotes under your pillow that you're looking to set aside for a rainy day when you won't be able to play at your prime any longer. That doesn't mean you shouldn't invest, nor that means that you mustn't save. There are several factors at play here. First of all as a young person you are likely to have a high tolerance for risk, there is still plenty of time to recover should expected returns not materialise. Even a pension fund with the most aggressive risk / return strategy might just not quite do it for you. You could invest into education instead, improve health, obtain a profitable skill, create social capital by building connections, pay for experience, buy a house, start a family or even a business. Next, as a young professional you're unlikely to have reached your full earning potential yet and due to the law of diminishing marginal utility a hundred pounds per month now have greater utility (i.e. positive impact on your lifestyle) than a seven hundred pounds will in 7-10 years time once your earnings plateaued. That is to say it's easier to save £700 month from £3000 and maintain a reasonable level of personal comfort than carve £100 from £1300 monthly income. And last, but not the least, lets face it from a human point of view - forty years is a very long investment horizon and many things might and will change. One of the downsides of UK pensions is that you have very little control over the money until you reach a certain age. Tactically I suggest saving up to build a cushion consisting of cash or near cash assets; the size of the stash should be such that it is enough to cover all of your expenses from a minimum of 2 months to a maximum of a year. The exact size will depend on your personal comfort level, whatever social net you have (parents, wife, partner) and how hard it will be to find a new source of income should the current cease to produce cash. On a strategic level you can start looking into investing any surplus cash into the foundation of what will bring joy and happiness into the next 40 years of your life. Your or your partners training and education is one of the most sensible choices whilst you're young. Starting a family is another one. Both might help you reach you full earning potential much quicker. Finding what you love to do and learning how to do it really well - cash can accelerate this process bringing you quicker there you want to be. If you were a start-up business in front of a huge uncaptured market would you rather use cash to pay dividends or finance growth?", "title": "" } ]	[ { "docid": "cf1a86f1570ffbf4f4b2148c8ab86aea", "text": "I'd like to make two points: To focus on your test case of Japan. You point out that about a third of them believe they'll work until they die. That means more than a majority of them believe they'll retire. In a democracy where a majority of people make decisions it is completely expected that the majority will dictate the policy. Of course there is fuzziness around that last statement because people who believe they'll retire could very well be of the mindset that they'll handle their retirement savings themselves rather than rely on government. Similarly some people that expect to work until they die might realize that there's a risk that they won't be able to. To focus on the case of government run pensions. The pension program that a government runs isn't like a private savings plan where its purpose is to get you a good rate of return. At best it's an insurance policy; more accurately it's just a tax and you should think of it this way. The reason you should think of it that way is several fold. One, if the pension fund is ever short, the government will make up the difference from the general fund. Two, the government can spend the money from the pension fund on other programs if the law changes which, over the course of a lifetime, is entirely possible. Three, no one has a legal right to withdraw their contributions directly. Four, the point of the program is to take care of old people so they aren't starving in the street. To do this, they take the money of the young and give it to to old people. The money you pay in doesn't go to investments of any sort, it goes directly to the elderly. Ultimately this is why you can't opt-out and why you should think of those contributions as a tax and not as savings.", "title": "" }, { "docid": "a2ec1def5f9b0579a09dbd6dfbe48497", "text": "\"Paying someone to look after your money always costs something - it doesn't matter whether you're inside a pension or not. Fees are highest for \"\"actively managed\"\" funds and lowest for passively managed funds or things where you choose the investments directly - but in the latter case you might pay out a lot in dealing fees. Typically pensions will have some small additional costs on top of that, but those are hugely outweighed by the tax advantages - payments into a pension are made from gross salary (subject to an annual limit), and growth inside the pension is tax free. You do pay income tax when you take the money out though - but by then your marginal tax rate may well have dropped. If you want to control your own investments within a pension you can do this, subject to choosing the right provider - you don't have to be invested in the stockmarket at all (my own pension isn't at the moment). I wrote an answer to another question a while ago which briefly summarises the options As far as an annuity goes, it's not as simple as the company taking the money you saved when you die. The point of an annuity is that you can't predict when you'll die. Simplifying massively, suppose the average life expectancy when you retire is 20 years and you have 100K saved, and ignore inflation and interest for now. Then on average you should have 5K/year available - but since you don't know when you'll die if you just spend your money at that rate you might run out after 20 years but still be alive needing money. Annuities provide a way of pooling that risk - in exchange for losing what's left if you die \"\"early\"\", you keep getting paid beyond what you put in if you die \"\"late\"\". Your suggestion of taking the dividends from an index tracker fund - or indeed the income from any other investment - is fine, but the income will be substantially less than an annuity bought with the same money because you won't be using up any capital, whereas an annuity implicitly does that. Depending on the type of investment, it might also be substantially more risky. Overall, you only need to secure the income you actually need/want to live on. Beyond that level, keeping your money outside the pension system makes some sense, though this might change with the new rules referred to in other answers that mean you don't have to buy an annuity if you have enough guaranteed income anyway. In any case, I strongly suggest you focus first on ensuring you have enough to live on in retirement before you worry about leaving an inheritance. As far as setting up a trust goes, you might be able to do that, but it would be quite expensive and the government tends to view trusts as tax avoidance schemes so you may well fall foul of future changes in the rules.\"", "title": "" }, { "docid": "76e9077605fa0cadc75e0c00546cbc90", "text": "Another case of a company retaining control of the pension fund and suddenly not being able to pay out. When will people learn? Pension shouldalways be paid out to a third party account that the employer can't touch once it has been deposited. That way you dont risk the company taking your pemsion with it when it goes under.", "title": "" }, { "docid": "bd76b9c659a84acc192bdc6541303df9", "text": "the pots will be negligible, however this capital could be used better elsewhere if I was to withdraw them. You won't be able to withdraw the money. Notwithstanding the recent 'pension freedom' changes, money put into a pension is still inaccessible until age 55 at the very earliest, and probably later by the time you get there. You should have been Advised of this every time you enrolled into a scheme, although it may well have been buried in something you were given to read. The best you can do (and what I would recommend, although of course this post isn't Advice) is to transfer the pensions to a personal pension, for example a SIPP, wherein you will be able to control where the money is invested. Most SIPP providers will gladly help you with such transfers. Would it be beneficial to keep these smaller pots with their respected schemes The reason I suggest transferring is that leaving the funds in workplace schemes that are no longer being contributed to is a surefire way of finding yourself invested in poorly-performing neglected funds, earning money for no one beyond the scheme provider.", "title": "" }, { "docid": "3ebf82a0147a97fb5f9595067a948193", "text": "\"There are broadly two kinds of pension: final salary / defined benefit, and money purchase. The text you quote above, where it talks about \"\"pension\"\" it is referring to a final salary / defined benefit scheme. In this type of scheme you earn a salary of £X during your working life, and you are then entitled to a proportion of £X (the proportion depends on how long you worked there) as a pension. These types of scheme are relatively rare now (outside the public sector) because the employer is liable for making enough investments into a pot to have enough money to pay everyone's pension entitlements, and when the investments do poorly the liability for the shortfall ends up on the employer's plate. You might have heard about the \"\"black hole in public sector pensions\"\" which is what this refers to - the investments that the government have made to pay public sector workers' pensions has not in fact been sufficient. The other type of scheme is a money purchase scheme. In this scheme, you and/or your employer make payments into an investment pot which is locked away until you retire. Once you retire, that pot is yours but there are restrictions on what you can do with it - you can use it to purchase an annuity (I will give you my £X,000 pension pot in return for you giving me an annual income of £Y, say) and you can take some of it as a lump sum. The onus is on you to make sure that you (and/or your employer) have contributed enough to make a large enough pot to give you the income you want to live on, and to make a sensible decision about what to do with the pot when you retire and what to use it as income. With either type of scheme, you can claim this pension after you reach retirement age, whether or not you are still working. In some schemes you are also permitted to claim the pension earlier than retirement age if you have stopped working - it will depend on the rules of the scheme. What counts as \"\"retirement age\"\" depends on how old you are now (and whether you are male or female) as the government has been pushing this age out as people have been living longer. In addition to both schemes, there is also a \"\"state pension\"\" which is a fixed, non-means-tested, weekly amount paid from government funds. Again you are entitled to receive this after you pass retirement age, whether or not you are still working.\"", "title": "" }, { "docid": "e77c72351e5dd78b17a8fbf7908fd325", "text": "@JoeTaxpayer's answer outlines how to value it. Some other considerations: As I understand it, some public pensions may be tax-free if you still live in the state that is paying the pension. E.g. when a Massachusetts teacher receives pension, it is exempt from state taxes, but if that person moves to Vermont he will have to pay Vermont income tax on those payments. So if you plan to stay in the state post-retirement, this provides additional value. Pension payments aren't fully guaranteed by the PBGC. And not all pension plans are fully funded. Depending on the political and economic environment when you hit retirement, your retirement plan could suffer. (And if you aren't working, you may not have a union vote any more when the other working members are voting on contract amendments that affect pensions.) I'm not certain of all of the rules, but I hear news reports from time to time that formulas like what you've posted in the original question are changed through negotiation with the union. If you make an employment decision using the formula in year X and then the formula changes in year X+10, your expected pension payment will change.", "title": "" }, { "docid": "ac3d50624633328f5107c5119d14d461", "text": "I'm also a UK, Ltd company contractor that has pondered the same topic. I afraid, however, that I don't understand the maths in the original question. Mortgage interest is flat for the term of the mortgage rather than compounded, so, ignoring the tapering at the end of the lifespan of the mortgage, I get the amount of interest to something like £9,300 (7500 x 0.05 x 25). Does this make the decision any easier for you? As you point out, the total cost of this overpayment from your company account is £12,500. Using the above figure, it would take over 13 years to recoup the £5,000 difference (at £375 interest a year). I used to be of the same opinion that the mortgage should be paid off at all costs first. But now I'm coming round to the American way of thinking; £12,500 invested in a pension with a 5% yield will easily outstrip the interest saved by making the over payment - 12500 x 1.05 ^ 25 = £43,300 - over 250% better off (£43,300 / (£9,300 + £7,500)). I now make no mortgage overpayments at all and instead pay all the money into my pension. This (amongst other things) keeps me below the upper earnings tax threshold, so I'm only paying corporation tax for the money I'm drawing as dividends. There's a massive caveat to this though; I'm 49. I should be able to draw the tax free element of my pension pot in six years time and pay my mortgage off and it's quite unlikely that the government will be changing pensions policy in that time (but drawing 25% tax free has been a feature of pensions for quite some time). I can then chose to keep working or retire. If my pension is still doing well (9% ish pa at the moment), I could chose to not pay my mortgage off at all. In the next twenty or so years, however, all this could change. In your position I would do a bit of both. Make a regular overpayment to pay down your mortgage (even a small amount that you'll barely notice will make quite a difference to the end date of your mortgage - £100 a month will take years off). I didn't start paying properly into my pension until fairly recently and so If you're not already, I'd also make quite substantial, regular payments into one now, directly from your company, 15-17.5% of your gross drawings. Leaving it until later will only make it more painful. Then when you get to retirement age, no matter what, you'll have a decent pension pot. An actuary I worked with pointed out that if you pay something into a pension, when you retire you should have some sort of pot; if you pay nothing, you are absolutely guaranteed to have nothing. And finally, if you haven't already, fix your mortgage. We're three years into a five year fix. The variable rate we were going to be transferred to was 3.99%. We fixed, not because of wanting any sense of security, but because the fixed rate was 2.59% with no fee. There are much better rates than that about now. Rates are starting to rise, so it's a good time.", "title": "" }, { "docid": "e60bd04c2b5a61f2da564a518364ddc5", "text": "That's not how pension funds work. Individuals don't have their own account. They have a promise for a guaranteed amount of income. The money gets managed all together in one giant pool by professional investors. And these are the investors that the article is talking about. They're not a bunch of billionaires refusing to invest idle cash. They're often bureaucrats in charge of sovereign wealth funds that are desperately trying to earn enough interest to meet their obligations. Taxing them more isn't going to help anything.", "title": "" }, { "docid": "cd68bf0c7ae9071b0a2871116021cf93", "text": "He's complaining about the post freezing a pension and requiring employees to waive their right to sue when terminated to receive severance. Freezing pensions is becoming standard because it's an outdated and expensive way to fund retirement. Requiring a waiver for severance is standard. This guy comes off like a whiner that doesn't know the way the world works. There is probably a reason the post was in trouble before Bezos.", "title": "" }, { "docid": "95dc6c3cf5a52f93fcd1b3e9d148ab64", "text": "\"You mean \"\"I don't understand why someone would sign a contract expecting the employer to observe it\"\"? Pensions are contractual obligations. It's only the massive mismanagement, lack of fiscal responsibility, and evisceration of employee bargaining power that puts us in a position to think that employers wouldn't observe their contractual obligations. I mean, if this were the mortgage market, you would be arguing to banks \"\"What the hell made you think this homeowner would keep paying you 6% interest on this money when you're not providing any kind of value twenty years later?\"\"\"", "title": "" }, { "docid": "2fdec604dd5e9480eddf84d91e08b92d", "text": "\"The pension is indeed the clear winner and you haven't missed anything. It's easiest to just compare everything in current numbers as you've done and ignore investment opportunities. Given you expect to pay off your student loan in full, you should consider the repayment as a benefit for you too, so the balance is between £580 after tax and £1138 in your pension. As you say under the current tax regime you'd probably end up with £968 in your pocket from the pension. Some harder to value considerations: You might consider there's political risk associated with the pension, as laws may change over the years - but the government has so far not shown any inclination to penalise people who have already saved under one set of assumptions, so hopefully it's reasonably safe (I'm certainly taking that view with my own money!) Paying more towards your student loan or your mortgage is equivalent to investing at that interest rate (guaranteed). If you do the typical thing of investing your pension in the stock market, the investment returns are likely higher but more risky. In today's interest rate environment, you'd struggle to get a \"\"safe\"\" return that's anywhere near the mortgage rate. So if you're very risk averse, that would tilt the balance against the pension, but I doubt it would be enough to change the decision. Your pension might eventually hit the lifetime allowance of £1mn, after contributions and investment growth. If that's a possibility, you should think carefully about the plan for your contributions. If you do go over, the penalties are calibrated to cancel out the difference between higher-rate and basic-rate tax - i.e. cancelling out the tax benefits you outlined, but not the national insurance benefits. But if you do go over, the amount of money you'd have mean that you might also find yourself paying higher-rate tax on some of your pension income, at which point you could lose out. The lifetime allowance is really complicated, there's a Q+A about it here if you want to understand more.\"", "title": "" }, { "docid": "f9f85f2ca6676707e825954304d4e8ed", "text": "You have to read the fine print of the pension wrapper (Standard Life), and of the new fund you want to invest into to find out. Typically here is were the fee feast could happen So you can manage actively your pension pot. But if you choose to do so you need to be mindful of the fees you have to pay. You should better find a pension wrapper with low fees and find funds with low fees If you change all your funds 4 times a year and you get a 1% charge each time, then you pay 4% of your assets. If your investments return for that year is 8%, then you wiped 50% of your return for that year! Good luck with the reading", "title": "" }, { "docid": "189074bc66e38dfa800eb176139e72b2", "text": "\"I've been down the consolidation route too (of a handful of DC pensions; the DB ones I've not touched, and you would indeed need advice to move those around). What you should be comparing against is: what's the cheapest possible thing you could be doing? Monevators' online platform list will give you an idea of SIPP costs (if your pot is big enough and you're a buy-and-hold person, ATS' flat-fee model means costs can become arbitrarily close to zero percent), and if you're happy to be invested in something like Vanguard Lifestrategy, Target Retirement or vanilla index trackers then charges on those will be something like 0.1%-0.4%. Savings of 0.5-1.0% per year add up over pension saving timescales, but only you can decide whether whatever extra the adviser is offering vs. a more DIY approach is worth it for you. Are you absolutely sure that 0.75% pa fee isn't on top of whatever charges are built into the funds he'll invest you in? For the £1000 fee, advisers claim to have high costs per customer because of \"\"regulatory burdens\"\"; this is why there's talk of an \"\"advice gap\"\" these days: if you only have a small sum to invest, the fixed costs of advice become intolerable. IMHO, nutmeg are still quite expensive for what they offer too (although still probably cheaper than any \"\"advised\"\" route).\"", "title": "" }, { "docid": "03bdcd1b1605b952c67b41e225da099a", "text": "\"The end result is basically the same, it's just a choice of whether you want to base the final amount you receive on your salary, or on the stock market. You pay in a set proportion of your salary, and receive a set proportion of your salary in return. The pension (both contributions and benefit) are based on your career earnings. You get x% of your salary every year from retirement until death. These are just a private investment, basically: you pay a set amount in, and whatever is there is what you get at the end. Normally you would buy an annuity with the final sum, which pays you a set amount per year from retirement until death, as with the above. The amount you receive depends on how much you pay in, and the performance of the investment. If the stock market does well, you'll get more. If it does badly, you could actually end up with less. In general (in as much as anything relating to the stock market and investment can be generalised), a Defined Benefit plan is usually considered better for \"\"security\"\" - or at least, public sector ones, and a majority of people in my experience would prefer one, but it entirely depends on your personal attitude to risk. I'm on a defined benefit plan and like the fact that I basically get a benefit based on a proportion of my salary and that the amount is guaranteed, no matter what happens to the stock market in the meantime. I pay in 9% of my salary get 2% of my salary as pension, for each year I pay into the pension: no questions, no if's or buts, no performance indicators. Others prefer a defined contribution scheme because they know that it is based on the amount they pay in, not the amount they earn (although to an extent it is still based on earnings, as that's what defines how much you pay in), and because it has the potential to grow significantly based on the stock market. Unfortunately, nobody can give you a \"\"which is best\"\" answer - if I knew how pension funds were going to perform over the next 10-50 years, I wouldn't be on StackExchange, I'd be out there making a (rather large) fortune on the stock market.\"", "title": "" }, { "docid": "005ba87dbb35cb30d0d6f7c899898e9d", "text": "I agree that poor management can mightily contribute to subpar plan performance, but many other factors contribute to it too, and I'm not convinced that it's purely ineptitude on Ford/GM/American Airlines/whoever else that has resulted in these pension headaches. Like I said, it's difficult. I also just don't like pensions from a business strategy perspective, because it creates a long-term liability that any going concern should obviously avoid. I think that letting individuals control their own finances is better for employer and employee. If the employee wants that pension buyout option right now to go buy a Porsche, who's to say we should stop them? It's their money.", "title": "" } ]	fiqa
cc4d0abda910d06a2e135af4739c9893	When is the right time to buy a new/emerging technology?	[ { "docid": "f09139630d79fcf3de3541ad61eb8b70", "text": "If you're looking for a purely financial answer (ignoring the social/environmental aspects) there are a few different ways you can look at it. For these types of improvements the simplest is a payback calculation. How long would it take you to recoup the initial costs? For example, if the entire installation cost $5,000 (including any tax credits), and you save $100 per month (I'm making both numbers up), you'll pay back your investment in 50 months, or about 4 years. (Note that if you borrow money to do the improvement, then your payback period is longer because you're reducing the amount that you're saving each month by paying interest.) If you're deciding between different uses for the money (like investing, or paying down other debt) then you can look at the return that you're getting. Using the same example, you are spending $5,000 and getting $100 per month back, for a 24% annual return ($1,200 / $5,000), which is better than you can get on almost anything but a 401(k) match (meaning don't stop your 401(k) contributions to do this either). The decision on whether or wait or not then becomes - will the price drop faster than the amount of savings you will realize. So if you will save $100 per month in your electric bill, is the price of the complete installation going down by more than $100 each month? If not, you'd be better off buying now and start paying back the investment sooner.", "title": "" }, { "docid": "b7b23d7b3242c0f126e48a4d2f6e2edc", "text": "The short answer is that it's never the right time to buy an emerging technology. As long as the technology is emerging, you should expect that newer revisions will be both better and less expensive. With solar, specifically, there are some tax credits to help the early adopters that may help you on the cost/benefit analysis, but in the end, you still have to decide whether the benefits outweigh the costs now, and if not, whether that will change in the near future. For me, part of the solar benefit is the ability to generate electricity when the power goes out. That option does require local battery storage, however. One of the benefits of using Musk's solar tiles instead of actual slate is the weight of the quartz tiles which is much lower than the weight of real slate. In many cases a slate roof is heavy enough to require major reinforcement of the roof trusses before installation. The lower weight also saves significantly on shipping costs. This is where Musk can lower costs enough to be competitive to some of the materials he hope to compete with.", "title": "" }, { "docid": "a29b0792cd39ac89b4fa096127c4a585", "text": "When is the right time to buy a new/emerging technology? When it's trading at a discount that allows you to make your money back and then some. The way you presented it, it is of course impossible to say. You have to look at exactly how much cheaper and efficient it will be, and how long that will take. Time too has a cost, and being invested has opportunity cost, so the returns must not only arrive in expected quantity but also arrive on time. Since you tagged this investing, you should look at the financial forecasts of the business, likely future price trajectories, growth opportunity and so on, and buy if you expect a return commensurate with the risk, and if the risk is tolerable to you. If you are new to investment, I would say avoid Musk, there's too much hype and speculation and their valuations are off the charts. You can't make any sensible analysis with so much emotion running wild. Find a more obscure, boring company that has a sound business plan and a good product you think is worth a try. If you read about it on mainstream news every day you can be sure it's sucker bait. Also, my impression that these panels are actually really expensive and have a snowball's chance in Arizona (heh) in a free market. Recently the market has been manipulated through green energy subsidies of a government with a strong environmentalist voter base. This has recently changed, in case you haven't heard. So the future of solar panels is looking a bit uncertain. I am thinking about buying solar panels for my roof. That's not an investment question, it's a shopping question. Do you actually need a new roof? If no, I'd say don't bother. Last I checked the payoff is very small and it takes over a decade to break even, unless you live in a desert next to the Mexican border. Many places never break even. Electricity is cheap in the United States. If you need a new roof anyway, I suppose look at the difference. If it's about the same you might as well, although it's guaranteed to be more hassle for you with the panels. Waiting makes no sense if you need a new roof, because who knows how long that will take and you need a roof now. If a solar roof appeals to you and you would enjoy having one for the price available, go ahead and get one. Don't do it for the money because there's just too much uncertainty there, and it doesn't scale at all. If you do end up making money, good for you, but that's just a small, unexpected bonus on top of the utility of the product itself.", "title": "" }, { "docid": "0388757d1240e9f213f9597711d299ac", "text": "As you said, the next generation will be cheaper and more efficient. Same for the generation after that. From a financial standpoint, there isn't a steadfast theory that supports when to buy the technology. It comes down to primarily personal issues. As far as I know, Musk's claims about the cost were relating to a traditional slate roof, not a traditional asphalt shingle roof. I can't recall if he explicitly said one way or the other, but I have yet to see any math that supports a comparison to asphalt shingles. If you look at all of the demos and marketing material, it's comparisons to various styles of tile roofing, which is already more expensive than asphalt shingles. Do you feel it's worth it to invest now, or do you think it would be more worth it to invest later when the costs are lower? A new roof will last 10-20 years (if not longer...I'm not a roof expert). Do you need a new roof yet? Are your electricity bills high enough that the cost of going solar will offset it enough? Can you sell unused power back to your power company? I could go on, but I think you get the point. It's entirely a personal decision, and not one that will have a definitive answer. If you keep waiting to make a purchase because you're worried that the next generation will be cheaper and more efficient, then you're never going to make the purchase.", "title": "" } ]	[ { "docid": "8b31af198fa10e9b9452c1f78618b999", "text": "I think it may be best to take everything you're asking line-by-line. Once you buy stocks on X day of the month, the chances of stocks never actually going above and beyond your point of value on the chart are close to none. This is not true. Companies can go out of business, or take a major hit and never recover. Take Volkswagen for example, in 2015 due to a scandal they were involved in, their stocks went downhill. Now their stocks are starting to rise again. The investors goal is not to wait as long as necessary to make a profit on every stock purchase, but to make the largest profit possible in the shortest time possible. Sometimes this means selling a stock before it recovers (if it ever does). I think the problem with most buyers is that they desire the most gain they can possibly have. However, that is very risky. This can be true. Every investor needs to gauge the risk they're willing to take and high-gain investments are riskier. Therefore, it's better to be winning [small/medium] amounts of money (~)100% of the time than [any] amount of money <~25%. Safer investments do tend to yield more consistent returns, but this doesn't mean that every investor should aim for low-yield investments. Again, this is driven by the investor's risk tolerance. To conclude, profitable companies' stock tends to increase over time and less aggressive investments are safer, but it is possible to lose from any stock investment.", "title": "" }, { "docid": "5d876cb085eda6e8eea31f3493f64d58", "text": "You want to buy when the stock market is at an all-time low for that day. Unfortunately, you don't know the lowest time until the end of the day, and then you, uh can't buy the stock... Now the stock market is not random, but for your case, we can say that effectively, it is. So, when should you buy the stock to hopefully get the lowest price for the day? You should wait for 37% of the day, and then buy when it is lower than it has been for all of that day. Here is a quick example (with fake data): We have 18 points, and 37% of 18 is close to 7. So we discard the first 7 points - and just remember the lowest of those 7. We bear in mind that the lowest for the first 37% was 5. Now we wait until we find a stock which is lower than 5, and we buy at that point: This system is optimal for buying the stock at the lowest price for the day. Why? We want to find the best position to stop automatically ignoring. Why 37%? We know the answer to P(Being in position n) - it's 1/N as there are N toilets, and we can select just 1. Now, what is the chance we select them, given we're in position n? The chance of selecting any of the toilets from 0 to K is 0 - remember we're never going to buy then. So let's move on to the toilets from K+1 and onwards. If K+1 is better than all before it, we have this: But, K+1 might not be the best price from all past and future prices. Maybe K+2 is better. Let's look at K+2 For K+2 we have K/K+1, for K+3 we have K/K+2... So we have: This is a close approximation of the area under 1/x - especially as x → ∞ So 0 + 0 + ... + (K/N) x (1/K + 1/K+1 + 1/K+2 ... + 1/N-1) ≈ (K/N) x ln(N/K) and so P(K) ≈ (K/N) x ln(N/K) Now to simplify, say that x = K/N We can graph this, and find the maximum point so we know the maximum P(K) - or we can use calculus. Here's the graph: Here's the calculus: To apply this back to your situation with the stocks, if your stock updates every 30 seconds, and is open between 09:30 and 16:00, we have 6.5 hours = 390 minutes = 780 refreshes. You should keep track of the lowest price for the first 289 refreshes, and then buy your stock on the next best price. Because x = K/N, the chance of you choosing the best price is 37%. However, the chance of you choosing better than the average stock is above 50% for the day. Remember, this method just tries to mean you don't loose money within the day - if you want to try to minimise losses within the whole trading period, you should scale this up, so you wait 37% of the trading period (e.g. 37% of 3 months) and then select. The maths is taken from Numberphile - Mathematical Way to Choose a Toilet. Finally, one way to lose money a little slower and do some good is with Kiva.org - giving loans to people is developing countries. It's like a bank account with a -1% interest - which is only 1% lower than a lot of banks, and you do some good. I have no affiliation with them.", "title": "" }, { "docid": "c62a9ef6ddf8a9f66d4ec1c669245f41", "text": "\"Basically, unless you are an investment professional, you should not be investing in a venture in a developing country shown to you by someone else. The only time you should be investing in a developing country is if a \"\"lightbulb\"\" goes off in your head and you say to yourself, \"\"With my engineering background, I can develop this machine/process/concept that will work better in this country than anywhere else in the world.\"\" And then run it yourself. (That's what Michael Dell, a computer repairman, did for \"\"made to order\"\" computers in the United States, and \"\"the rest is history.\"\") E.g. if you want to invest in \"\"real estate\"\" in a developing country, you might design a \"\"modular home\"\" out of local materials, tailored to local tastes, and selling for less than local equivalents, based on a formula that you know better than anyone else in the world. And then team up with a local who can sell it for you. Whatever you do, don't \"\"invest\"\" and revisit it in 10-15 years. It will be gone.\"", "title": "" }, { "docid": "4d852c52b7861c2ea92f12f79e72212a", "text": "By not timing the market and being a passive investor, the best time to invest is the moment you have extra money (usually when wages are received). The market trends up. $10 fee on $2000 represents 0.5% transaction cost, which is borderline prohibitive. I would suggest running simulations, but I suspect that 1 month is the best because average historical monthly total return is more than 0.5%.", "title": "" }, { "docid": "cb8c0f954bb7a2e6924705100868bec4", "text": "Let's say that you bought a share of Apple for $10. When (if ever) their stock sold for $10, it was a very small company with a very small net worth; that is, the excess of assets over liabilities. Your $10 share was perhaps a 1/10,000,000th share of a tiny company. Over the years, Apple has developed both software and hardware that have real value to the world. No-one knew they needed a smartphone and, particularly, an iPhone, until Apple showed it to us. The same is true of iPads, iPods, Apple watches, etc. Because of the sales of products and services, Apple is now a huge company with a huge net worth. Obviously, your 1/10,000,000th share of the company is now worth a lot more. Perhaps it is worth $399. Maybe you think Apples good days are behind it. After all, it is harder to grow a huge company 15% a year than it is a small company. So maybe you will go into the marketplace and offer to sell your 1/10,000,000th share of Apple. If someone offers you $399, would you take it? The value of stocks in the market is not a Ponzi scheme, although it is a bit speculative. You might have a different conclusion and different research about the future value of Apple than I do. Your research might lead you to believe the stock is worth $399. Mine might suggest it's worth $375. Then I wouldn't buy. The value of stocks in the market is based on the present and estimated future value of living, breathing companies that are growing, shrinking and steady. The value of each company changes all the time. So, then, does the price of the stock. Real value is created in the stock market when real value is created in the underlying company.", "title": "" }, { "docid": "719104e49dea86adee1d721d1f412b5e", "text": "Remove your money. If you do not need this money for some time, you can convert it to Gold, and now is a good time to buy. Gold is not expected to decrease much in price as we're already at the bottom of the employment cycle and the Depression is already begun and will take about two years to grip the world.", "title": "" }, { "docid": "6e5e47bf5b7cbbafca617ed1640c3f45", "text": "\"The best time to buy a stock is the time of day when the stock price is lowest! Obviously you learned nothing from that sentence, but unfortunately you won't get a much better answer than that. Here's a question that is very similar to yours: \"\"Is it better to have a picnic for lunch or for dinner to minimize the chance of getting rained out?\"\" Every day is different...\"", "title": "" }, { "docid": "9d3786a4e8a8966bf704974b96a52ffa", "text": "\"Actually, this is a pretty good analogy to certain types of stocks, specifically tech and other \"\"fad\"\" stocks. Around the turn of the century, there were a lot of \"\"Bobs\"\" buying tech stocks (like they would baseball cards), for tech stocks' sakes. That's what drove the internet and tech stock bubbles of high valuations. At other times, the tech stocks are bought and sold mainly by \"\"Steve's\"\" for business reasons such as likely (not merely possible) future appreciation, and command a much lower valuation.\"", "title": "" }, { "docid": "ecaf5b8798b632c7f3dde298577f22c5", "text": "\"In this environment, I don't think that it is advisable to buy a broad emerging market fund. Why? \"\"Emerging market\"\" is too broad... Look at the top 10 holdings of the fund... You're exposed to Russia & Brazil (oil driven), Chinese and Latin American banks and Asian electronics manufacturing. Those are sectors that don't correlate, in economies that are unstable -- a recipie for trouble unless you think that the global economy is heading way up. I would recommend focusing on the sectors that you are interested in (ie oil, electronics, etc) via a low cost vehicle like an index ETF or invest using a actively managed emerging markets fund with a strategy that you understand. Don't invest a dime unless you understand what you are getting into. An index fund is just sorting companies by market cap. But... What does market cap mean when you are buying a Chinese bank?\"", "title": "" }, { "docid": "d2dc6d6fc7fc3635ee59de7c15499d99", "text": "The segment only briefly talked about the economic aspect of this. I feel a lot of this has to do with the fact that tech companies are IP heavy as supposed to capital heavy. This makes them more flexible to enter new markets. It is somewhat unthinkable for a non-tech company to go into a market in a different vertical (e.g. Amazon going into movie making). Also I much rather the government tackle cable/utilities monopoly first, as that market is already anti-consumer even on price. Tech is still pro-consumer on price, just anti-consumer on choice.", "title": "" }, { "docid": "b82dfef6dbd9e0551f0b3fb6cb756590", "text": "In the theory: Somewhere between the most you think you can get, and the minimum you think you deserve In your case: If they want you to actually invest, they aren't purely interested in your technical expertise. which means that you need to actually believe in the idea and be involved in the decision making process. That really depends on what technology entrepreneurship exactly you are talking about.", "title": "" }, { "docid": "2cb116b7138656269772ea1ef0834246", "text": "This is something I love about only investing in tech. Every company I'd want to invest in has a great balance sheet anyway, that's just how their economics work, so I don't have to worry about this. I actually work in reverse. Like with AAPL, I'm deducting their cash from their market cap to get an even more attractive valuation. As opposed to trying to work out all the complex debt and liabilities of a bank or something. AAPL actually does have some debt now but it's dead simple to deduct and only a workaround to their offshore cash.", "title": "" }, { "docid": "5dee461595cf49c9e87ebe15415b1ee2", "text": "This is dumb on many levels. First are they really trying to blame the Flash Crash for investors leaving the market. It's 2014 and they claim in 17 of 25 months since the 2010 crash investors have withdrawn (not really sure what this means either, since shares don't disappear- does this just mean the market is up? It's unclear). Either way the article quoted is from 2012! And for a research team creating an empirical model, this is a very scary usage of small sample size, mistaking correlation for causation, etc. And the algo, though they don't give much info, seems to be the very essence of data mining. Pick a million signals and filter on those that are empirically the best. If you are an individual investor or a small fund thinking of purchasing something like this, first consider: if it really worked, why are the founders selling it when they could just use it themselves and profit from it? It's almost guaranteed not to work out of sample", "title": "" }, { "docid": "8385719c8db684b5a4e3be501ec207d1", "text": "\"Your chance of even correctly recognizing the actual lowest point of a dip are essentially zero, so if you try to time the market, you'll most likely not get the \"\"buy cheap\"\" part perfectly right. And as you write yourself, while you wait for the dip, you have an ongoing opportunity cost. Cost averaging is by far the best strategy for non-professional and risk averse investors to deal with this. And yes, over the long run, it's far more important to invest at all than when you do it.\"", "title": "" }, { "docid": "e2a40a55ccb43867015befa3ae7927e4", "text": "\"The price movements of Bitcoin are actually cogent in at least one sense: Why in the world would somebody use bitcoin right now to buy anything? That $100 item you bought today represents (to most) a huge opportunity cost as far as \"\"missed returns in the future\"\" go. It's basically a dollar-deflationary cycle, which we know to be corrosive to an economy: You don't buy today what you expect to be cheaper tomorrow. That's highly problematic for bitcoin as far as business adoption is concerned.\"", "title": "" } ]	fiqa
cb43cd7800bf528733b8a6d3983134ad	Does payment in goods count as “income” for tax purposes?	[ { "docid": "26ce60fef4f08824a11abf3f8009ba3b", "text": "The IRS defines income quite specifically. On the topic What is Taxable and Nontaxable Income, they note: You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties. Bartering, or giving someone wages (or similar) in something other than currency (or some other specifically defined things, like fringe benefits), is taxed at fair market value: Bartering Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. For additional information, Refer to Tax Topic 420 - Bartering Income and Barter Exchanges. Bartering is more specifically covered in Topic 420 - Bartering Income: You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 for information on filing an amended return. More details about income in general beyond the above articles is available in Publication 525, Taxable and Nontaxable Income. It goes into great detail about different kinds of income. In your example, you'd have to calculate the fair market value of an avocado, and then determine how much cash-equivalent you were paid in. The IRS wouldn't necessarily tell you what that value was; you'd calculate it based on something you feel you could justify to them afterwards. The way I'd do it would be to write down the price of avocados at each pay period, and apply a dollar-cost-averaging type method to determine the total pay's fair value. While the avocado example is of course largely absurd, the advent of bitcoins has made this much more relevant. Publication 525 has this to say about virtual currency: Virtual Currency. If your employer gives you virtual currency (such as Bitcoin) as payment for your services, you must include the fair market value of the currency in your income. The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, Federal Insurance Contribution Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement. Gold would be fundamentally similar - although I am not sure it's legal to pay someone in gold; assuming it were, though, its fair market value would be again the definition of income. Similarly, if you're paid in another country's currency, the US dollar equivalent of that is what you'll pay taxes on, at the fair market value of that currency in US dollars.", "title": "" } ]	[ { "docid": "dba4f638e967cf689e1b735cc9daed10", "text": "No, it would not show up on the income statement as it isn't income. It would show up in the cash flow statement as a result of financing activities.", "title": "" }, { "docid": "21d4e1e1342a71f70549aee9c0eb3e5b", "text": "IANAL, I have not been VAT registered myself but this is what I have picked up from various sources. You might want to confirm things with your solicitor or accountant. As I understand it there is a critical difference between supplying zero-rated goods/services and supplying exempt goods/services. If the goods/services are zero-rated then the normal VAT rules apply, you charge VAT on your outputs (at a rate of 0%) and can claim back VAT on your inputs (at whatever rate it was charged at, depending on the type of goods.. If the goods/services are exempt you don't charge and VAT on your outputs and can't claim back any VAT on your inputs. (Things get complicated if you have a mixture of exempt and non-exempt outputs) According to http://oko.uk/blog/adsense-vat-explained adsense income is a buisness to buisness transaction with a company in another EU country and so from a supplier point of view (you are the supplier, google is the customer) it counts as a zero-rated transaction.", "title": "" }, { "docid": "719c0a7c4a90b1bc43da880d1d4a1584", "text": "There are quite a few questions as to how you are recording your income and expenses. If you are running the bakery as a Sole Proprietor, with all the income and expense in a business account; then things are easy. You just have to pay tax on the profit [as per the standard tax bracket]. If you running it as individual, you are still only liable to pay tax on profit and not turnover, however you need to keep a proper book of accounts showing income and expense. Get a Accountant to do this for you there are some thing your can claim as expense, some you can't.", "title": "" }, { "docid": "d55b27429ba53a663bc7257aa958fc75", "text": "\"I am going to keep things very simple and explain the common-sense reason why the accountant is right: Also, my sister in law owns a small restaurant, where they claim their accountant informed them of the same thing, where a portion of their business purchases had to be counted as taxable personal income. In this case, they said their actual income for the year (through their paychecks) was around 40-50K, but because of this detail, their taxable income came out to be around 180K, causing them to owe a huge amount of tax (30K ish). Consider them and a similarly situated couple that didn't make these purchases. Your sister in law is better off in that she has the benefit of these purchases (increasing the value of her business and her expected future income), but she's worse off because she got less pay. Presumably, she thought this was a fair trade, otherwise she wouldn't have made those purchases. So why should she pay any less in taxes? There's no reason making fair trades should reduce anyone's tax burden. Now, as the items she purchased lose value, that will be a business loss called \"\"depreciation\"\". That will be deductible. But the purchases themselves are not, and the income that generated the money to make those purchases is taxable. Generally speaking, business gains are taxable, regardless of what you do with the money (whether you pay yourself, invest it, leave it in the business, or whatever). Generally speaking, only business losses or expenses are deductible. A purchase is an even exchange of income for valuable property -- even exchanges are not deductions because the gain of the thing purchased already fairly compensates you for the cost. You don't specify the exact tax status of the business, but there are really only two types of possibilities. It can be separately taxed as a corporation or it can be treated essentially as if it didn't exist. In the former case, corporate income tax would be due on the revenue that was used to pay for the purchases. There would be no personal income tax due. But it's very unlikely this situation applies as it means all profits taken out of the business are taxed twice and so small businesses are rarely organized this way. In the latter case, which is almost certainly the one that applies, business income is treated as self-employment income. In this case, the income that paid for the purchases is taxable, self-employment income. Since a purchase is not a deductible expense, there is no deduction to offset this income. So, again, the key points are: How much she paid herself doesn't matter. Business income is taxable regardless of what you do with it. When a business pays an expense, it has a loss that is deductible against profits. But when a business makes a purchase, it has neither a gain nor a loss. If a restaurant buys a new stove, it trades some money for a stove, presumably a fair trade. It has had no profit and no loss, so this transaction has no immediate effect on the taxes. (There are some exceptions, but presumably the accountant determined that those don't apply.) When the property of a business loses value, that is usually a deductible loss. So over time, a newly-purchased stove will lose value. That is a loss that is deductible. The important thing to understand is that as far as the IRS is concerned, whether you pay yourself the money or not doesn't matter, business income is taxable and only business losses or expenses are deductible. Investments or purchases of capital assets are neither losses nor expenses. There are ways you can opt to have the business taxed separately so only what you pay yourself shows up on your personal taxes. But unless the business is losing money or needs to hold large profits against future expenses, this is generally a worse deal because money you take out of the business is taxed twice -- once as business income and again as personal income. Update: Does the business eventually, over the course of the depreciation schedule, end up getting all of the original $2,000 tax burden back? Possibly. Ultimately, the entire cost of the item is deductible. That won't necessarily translate into getting the taxes back. But that's really not the right way to think about it. The tax burden was on the income earned. Upon immediate replacement, hypothetically with the exact same model, same cost, same 'value', isn't it correct that the \"\"value\"\" of the business only went up by the amount the original item had depreciated? Yes. If you dispose of or sell a capital asset, you will have a gain or loss based on the difference between your remaining basis in the asset and whatever you got for the asset. Wouldn't the tax burden then only be $400? Approximately, yes. The disposal of the original asset would cause a loss of the difference between your remaining basis in the asset and what you got for it (which might be zero). The new asset would then begin depreciating. You are making things a bit more difficult to understand though by focusing on the amount of taxes due rather than the amount of taxable gain or loss you have. They don't always correlate directly (because tax rates can vary).\"", "title": "" }, { "docid": "54d9bf5d51bfb4434224944a5f19d757", "text": "4 months working from your kitchen doesn't sound like an isolated or incidental transaction. So I think that yes, that income would be taxable by NYS (and NYC/Yonkers if the kitchen is in these cities).", "title": "" }, { "docid": "d76b0aa423ae2d10652b65376f7b65d4", "text": "\"I'll assume United States as the country; the answer may (probably does) vary somewhat if this is not correct. Also, I preface this with the caveat that I am neither a lawyer nor an accountant. However, this is my understanding: You must recognize the revenue at the time the credits are purchased (when money changes hands), and charge sales tax on the full amount at that time. This is because the customer has pre-paid and purchased a service (i.e. the \"\"credits\"\", which are units of time available in the application). This is clearly a complete transaction. The use of the credits is irrelevant. This is equivalent to a customer purchasing a box of widgets for future delivery; the payment is made and the widgets are available but have simply not been shipped (and therefore used). This mirrors many online service providers (say, NetFlix) in business model. This is different from the case in which a customer purchases a \"\"gift card\"\" or \"\"reloadable debit card\"\". In this case, sales tax is NOT collected (because this is technically not a purchase). Revenue is also not booked at this time. Instead, the revenue is booked when the gift card's balance is used to pay for a good or service, and at that time the tax is collected (usually from the funds on the card). To do otherwise would greatly complicate the tax basis (suppose the gift card is used in a different state or county, where sales tax is charged differently? Suppose the gift card is used to purchase a tax-exempt item?) For justification, see bankruptcy consideration of the two cases. In the former, the customer has \"\"ownership\"\" of an asset (the credits), which cannot be taken from him (although it might be unusable). In the latter, the holder of the debit card is technically an unsecured creditor of the company - and is last in line if the company's assets are liquidated for repayment. Consider also the case where the cost of the \"\"credits\"\" is increased part-way through the year (say, from $10 per credit to $20 per credit) or if a discount promotion is applied (buy 5 credits, get one free). The customer has a \"\"tangible\"\" item (one credit) which gets the same functionality regardless of price. This would be different if instead of \"\"credits\"\" you instead maintain an \"\"account\"\" where the user deposited $1000 and was billed for usage; in this case you fall back to the \"\"gift card\"\" scenario (but usage is charged at the current rate) and revenue is booked when the usage is purchased; similarly, tax is collected on the purchase of the service. For this model to work, the \"\"credit\"\" would likely have to be refundable, and could not expire (see gift cards, above), and must be usable on a variety of \"\"services\"\". You may have particular responsibility in the handling of this \"\"deposit\"\" as well.\"", "title": "" }, { "docid": "c1f72824ef2b3072f154a0d2fa565ef4", "text": "Depending on what software you use. It has to be reported as a foreign income and you can claim foreign tax paid as a foreign tax credit.", "title": "" }, { "docid": "5ea83557af9a5d48e3d8b1794e9161bd", "text": "If this is a business expense - then this is what is called reimbursement. Reimbursement is usually not considered as income since it is money paid back to you for an expense you covered for your employer with your after-tax money. However, for reimbursement to be considered properly executed, from income tax stand point, there are some requirements. I'm not familiar with the UK income tax law specifics, but I reason the requirements would not differ much from places I'm familiar with: before an expense is reimbursed to you, you should usually do this: Show that the expense is a valid business expense for the employer benefit and by the employer's request. Submit the receipt for reimbursement and follow the employer's procedure on its approval. When income tax agent looks at your data, he actually will ask about the £1500 tab. You and you'll employer will have to do some explaining about the business activity that caused it. If the revenue agent is not satisfied, the £750 that is paid to you will be declared as your income. If the required procedures for proper reimbursement were not followed - the £750 may be declared as your income regardless of the business need. Have your employer verify it with his tax accountant.", "title": "" }, { "docid": "159ebc98bb6fd24aa4857ed919b18228", "text": "Do I report it as income? Is it subject to just the same amount of taxes (~30%) as regular income? Are there any restrictions on how it can be used? It is income. You can deduct the costs of maintaining the web page and producing the software from it (have an accountant do that for you, there are strict rules on how to do that, and you can only deduct up to the income if its a hobby and not a for-profit business), but otherwise it's earned income like any other self employment income. It is reported on your schedule C or on line 21 of your 1040 (miscellaneous income), and you're also liable for self-employment taxes on this income. There are no restrictions, it's your money. Technically, who is the donation even being made to? Me, just because I own the webpage? Yes. This is for the United States, but is there any difference if the donations come from overseas? No, unless you paid foreign taxes on the money (in which case you should fill form 1116 and ask for credit). If you create an official 501(c) organization to which the donations are given, instead of you getting it directly, the tax treatment will be different. But of course, you have to have a real charitable organization for that. To avoid confusion - I'm not a licensed tax professional and this is not a tax advice. If in doubt - talk to a EA/CPA licensed in your State.", "title": "" }, { "docid": "68a5a4c899a2e109399eecca707bedb5", "text": "On the revenue only. This amount of 10$ will be considered as interest and fully taxable. It will not be a capital gain. But why would you decide to declare it as an income? 100$ is insignificant. If you lend small amount to friends it cannot be considered a lending business.", "title": "" }, { "docid": "4ece5a4423569b60c3f64870d4bc281f", "text": "\"I'm assuming that you're in the US. In that case, the answer is that it depends on how your company set up its reimbursement plan. The IRS recognizes \"\"accountable\"\" and \"\"nonaccountable\"\" plans. Accountable plans have to meet certain requirements. Anything else is nonaccountable. If you are reimbursed according to an accountable plan, this is not income and should not be reported to the IRS at all. If you are reimbursed under a nonaccountable plan, then this is income but you might be able to get a deduction on your tax return if you itemize. Most established companies have accountable plans for normal business expenses. More detail from IRS: http://www.tax.gov/TaxabilityCertainFringeBenefits/pdf/Accountable_v_Nonaccountable_Plans_Methods_of_Reimbursing_Employees_for_Expense.pdf\"", "title": "" }, { "docid": "a5b98c263e67e55dc1edff2864f901cc", "text": "\"The decision as to what counts as income is up to the bank. You'll need to ask them whether or not rental income can be included in the total. I can offer some anecdotal evidence: when I applied for a mortgage to buy my home, I already had a rental property with a buy-to-let mortgage on it. Initially the bank regarded that property as a liability, not an asset, because it was mortgaged! However, once I was able to show that there was a good history of receiving enough rent, they chose to ignore the property altogether -- i.e. it wasn't regarded as a liability, but it wasn't regarded as a source of income either. More generally, as AakashM says, residential mortgages are computed based on affordability, which is more than just a multiple of your salary. To answer your specific questions: Covered above; it's up to the bank. If you're married, and you don't have a written tenancy agreement, and you're not declaring the \"\"rent\"\" on your tax return, then it seems unlikely that this would be regarded as income at all. Conversely, if your partner is earning, why not put their name on the mortgage application too? Buy-to-let mortgages are treated differently. While it used to be the case that they were assessed on rental income only, nowadays lenders may ask for proof of the landlord's income from other sources. Note that a BTL cannot be used for a property you intend to live in, and a residential mortgage cannot be used for a property you intend to let to tenants -- at least, not without the bank's permission.\"", "title": "" }, { "docid": "7c0a0278315e3d323293789b6ad3c383", "text": "Some aspect is legal some in grey area. Please maintain proper documentation. Generally for amounts in question, there is less scrutiny from Income tax. Buying on behalf of your friends... First there is a limit of 250,000 USD, so fine on this point. Second is only licensed dealers can participate in FX. In your case, it can appear that you are acting as dealer. On getting money back, this looks like gift and if it's more than 50,000 in a year it is taxable. Of course if you establish that it was convenience then no issues. So you need good amount of documentation, plus if you are getting paid after few months, tax can treat this as personal loan and arrive at deemed interest. Edits: There is no guideline as to what the income tax will ask you, if there is a scrutiny. One would need to have paper work, a letter from friend requesting you to purchase things. You would have to keep a record of items ordered and match it with credit card statement. Proof that the goods were delivered to his address. Proof of equivalent credit entry from your friend into your bank statement. Reason why your friend could not do this himself. i.e. what is stopping him from getting a international debit/credit card? So if you think you can convince that its convenience, yes, else taxes.", "title": "" }, { "docid": "8d89699512eae9345dfa6082afef133e", "text": "Think about it from a more pragmatic POV -- on what basis would you levy taxes on money that is lost? If your house were robbed, should you have to pay taxes based on the money stolen from you? What if your car breaks down? Income in its simplest form is revenue - cost of goods sold. So if I buy a car for $10,000 and sell it to you for $8,000, I have negative income.", "title": "" }, { "docid": "45390f1ecd215cbde66ecaa8e7578bd6", "text": "\"Gifts given and received between business partners or employers/employees are treated as income, if they are beyond minimal value. If your boss gives you a gift, s/he should include it as part of your taxable wages for payroll purposes - which means that some of your wages should be withheld to cover income, social security, and Medicare taxes on it. At the end of the year, the value of the gift should be included in Box 1 (wages) of your form W-2. Assuming that's the case, you don't need to do anything special. A 1099-MISC would not be appropriate because you are an employee of your boss - so the two of you need to address the full panoply of employment taxes, not just income tax, which would be the result if the payment were reported on 1099-MISC. If the employer wants to cover the cost to you of the taxes on the gift, they'll need to \"\"gross up\"\" your pay to cover it. Let's say your employer gives you a gift worth $100, and you're in a 25% tax bracket. Your employer has to give you $125 so that you end up with a gain of $100. But the extra $25 is taxable, too, so your employer will need to add on an extra $6.25 to cover the 25% tax on the $25. But, wait, now we've gotta pay 25% tax on the $6.25, so they add an extra $1.56 to cover that tax. And now they've gotta pay an extra $.39 . . . The formula to calculate the gross-up amount is: where [TAX RATE] is the tax rate expressed as a percentage. So, to get the grossed-up amount for a $100 gift in a 25% bracket, we'd calculate 1/(1-.25), or 1/.75, or 1.333, multiply that by the target gift amount of $100, and end up with $133.33. The equation is a little uglier if you have to pay state income taxes that are deductible on the federal return but it's a similar principle. The entire $133.33 would then be reported as income, but the net effect on the employee is that they're $100 richer after taxes. The \"\"gross-up\"\" idea can be quite complicated if you dig into the details - there are some circumstances where an additional few dollars of income can have an unexpected impact on a tax return, in a fashion not obvious from looking at the tax table. If the employer doesn't include the gift in Box 1 on the W-2 but you want to pay taxes on it anyway, include the amount in Line 7 on the 1040 as if it had been on a W-2, and fill out form 8919 to calculate the FICA taxes that should have been withheld.\"", "title": "" } ]	fiqa
1d75a9d9f906373a1292dd938390b96f	Is a “total stock market” index fund diverse enough alone?	[ { "docid": "fda874738f68f83b73d40aa1db1d01f1", "text": "You're missing the concept of systemic risk, which is the risk of the entire market or an entire asset class. Diversification is about achieving a balance between risk and return that's appropriate for you. Your investment in Vanguard's fund, although diversified between many public companies, is still restricted to one asset class in one country. Yes, you lower your risk by investing in all of these companies, but you don't erase it entirely. Clearly, there is still risk, despite your diversification. You may decide that you want other investments or a different asset allocation that reduce the overall risk of your portfolio. Over the long run, you may earn a high level of return, but never forget that there is still risk involved. bonds seem pretty worthless, at least until I retire According to your profile, you're about my age. Our cohort will probably begin retiring sometime around 2050 or later, and no one knows what the bond market will look like over the next 40 years. We may have forecasts for the next few years, but not for almost four decades. Writing off an entire asset class for almost four decades doesn't seem like a good idea. Also, bonds are like equity, and all other asset classes, in that there are different levels of risk within the asset class too. When calculating the overall risk/return profile of my portfolio, I certainly don't consider Treasuries as the same risk level as corporate bonds or high-yield (or junk) bonds from abroad. Depending on your risk preferences, you may find that an asset allocation that includes US and/or international bonds/fixed-income, international equities, real-estate, and cash (to make rebalancing your asset allocation easier) reduces your risk to levels you're willing to tolerate, while still allowing you to achieve returns during periods where one asset class, e.g. equities, is losing value or performing below your expectations.", "title": "" }, { "docid": "4e5d97779d66424a1f1b251caeed7bf6", "text": "and seems to do better than the S&P 500 too. No, that's not true. In fact, this fund is somewhere between S&P500 and the NASDAQ Composite indexes wrt to performance. From my experience (I have it too), it seems to fall almost in the middle between SPY and QQQ in daily moves. So it does provide diversification, but you're basically diversifying between various indexes. The cost is the higher expense ratios (compare VTI to VOO).", "title": "" }, { "docid": "0b64e6f44cfffa8152c4f202306b9333", "text": "Write off the entire asset class of corporate bonds? Finance theory says yes, the only two asset classes that you need are stocks and treasury bills (very short-term US government bonds). See the Capital Asset Pricing Model (CAPM).", "title": "" }, { "docid": "7fb16f6ebc255233b5509e56fee988c5", "text": "I don't think you are missing much, if anything, Brendan. You get massive diversification and low fees with a fund like VTI. I'm not sure if it is good to have everything with only one broker though. I would add to the conversation that the goal shouldn't be to have a giant pile of money in x years..and then spend it down in retirement. A much better/safer goal is to have enough dividends being generated that you never have to touch your capital. Looks like you are starting young so congrats.", "title": "" }, { "docid": "6cf6dc9d508ba6aec8645becf43c228b", "text": "\"Brendan, The short answer is no, there is no need to get into any other funds. For all intents and purposes the S&P 500 is \"\"The Stock Market\"\". The news media may quote the Dow when the market reaches new highs or crashes but all of the Dow 30 stocks are included in the S&P 500. The S&P is also marketcap weighted, which means that it owns in higher proportion the big \"\"Blue Chip\"\" stocks more than the smaller less known companies. To explain, the top 10 holdings in the S&P represent 18% of the total index, while the bottom 10 only represent 0.17% (less than 1 percent). They do have an equal weighted S&P in which all 500 companies represent only 1/500th of the index and that is technically even more diversified but in actuality it makes it more volatile because it has a higher concentration of those smaller less known companies. So it will tend to perform better during up markets and worse during down markets. As far as diversification into different asset classes or other countries, that's non-sense. The S&P 500 has companies in it that give you that exposure. For example, it includes companies that directly benefit from rising oil prices, rising gold prices, etc known as the Energy and Materials sector. It also includes companies that own malls, apartment complexes, etc. known as the Real Estate sector. And as far as other countries, most of the companies in the S&P are multi-national companies, meaning that they do business over seas in many parts of the world. Apple and FaceBook for example sell their products in many different countries. So you don't need to invest any of your money into an Emerging Market fund or an Asia Fund because most of our companies are already doing business in those parts of the world. Likewise, you don't need to specifically invest into a real estate or gold fund. As far as bonds go, if you're in your twenties you have no need for them either. Why, because the S&P 500 also pays you dividends and these dividends grow over time. So for example, if Microsoft increases its dividend payment by 100% over a ten year period , all of the shares you buy today at a 2.5% yield will, in 10 years, have a higher 5% yield. A bond on the other hand will never increase its yield over time. If it pays out 4%, that's all it will ever pay. You want to invest because you want to grow your money and if you want to invest passively the fastest way to do that is through index ETFs like the $SPY, $IVV, and $RSP. Also look into the $XIV, it's an inverse VIX ETF, it moves 5x faster than the S&P in the same direction. If you want to actively trade your money, you can grow it even faster by getting into things like options, highly volatile penny stocks, shorting stocks, and futures. Don't get involved in FX or currency trading, unless it through futures.\"", "title": "" }, { "docid": "35c0f7c832b86a7798bfb34c447c78c9", "text": "Good idea to stay only with VTI if you are 30. For 50, I recommend: 65% VTI 15% VOO 10% VXUS 10% BND", "title": "" } ]	[ { "docid": "63c887e3ce5fcbdc3b4a2d62eecfd837", "text": "Let's say that you want to invest in the stock market. Choosing and investing in only one stock is risky. You can lower your risk by diversifying, or investing in lots of different stocks. However, you have some problems with this: When you buy stocks directly, you have to buy whole shares, and you don't have enough money to buy even one whole share of all the stocks you want to invest in. You aren't even sure which stocks you should buy. A mutual fund solves both of these problems. You get together with other investors and pool your money together to buy a group of stocks. That way, your investment is diversified in lots of different stocks without having to have enough money to buy whole shares of each one. And the mutual fund has a manager that chooses which stocks the fund will invest in, so you don't have to pick. There are lots of mutual funds to choose from, with as many different objectives as you can imagine. Some invest in large companies, others small; some invest in a certain sector of companies (utilities or health care, for example), some invest in stocks that pay a dividend, others are focused on growth. Some funds don't invest in stocks at all; they might invest in bonds, real estate, or precious metals. Some funds are actively managed, where the manager actively buys and sells different stocks in the fund continuously (and takes a fee for his services), and others simply invest in a list of stocks and rarely buy or sell (these are called index funds). To answer your question, yes, the JPMorgan Emerging Markets Equity Fund is a mutual fund. It is an actively-managed stock mutual fund that attempts to invest in growing companies that do business in countries with rapidly developing economies.", "title": "" }, { "docid": "68ca8ce246d0e966543105f3cfd308d4", "text": "Yes, it is unreasonable and unsustainable. We all want returns in excess of 15% but even the best and richest investors do not sustain those kinds of returns. You should not invest more than a fraction of your net worth in individual stocks in any case. You should diversify using index funds or ETFs.", "title": "" }, { "docid": "e58ec0d9172a4cbb4b23095ab7583a37", "text": "\"would constantly fluctuate and provide an indication of how well the market is doing. The index is there to tell if you made profit or loss by investing in the market. Using a pure total market cap will only tell you \"\"Did IPO activity exceed bankruptcy and privatization activity\"\".\"", "title": "" }, { "docid": "a198d0acdcc2a019260a9d70f0bdcf39", "text": "Cost. If an investor wanted to diversify his portfolio by investing in the companies that make up the S&P 500, the per-share and commission costs to individually place trades for each and every one of those companies would be prohibitive. I can buy one share of an exchange-traded fund that tracks the S&P 500 for less than the purchase price of a single share in some of the companies that make up the index.", "title": "" }, { "docid": "11d7b3a389522f80d9d899b9bff4ec81", "text": "\"You quickly run into issues of what denotes \"\"similar\"\", and how to construct an appropriate index methodology. For example, do you group all CB arb funds together globally or separate them by country? Is long-bias equity long-short different to no-bias and variable-bias? Is a fund that concentrates on sovereign debt more like a macro fund or a fixed income fund? And so on. By definition, hedge funds try not to mimic their peers, with varying degrees of success. Even if you get through that problem, how do you create the index? You may not be able to get return numbers for all the \"\"similar\"\" funds, and even if you do, how do you weight them? By AUM, or equal weight? There are commercial indices out there (CSFB, Eurekahedge, Marhedge, Barclays, MSCI, etc) but there's no one accepted standard, and it's unlikely that there ever will be as a result. It's certainly interesting to look at your performance versus one of these indices, and many investors do monitor fund performance this way, but to demand strict benchmarking to one of them is a big ask...\"", "title": "" }, { "docid": "91ac8519ecdfef7fe122c4fde90a549d", "text": "\"Note that an index fund may not be able to precisely mirror the index it's tracking. If enough many people invest enough money into funds based on that index, there may not always be sufficient shares available of every stock included in the index for the fund to both accept additional investment and track the index precisely. This is one of the places where the details of one index fund may differ from another even when they're following the same index. IDEALLY they ought to deliver the same returns, but in practical terms they're going to diverge a bit. (Personally, as long as I'm getting \"\"market rate of return\"\" or better on average across all my funds, at a risk I'm comfortable with, I honestly don't care enough to try to optimize it further. Pick a distribution based on some stochastic modelling tools, rebalance periodically to maintain that distribution, and otherwise ignore it. That's very much to the taste of someone like me who wants the savings to work for him rather than vice versa.)\"", "title": "" }, { "docid": "dfe7cdcbff23350b408f12110c75cf4c", "text": "Funds can't limit themselves to a small number of stocks without also limiting themselves to a small amount of total investment. I think 25 companies is too small to be practical from their point of view.", "title": "" }, { "docid": "bfe08dfc688e3e87e95667f68f4eb311", "text": "\"Diversification is extremely important and the one true \"\"Free Lunch\"\" of investing, meaning it can provide both greater returns and less risk than a portfolio that is not diversified. The reason people say otherwise is because they are talking about \"\"true\"\" portfolio diversification, which cannot be achieved by simply spreading money across stocks. To truly diversify a portfolio it must be diversified across multiple, unrelated \"\"Return Drivers.\"\" I describe this throughout my best-selling book and am pleased to provide complimentary links to the following two chapters, where I discuss the lack of diversification from spreading money solely across stocks (including correlation tables), as well as the benefits of true portfolio diversification: Jackass Investing - Myth #8: Trading is Gambling – Investing is Safer Jackass Investing - Myth #20: There is No Free Lunch\"", "title": "" }, { "docid": "cc774863ed13c1d2f406183d15b26019", "text": "Quick and dirty paper but pretty interesting.. I'm not in Portfolio Management but I probably would have ended up at the modal number as well. I don't know the subject deeply enough to answer my own question, but is the bias always toward underestimation of variance? Or is that a complex of the way the problem was set up? Another question I have for those in investment management; Would this impact asset allocation?", "title": "" }, { "docid": "61a3236acf34529cae6bfa96e07ccccb", "text": "\"As Dheer pointed out, the top ten mega-cap corporations account for a huge part (20%) of your \"\"S&P 500\"\" portfolio when weighted proportionally. This is one of the reasons why I have personally avoided the index-fund/etf craze -- I don't really need another mechanism to buy ExxonMobil, IBM and Wal-Mart on my behalf. I like the equal-weight concept -- if I'm investing in a broad sector (Large Cap companies), I want diversification across the entire sector and avoid concentration. The downside to this approach is that there will be more portfolio turnover (and expense), since you're holding more shares of the lower tranches of the index where companies are more apt to churn. (ie. #500 on the index gets replaced by an up and comer). So you're likely to have a higher expense ratio, which matters to many folks.\"", "title": "" }, { "docid": "4fbab26ea90ed96ee595869a4742a7f8", "text": "diversifying; but isn't that what mutual funds already do? They diversify and reduce stock-specific risk by moving from individual stocks to many stocks, but you can diversify even further by selecting different fund types (e.g. large-cal, small-cap, fixed- income (bond) funds, international, etc.). Your target-date fund probably includes a few different types already, and will automatically reallocate to less risky investments as you get close to the target date. I would look at the fees of different types of funds, and compare them to the historical returns of those funds. You can also use things like morningstar and other ratings as guides, but they are generally very large buckets and may not be much help distinguishing between individual funds. So to answer the question, yes you can diversify further - and probably get better returns (and lower fees) that a target-date fund. The question is - is it worth your time and effort to do so? You're obviously comfortable investing for the long-term, so you might get some benefit by spending a little time looking for different funds to increase your diversification. Note that ETFs don't really diversify any differently than mutual funds, they are just a different mechanism to invest in funds, and allow different trading strategies (trading during the day, derivatives, selling short, etc.).", "title": "" }, { "docid": "46954434d854deff0918901928a5d57c", "text": "How much should a rational investor have in individual stocks? Probably none. An additional dollar invested in a ETF or low cost index fund comprised of many stocks will be far less risky than a specific stock. And you'd need a lot more capital to make buying, voting, and selling in individual stocks as if you were running your own personal index fund worthwhile. I think in index funds use weightings to make it easier to track the index without constantly trading. So my advice here is to allocate based not on some financial principal but just loss aversion. Don't gamble with more than you can afford to lose. Figure out how much of that 320k you need. It doesn't sound like you can actually afford to lose it all. So I'd say 5 percent and make sure that's funded from other equity holdings or you'll end up overweight in stocks.", "title": "" }, { "docid": "c8eb242062af3deb1b43b4460f7fe2ce", "text": "As these all seem to be US Equity, just getting one broad based US Equity index might offer similar diversification at lower cost. Over 5 years, 20 basis points in fees will only make about 1% difference. However, for longer periods (retirement saving), it is worth it to aim for the lowest fees. For further diversification, you might want to consider other asset classes, such as foreign equity, fixed income, etc.", "title": "" }, { "docid": "0ab67cb866af574225982bd99e0e663a", "text": "\"It sounds like you need an index fund that follows so called Sustainability index. A sustainability index does not simply select \"\"socially responsible\"\" industries. It attempts to replicate the target market, in terms of countries, industries, and company sizes, but it also aims to select most \"\"sustainable\"\" companies from each category. This document explains how Dow Jones Sustainability World index is constructed (emphasis mine): An example of a fund following such index is iShares Dow Jones Global Sustainability Screened UCITS ETF, which also excludes \"\"sin stocks\"\".\"", "title": "" }, { "docid": "42be91c24d44888a1d06dd8dd83d69fa", "text": "I am in the same boat as you right now, I have about a year experience working for a financial advisor but even then it is not relevant enough for being an analyst. I have put in over 120 apps over the past month and a half to any position that I meet 90% of requirements. The only thing I don't have is years of experience. I know how to code VBA, and how to build financial models but alas, I am looked over. I have also been trying to network like crazy and just accepted to do a temp job working for a bank as a loan analyst and hopefully that will pan out into something better. Many jobs want experiences with SAP and SQL, and I don't have either of those either, and there is no where to get experience because no junior analyst positions will take me without enough experience. I turned down a banking internship because I did not want to take out loans for college, and now I am thinking I made the wrong choice. Hopefully some one will pick us up and catch us up to speed soon! What area are you living in? I am in the Chicago area and I see new postings every day. Also are you going to every job board? Career-builder, Monster, Indeed, LinkedIn, Craigslist? I have also hooked up with a few recruiting firms, they are the ones who got me the temp job. If you are in the Chicago area I will recommend a few for you to look into and a couple to stay away from. Good luck on your search! I know you need it, because I need it too...", "title": "" } ]	fiqa
f21ed4e7ebd37e099f9049dda8fb657e	What is the difference between “good debt” vs. “bad debt”?	[ { "docid": "141eafddbda39e17d4fc29f187dd72dc", "text": "\"The word \"\"good\"\" was used in contrast to \"\"bad\"\" but these words are misused here. There are three kinds of debt: Debt for spending. Never go into debt to buy consumables, go out for a good time, for vacations, or other purchases with no lasting financial value. Debt for depreciating assets, such as cars and sometimes things like furniture. There are those who put this in the same category as the first, but I know many people who can budget a car payment and pay it off during the life of the car. In a sense, they are renting their car and paying interest while doing so. Debt for appreciating, money-making assets. Mortgage and student loans are both often put into the good category. The house is the one purchase that, in theory, provides an immediate return. You know what it saves you on the rent. You know what it costs you, after tax. If someone pays 20% of their income toward their fixed rate mortgage, and they'd otherwise be paying 25% to rent, and long term the house will keep up with inflation, it's not bad in the sense that they need to aggressively get rid of it. Student loans are riskier in that the return is not at all guaranteed. I think that one has to be careful not to graduate with such a loan burden that they start their life under a black cloud. Paying 10% of your income for 10 years is pretty crazy, but some are in that position. Finally, some people consider all debt as bad debt, live beneath their means to be debt free as soon as they can, and avoid borrowing money.\"", "title": "" }, { "docid": "262b3aa336e364f9d8b702737a0c465a", "text": "I think people are conflating two orthogonal sets of terms. Unsecured/secured and good/bad are not synonyms. Debt may be secured or unsecured. If I take a loan against a car or house it is typically secured, so the object is collateral against the loan. Bad debt in financial terms is a loan that is not expected to be recovered. A bank might write off a loan or a portion of a loan as bad debt if the borrower goes bankrupt or into administration for example. Both secured and unsecured loans may be considered bad debt. I think the context in which the question is being asked is how to distinguish between sensible and inadvisable borrowing. An extreme example of inadvisable borrowing would be to buy a PC on a store card. PCs devalue very quickly and a store card may charge 30% APR, so paying the minimum off each month would mean paying more than twice the sticker price for a product that is now worth less than half the original borrowed amount. On the other hand, a 3% mortgage when borrowing less than 60% of the value of a property is a good bet from a lender's perspective, and would be a good debt to have (not as good as no debt, but better thhan a high APR one).", "title": "" }, { "docid": "bc857f6d3574927958580066c5cdad09", "text": "\"Here's what Suze Orman has to say about it: Good debt is money you borrow to purchase an asset, such as a home you can afford. History shows that home values generally rise in step with the inflation rate, so a mortgage is good debt. Student loans are, too, because they're an investment in the future. Census data pegs the average lifetime earnings of a high school graduate at a million dollars below that of someone with a bachelor's degree. Bad debt is money you borrow to buy a depreciating asset or to finance a \"\"want\"\" rather than a \"\"need.\"\" A car is a depreciating asset; from the day you drive it off the lot, it starts losing value. Credit card balances or a home equity line of credit that's used to pay for indulgences—vacations, shopping, spa days—is bad debt.\"", "title": "" }, { "docid": "90d93fb8b362e381549433cb9ca8678c", "text": "\"In general, all forms of debt are bad, as they keep you tied to a financial institution and can be an emotional burden for many. In the book Payback (by Margaret Atwood), debt is even described as a sin. However some forms of debt are necessary and some can help create wealth. \"\"Good\"\" debt: a mortgage - to purchase a home, which is an asset that usually appreciates in value. Necessary debt: car loan or lease - only when there is no other mode of transportation to get to work. Really bad debt: unpaid credit cards - for dinners out.\"", "title": "" }, { "docid": "a53203e93e54c64b01441646a3c92d95", "text": "\"None of the previous answers (which are all good) mention margin accounts (loans from your broker). You may also have heard them described as \"\"leverage\"\". It may seem odd to mention this rather narrow form of debt here, but it's important because overuse of leverage has played a large part in pretty much every financial crisis you can think of (including the most recent one). As the Investopedia definitions indicate, leverage magnifies gains, but also magnifies losses. I consider margin/leverage to be \"\"bad\"\" debt.\"", "title": "" }, { "docid": "c8aaf167eb2c41d5f96cc799f1d14288", "text": "First of all debt is a technology that allows borrower to bring forward their spending; it's a financial time machine. From borrowers point of view debt is good when it increases overall economic utility. A young person wants to bring up a family but cannot afford the house. Had they waited for 30 years they would have reached the level of income and savings to buy the house for cash. By the time it might be too late to raise a family, sure they'd enjoy the house for the last 20 years of their life. But they would loose 30 years of utility - they could have enjoyed the house for 50 years! So, for a reasonable fee, they can bring the spending forward. Another young person might want to enjoy a life of luxury, using the magical debt time machine and bringing forward their future earnings. They might spend 10 years worth of future earnings on entertainment within a year and have a blast. Due to the law of diminishing marginal utility - all that utility is pretty much wasted, but they'll still will need to make sacrifices in the future. The trick is to roughly match the period of debt repayment to the economic life of the purchase. Buying a house means paying over 30 years for an asset that has an economic life of 80 years+, given that the interest fee is reasonable and the house won't loose it's value overnight that's a good debt. Buying a used car with a remaining life of 5 years and financing its with a seven years loan - is not a good idea. Buying a luxurious holiday that lasts a fortnight with 2 years of repayments, i.e. financing non-essential short term need with medium term debt is insane. The other question is could the required utility be achieved through a substitute at a lower cost without having to bring the spending forward or paying the associated fee.", "title": "" }, { "docid": "caeb923f77b21e2486ed1b64f5c179df", "text": "\"From what I've heard in the past, debt can be differentiated between secured debt and unsecured debt. Secured debt is a debt for which something stands good such as a mortgage on your house. You have a debt, but that debt is covered by the value of an asset and if you needed to free yourself of the debt, then you could by selling that asset. This is what is known as \"\"good\"\" debt. Unsecured debt is debt that is incurred where the only thing that is available to pay it back is your income. An example of this is credit card debt where you purchase something that couldn't be sold again to pay off the debt. This is know as \"\"bad\"\" debt. You have to be careful about thinking that house debt is always \"\"good\"\" debt because the house stands good for it though. The problem with that is that the house could go down in value and then suddenly your \"\"good\"\" debt is \"\"bad\"\" debt (or no longer secured). Cars are very risky this way because they go down in value. It is really easy to get a car loan where before long you are upside down. This is the problem with the term \"\"good\"\" debt. The label makes it sound like it is a good idea to have that debt, and the risk associated with having the debt is trivialized and allows yourself to feel good about your financial plan. Perhaps this is why so many houses are in foreclosure right now, people believed the \"\"good\"\" debt myth and thought that it was ok to borrow MORE than the home was worth to get into a house. Thus they turned a secured debt into an unsecured debt and put their residence at risk by levels of debt they couldn't afford. Other advice I've heard and tend to agree with, is that you should only borrow for a house, an education and maybe a car (danger on that last one), being careful to buy a modest house, car etc that is well within your means to repay. So if you do have to borrow for a car, go for basic transportation instead of the $40,000 BMW. Keep you house payment less than 1/4th of your take home pay. Pay off the school loans as quickly as possible. Regardless of the label, \"\"good\"\" \"\"bad\"\" \"\"unsecured\"\" \"\"secured\"\", I think that less debt is better than more debt. There is definitely such a thing as too much \"\"good\"\" debt!\"", "title": "" }, { "docid": "6c27dc08d8b8d07b4672b01911a91d43", "text": "\"All very good answers for the most part, but I have a definition for Good and Bad debt which is a little bit different from those mentioned here so far. The definitions come from Robert Kiyosaki in his book \"\"Rich Dad Poor Dad\"\", which I have applied to all my debts. Good Debt - Good Debt is debt used to fund a money making asset, an asset which puts money into your pockets (or bank account) each month. In other words the income produced by that asset is more than all the expenses (including the interest repayments on the debt) associated with the asset. Bad Debt - Bad Debt is debt used to fund both money losing assets and non-assets, where the interest repayments on the debt are more than any income (if any at all) produced by the goods or services the debt was used to purchase, so that you need to take money out of your pockets (or bank account) each month to sustain the debt. Based on this definition a mortgage used to purchase the house you live in would be classed as bad debt. Why? Because you are making interest repayments on the mortgage and you have other expenses related to the house like rates and maintenance, but you have no income being produced by the house. Even a mortgage on an investment (or rental) property where the rent is not enough to cover all the expenses is considered to be bad debt. For the debt on an investment property to be considered as good debt, the rent would have to cover the full interest payments and all other expenses. In other words it would need to be a positively geared (or a cashflow positive) asset. Why is this definition important in distinguishing between good and bad debt? Because it looks at the cashflow associated with the debt and not the profit. The main reason why most investors and businesses end up selling up or closing down is due to insufficient cashflow. It may be a profitable business, or the value of the property may have increased since you bought it, but if you don't have enough cash every month to pay the bills associated with the asset you will need to sell it. If the asset produces enough cashflow to pay for all the expenses associated with the asset, then you don't have to fund the asset through other sources of income or savings. This is important in two ways. Firstly, if you are working and suddenly lose your job you don't have to worry about paying for the asset as it is more than paying for itself. Secondly, if you don't have to dig into your other source/s of income or savings to sustain the asset, then theoretically you can buy an unlimited number of similar type assets. Just a note regarding the mortgage to buy a house you live in being classed as bad debt. Even though in this definition it is considered as bad debt, there are usually other factors which still can make this kind of debt worthwhile. Firstly, you have to live somehere, and the fact that you have to live somwhere means that if you did not buy the house you would probably be renting instead, and still be stuck with a similar monthly payment. Secondly, the house will still appreciate over the long term so in the end you will end up with an asset compared to nothing if you were renting. Just another note to mention the definition provided by John Stern \"\"...debt is a technology that allows borrower to bring forward their spending; it's a financial time machine...\"\", that's a clever way to think of it, especially when it comes to good debt.\"", "title": "" }, { "docid": "4553349fecda42e7d3fb6c6f864dbef3", "text": "\"When I look at debt I try to think of myself as a corporation. In life, you have a series of projects that you can undertake which may yield a positive net present value (for simplicity, let's define positive net present value as a project that yields more benefit than its cost). Let's say that one of the projects that you have is to build a factory to make clothing. The factory will cost 1 million dollars and will generate revenue of 1.5 million dollars over the next year, afterwhich it wears out. Although you have the knowledge to build this wonderful factory, you don't have a million bucks laying around, so instead, you go borrow it from the bank. The bank charges you 10% interest on the loan, which means that at the end of the year, the project has yielded a return of 400k. This is an extremely simplified example of what you call \"\"good\"\" debt. It is good if you are taking the debt and purchasing something with a positive value. In reality, this should be how people should approach all purchases, even if they are with cash. Everything that you buy is an investment in yourself - even entertainment and luxury items all could be seen as an investment in your happiness and relaxation. If more people approached their finances in this way, people would have much more money to spend, William\"", "title": "" } ]	[ { "docid": "8143e59701da827051bb11538170aa2e", "text": "Hi guys, have a question from my uni finance course but I’m unsure how to treat the initial loan (as a bond, or a bill or other, and what the face value of the loan is). I’ll post the question below, any help is appreciated. “Hi guys, I have a difficult university finance question that’s really been stressing me out.... “The amount borrowed is $300 million and the term of the debt credit facility is six years from today The facility requires minimum loan repayments of $9 million in each financial year except for the first year. The nominal rate for this form of debt is 5%. This intestest rate is compounded monthly and is fixed from the date the facility was initiated. Assume that a debt repayment of $10 million is payed on 31 August 2018 and $9million on April 30 2019. Following on monthly repayments of $9 million at the end of each month from May 31 2019 to June 30 2021. Given this information determine the outstanding value of the debt credit facility on the maturity date.” Can anyone help me out with the answer? I’ve been wracking my brain trying to decide if I treat it as a bond or a bill.” Thanks in advance,", "title": "" }, { "docid": "73f46ebcfc2e50b94d835095573d2fd9", "text": "You should definitely pay the remaining loan amount as quickly as possible. A loan in bad debts means that Bank has written it off books as its a education loan and there is no collateral. The defaults do get report to CIBIL [Credit Information Bureau India] and as such you will have difficulties getting credit card / new loans in future. Talk to the Bank Manager and ask can you regularize the loan? There are multiple options you would need to talk and find out; 1. You can negotiate and arrive at a number. Typically more than the principal outstanding and less than interest and penalties charged. 2. You can request to re-do the monthly payments with new duration, this will give you more time. 3. May one time large payment and subsequent amount in monthly payments. At the end its Bank's discretion whether to accept your terms or not.", "title": "" }, { "docid": "3aa6a4201058d4e0b109b5961a49f21a", "text": "Yes, a mortgage is debt. It's unique in that you have a house which should be worth far more than the mortgage. After the mortgage crisis, many found their homes under water i.e. worth less than the mortgage. The word debt is a simple noun for money owed, it carries no judgement or negative connotation except when it's used to buy short lived items with money one doesn't have. Aside from my mortgage, I get a monthly credit card bill which I pay in full. That's debt too, only it carried no interest and rewards me with 2% cash back. Many people would avoid this as it's still debt.", "title": "" }, { "docid": "1a59e5808f002b3d6230adb254f34b8e", "text": "Think about India's government, and then think about Spain's. Credit rating is a measure of risk of default. What government is more likely to default: A developed, relatively transparent European government with mature industries and an educated populous. Or a developing, relatively opaque SouthEast Asian government with a large amount of its populous uneducated, living in poverty. Ask yourself, would you rather make a loan to Spain or India? Which is more likely to pay you back? edit: Despite the fact that Spain needs a bailout, it already has a very mature, very advanced infrastructure/economy in place. With a little cash, the government can get that industrial machine working at efficiency again.", "title": "" }, { "docid": "c8272dc25995314578ce4b67916ebc6f", "text": "\"The basic equation taught in day one of accounting school is that Assets = Liabilities + Equity. My first point was that I looked at the actual financial statements published as of the end of the 2nd quarter 2017, and the total liabilities on their audited balance sheet were like $13 billion, not $20b. I don't know where the author got their numbers from. My second point: Debt usually needs to be paid on prearranged terms agreed upon by the debtor and the debtee, including interest, so it is important for a business to keep track of what they owe and to whom, so they can make timely payments. As long as they have the cash on hand to make payments plus whatever interest they owe, and the owners are happy with the total return on their investment, then it doesn't really matter how debt they have on the balance sheet. Remember the equation A=L+E. There are precisely two ways to finance a business that wants to acquire assets: liabilities and/or equity. The \"\"appropriate\"\" level of debt vs equity on a balance sheet varies wildly, and totally depends on the industry, size of the business, cash flow, personal preferences of the CEO, CFO, shareholders et al, etc. It gets way more detailed and complicated than that obviously, but the point is that looking at debt alone is a meaningless metric. This is corporate finance and accounting 101, so you can probably find tons of great articles and videos if you want to learn more.\"", "title": "" }, { "docid": "aa7af14c1c1b06bc00c9fef9c666de64", "text": "Cars are not houses. The comparison is apples to oranges. Bad car loans actually can be good business for car dealers. When someone defaults on their car loan they very quickly lose the car. That car is then resold. Default on a home loan and you don't even have to leave the house, and there is no way for them to take the house back from you. It often takes a year or two for the bank and lawyers to get you kicked out of the house. A car however is on wheels, it can easily be moved and taken back. This article is some poorly researched 'sky is falling' click-bait.", "title": "" }, { "docid": "3cafe9fcecfcd58776eaa19019664cb6", "text": "I don't have numbers on that, but I imagine the average student loan is much higher. Stilll, student loans, due to their default-less nature, are a bit of a different beast IMO. I think student loans will put a prolonged drag on the economy, but I really don't see where the catalyst for a crisis would be.", "title": "" }, { "docid": "63b9b79c6ef4b4ab69da4988ac1f7d32", "text": "\"This is the best tl;dr I could make, [original](https://www.theguardian.com/commentisfree/2017/sep/04/britain-addicted-debt-crash-2007-sub-prime-mortgages-personal-credit) reduced by 93%. (I'm a bot) *** > This is, of course, what determined the depth of the last crash, the wheeze of the collateralised debt obligation, which left no one able to distinguish between a good debt and a bad one. > Alex Brazier, executive director of financial stability at the Bank of England, warned last month that consumer loans had gone up by 10% in the past year, with average household debt having already eclipsed 2008 levels. > Student loan debt is counted separately from consumer loans, and stands at &pound;13bn a year. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6y43cq/we_are_addicted_to_debt_and_headed_for_a_crash_it/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~204396 tl;drs so far.\"\") \| [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") \| Top* keywords: debt^#1 know^#2 year^#3 much^#4 loan^#5\"", "title": "" }, { "docid": "a6acbb37e49c0f1cbf78c1923d813df7", "text": "\"The problems with ratings and the interpretation of ratings is that they are retrospective, and most people read them as prospective. They basically tell you that debtor is solvent right now. What does that mean? It means that the ratings are based on the audited financial statements of a company, government or other organization issuing debt. So, in the best case scenario where the rating agency is acting properly, they are still dependent on folks with fiduciary responsibility telling the truth. And even if they are telling the \"\"truth\"\", accounting rules make it possible to obscure problems for years in some cases. Municipal goverments are a great example of this... the general obligation bonds cities and even states with deep structural budget problems still get good ratings, because they are solvent and have sufficient operating cash to meet obligations today. But towards the end of a 30-year bond's life, that may not be the case anymore unless they dramatically alter their budgets. At the end of the day, ratings are one aspect of due diligence. They are useful screening devices, but you need to understand who you are lending money to by purchasing bonds and diversify your holdings to protect your wealth. The problem, of course, is when the trustees of your pension fund invests in garbage assets after getting a sales pitch on the beach in Hawaii, then conveniently place all of the blame for that bad investment on the rating agency. You unfortunately have zero control over that.\"", "title": "" }, { "docid": "e5c88c5babbd9efce0d5539f9d5fa6fc", "text": "Did you read the article? They weren't arguing whether or not the debt could be defaulted on. They were arguing that one side can't unilaterally change the terms of the contract and decide to pay less. Which seems like common sense, but whatever.", "title": "" }, { "docid": "e3e58d223a5031306e05985a5cbdf450", "text": "\"No idea what you are trying to say here. You default on a loan, student or otherwise, by not paying. That is what creates the default, but you still owe it. Student loans actually can be discharged, but it is very uncommon and an uphill battle. You have to prove \"\"undue hardship\"\" which has a rather high standard. The last firm I worked at did manage to get a large amount of student loans discharged for someone who was in a car wreck and became a quadriplegic after incurring the student loan. And even that was not an easy case, my old firm was actually rather pleased at their success.\"", "title": "" }, { "docid": "8ac5cffbd419a4f21a5789c2b9dc010d", "text": "Here is another way to look at it. Does this debt enable you to buy more car than you can really afford, or more car than you need? If so, it's bad debt. Let's say you don't have the price of a new car, but you can buy a used car with the cash you have. You will have to repair the car occasionally, but this is generally a lot less than the payments on a new car. The value of your time may make sitting around waiting while your car is repaired very expensive (if, like me, you can earn money in fine grained amounts anywhere between 0 and 80 hours a week, and you don't get paid when you're at the mechanic's) in which case it's possible to argue that buying the new car saves you money overall. Debt incurred to save money overall can be good: compare your interest payments to the money you save. If you're ahead, great - and the fun or joy or showoff potential of your new car is simply gravy. Now let's say you can afford a $10,000 car cash - there are new cars out there at this price - but you want a $30,000 car and you can afford the payments on it. If there was no such thing as borrowing you wouldn't be able to get the larger/flashier car, and some people suggest that this is bad debt because it is helping you to waste your money. You may be getting some benefit (such as being able to get to a job that's not served by public transit, or being able to buy a cheaper house that is further from your job, or saving time every day) from the first $10,000 of expense, but the remaining $20,000 is purely for fun or for showing off and shouldn't be spent. Certainly not by getting into debt. Well, that's a philosophical position, and it's one that may well lead to a secure retirement. Think about that and you may decide not to borrow and to buy the cheaper car. Finally, let's say the cash you have on hand is enough to pay for the car you want, and you're just trying to decide whether you should take their cheap loan or not. Generally, if you don't take the cheap loan you can push the price down. So before you decide that you can earn more interest elsewhere than you're paying here, make sure you're not paying $500 more for the car than you need to. Since your loan is from a bank rather than the car dealership, this may not apply. In addition to the money your cash could earn, consider also liquidity. If you need to repair something on your house, or deal with other emergency expenditures, and your money is all locked up in your car, you may have to borrow at a much higher rate (as much as 20% if you go to credit cards and can't get it paid off the same month) which will wipe out all this careful math about how you should just buy the car and not pay that 1.5% interest. More important than whether you borrow or not is not buying too much car. If the loan is letting you talk yourself into the more expensive car, I'd say it's a bad thing. Otherwise, it probably isn't.", "title": "" }, { "docid": "8607a75f115f28aefb6c44edda64f6e1", "text": "I'm not sure we're talking about the same thing. I'm talking about making money off loans which weren't defaulted but on but were paid back with interest. Anyway, in abstract preventing something bad absolutely counts as doing something good. The crisis could have been worse, and caused much more pain, hardship, and lost wealth. It was bad enough as it was, I'm personally glad it wasn't worse.", "title": "" }, { "docid": "5938b4fa65cfd89f3ab79fcaa8841dc8", "text": "\"No. One of the key ideas behind a corporation is that an investor's liability is limited to the amount he invests, i.e. the amount of stock he buys. This is the primary reason why small businesses become corporations, even though one person owns 100% of the stock. Then if the business goes broke, he won't lose his house, retiretment fund, etc. He'll lose everything he had in the business, but at least there's a limit to it. (In some countries there are other ways to achieve the same results, like creating a \"\"limited liabililty company\"\", but that's another story.)\"", "title": "" }, { "docid": "d64f746c5d5b41bec65f707a0054fb13", "text": "(a) you give away your money - gift tax The person who receives the gift doesn't owe any tax. If you give it out in small amounts, there will be no gift tax. It could have tax and Estate issues for you depending on the size of the gift, the timing, and how much you give away in total. Of course if you give it away to a charity you could deduct the gift. (b) you loan someone some money - tax free?? It there is a loan, and and you collect interest; you will have to declare that interest as income. The IRS will expect that you charge a reasonable rate, otherwise the interest could be considered a gift. Not sure what a reasonable rate is with savings account earning 0.1% per year. (c) you pay back the debt you owe - tax free ?? tax deductible ?? The borrower can't deduct the interest they pay, unless it is a mortgage on the main home, or a business loan. I will admit that there may be a few other narrow categories of loans that would make it deductible for the borrower. If the loan/gift is for the down payment on a house, the lender for the rest of the mortgage will want to make sure that the gift/loan nature is correctly documented. The need to fully understand the obligations of the homeowner. If it is a loan between family members the IRS may want to see the paperwork surrounding a loan, to make sure it isn't really a gift. They don't look kindly on loans that are never paid back and no interest collected.", "title": "" } ]	fiqa
ac590aed4d1e5bbfdd27dbb9ee60b6ff	What is the difference between a stock and a bond?	[ { "docid": "9e99375bd7e6b4b7a54da72ddd1843a2", "text": "WilliamKF explained it pretty well, but I want to put it in a more simplistic form:", "title": "" }, { "docid": "a594531713f25db64f1f7048814d8604", "text": "A stock is an ownership interest in a company. There can be multiple classes of shares, but to simplify, assuming only one class of shares, a company issues some number of shares, let's say 1,000,000 shares and you can buy shares of the company. If you own 1,000 shares in this example, you would own one one-thousandth of the company. Public companies have their shares traded on the open market and the price varies as demand for the stock comes and goes relative to people willing to sell their shares. You typically buy stock in a company because you believe the company is going to prosper into the future and thus the value of its stock should rise in the open market. A bond is an indebted interest in a company. A company issues bonds to borrow money at an interest rate specified in the bond issuance and makes periodic payments of principal and interest. You buy bonds in a company to lend the company money at an interest rate specified in the bond because you believe the company will be able to repay the debt per the terms of the bond. The value of a bond as traded on the open exchange varies as the prevailing interest rates vary. If you buy a bond for $1,000 yielding 5% interest and interest rates go up to 10%, the value of your bond in the open market goes down so that the payment terms of 5% on $1,000 matches hypothetical terms of 10% on a lesser principal amount. Whatever lesser principal amount at the new rate would lead to the same payment terms determines the new market value. Alternatively, if interest rates go down, the current value of your bond increases on the open market to make it appear as if it is yielding a lower rate. Regardless of the market value, the company continues to pay interest on the original debt per its terms, so you can always hold onto a bond and get the original promised interest as long as the company does not go bankrupt. So in summary, bonds tend to be a safer investment that offers less potential return. However, this is not always the case, since if interest rates skyrocket, your bond's value will plummet, although you could just hold onto them and get the low rate originally promised.", "title": "" }, { "docid": "c8bf45e7f978f6eede10dc892f7ebbcb", "text": "\"In a sentence, stocks are a share of equity in the company, while bonds are a share of credit to the company. When you buy one share of stock, you own a (typically infinitesimal) percentage of the company. You are usually entitled to a share of the profits of that company, and/or to participate in the business decisions of that company. A particular type of stock may or may not pay dividends, which is the primary way companies share profits with their stockholders (the other way is simply by increasing the company's share value by being successful and thus desirable to investors). A stock also may or may not allow you to vote on company business; you may hear about companies buying 20% or 30% \"\"interests\"\" in other companies; they own that percentage of the company, and their vote on company matters is given that same weight in the total voting pool. Typically, a company offers two levels of stocks: \"\"Common\"\" stock usually has voting rights attached, and may pay dividends. \"\"Preferred\"\" stock usually gives up the voting rights, but pays a higher dividend percentage (maybe double or triple that of common stock) and may have payment guarantees (if a promised dividend is missed in one quarter and then paid in the next, the preferred stockholders get their dividend for the past and present quarters before the common shareholders see a penny). Governments and non-profits are typically prohibited from selling their equity; if a government sold stock it would basically be taxing everyone and then paying back stockholders, while non-profit organizations have no profits to pay out as dividends. Bonds, on the other hand, are a slice of the company's debt load. Think of bonds as kind of like a corporate credit card. When a company needs a lot of cash, it will sell bonds. A single bond may be worth $10, $100, or $1000, depending on the investor market being targeted. This is the amount the company will pay the bondholder at the end of the term of the bond. These bonds are bought by investors on the open market for less than their face value, and the company uses the cash it raises for whatever purpose it wants, before paying off the bondholders at term's end (usually by paying each bond at face value using money from a new package of bonds, in effect \"\"rolling over\"\" the debt to the next cycle, similar to you carrying a balance on your credit card). The difference between the cost and payoff is the \"\"interest charge\"\" on this slice of the loan, and can be expressed as a percentage of the purchase price over the remaining term of the bond, as its \"\"yield\"\" or \"\"APY\"\". For example, a bond worth $100 that was sold on Jan 1 for $85 and is due to be paid on Dec 31 of the same year has an APY of (15/85*100) = 17.65%. Typically, yields for highly-rated companies are more like 4-6%; a bond that would yield 17% is very risky and indicates a very low bond rating, so-called \"\"junk status\"\".\"", "title": "" } ]	[ { "docid": "e1153acc2c4b339189bdcf1f88d1b7e5", "text": "When you buy a bond - you're giving a loan to the issuer. The interest rate on the bond is the interest rate on the loan. Usually (and this is also the case with the treasury bonds), the rate is fixed for the term of the loan. Thus, if the market rate for similar loans a year later is higher, the rate for the loan you gave - remains the same.", "title": "" }, { "docid": "89f95203df501325a17cfa064856c2a8", "text": "I dont really understand how this would work. In stocks, you are buying a share in a company at a specific price that fluctuates with the value of the company. In bonds, you are lending money for a specific time period with the hopes of getting your money back plus interest. Is actual money going to be lent? Are there going to be different bond products for each company every time they issue new debt? It just doesn't seem practical to me.", "title": "" }, { "docid": "acd9a181cdb5204856ef8ff054d77951", "text": "A bond fund has a 5% yield. You can take 1/.05 and think of it as a 20 P/E. I wouldn't, because no one else does, really. An individual bond has a coupon yield, and a YTM, yield to maturity. A bond fund or ETF usually won't have a maturity, only a yield.", "title": "" }, { "docid": "3c656dde86da64f3ddec1ee9aad23b39", "text": "\"They are similar in the sense that they are transferring money from the company to shareholders, but that's about it. There is different tax treatment, yes, but that's because they are fundamentally different. Dividends transfer money equally to all shareholders, but that also reduces the value of each share by the same amount, since it's cash out the door, which drops the value of the company. Shareholders are taxed on dividends at the capital gains tax rate. A buyback returns the cash to shareholders who decide to sell. Other shareholders get a secondary benefit of now owning a slightly larger portion of the company since there are fewer shares outstanding. Shareholders only pay tax if they sell shares for a gain. It that means when company buyback their stock, the stock price will definitely go up? Not necessarily. It depends on the price that the company buys back the shares for and what the \"\"opportunity cost\"\" of that cash is - meaning what else could the company have done with the cash that would have been better? Buybacks often happen in mature companies with undervalued stock prices and fewer opportunities for further investment. If a company has an intrinsic value of $10 a share but its stock is trading at $8 a share, then it can instantly get a 25% \"\"return\"\" by buying back stock. I use the term \"\"return\"\" loosely since the company does not actually profit from the buyback, but from the shareholder's perspective the company is worth more per share.\"", "title": "" }, { "docid": "d09fd123da8fdc790fbee54b044ccc79", "text": "The stock market is just like any other market, but stocks are bought and sold here. Just like you buy and sell your electronics at the electronics market, this is a place where buyers and sellers come together to buy and sell shares or stocks or equity, no matter what you call it. What are these shares? A share is nothing but a portion of ownership of a company. Suppose a company has 100 shares issued to it, and you were sold 10 out of those, it literally means you are a 10% owner of the company. Why do companies sell shares? Companies sell shares to grow or expand. Suppose a business is manufacturing or producing and selling goods or services that are high in demand, the owners would want to take advantage of it and increase the production of his goods or services. And in order to increase production he would need money to buy land or equipment or labor, etc. Now either he could go get a loan by pledging something, or he could partner with someone who could give him money in exchange for some portion of the ownership of the company. This way, the owner gets the money to expand his business and make more profit, and the lender gets a portion of profit every time the company makes some. Now if the owner decides to sell shares rather than getting a loan, that's when the stock market comes into the picture. Why would a person want to trade stocks? First of all, please remember that stocks were never meant to be traded. You always invest in stocks. What's the difference? Trading is short term and investing is long term, in very simple language. It's the greed of humans which led to this concept of trading stocks. A person should only buy stocks if he believes in the business the company is doing and sees the potential of growth. Back to the question: a person would want to buy stocks of the company because: How does a stock market help society? Look around you for the answer to this question. Let me give you a start and I wish everyone reading this post to add at least one point to the answer. Corporations in general allow many people come together and invest in a business without fear that their investment will cause them undue liability - because shareholders are ultimately not liable for the actions of a corporation. The cornerstone North American case of how corporations add value is by allowing many investors to have put money towards the railroads that were built across America and Canada. For The stock market in particular, by making it easier to trade shares of a company once the company sells them, the number of people able to conveniently invest grows exponentially. This means that someone can buy shares in a company without needing to knock door to door in 5 years trying to find someone to sell to. Participating in the stock market creates 'liquidity', which is essentially the ease with which stocks are converted into cash. High liquidity reduces risk overall, and it means that those who want risk [because high risk often creates high reward] can buy shares, and those who want low risk [because say they are retiring and don't have a risk appetite anymore] can sell shares.", "title": "" }, { "docid": "0917b869f6a039582d7eb14689bceea3", "text": "It's worth pointing out that a bulk of the bond market is institutional investors (read: large corporations and countries). For individuals, it's very easy to just put your cash in a checking account. Checking accounts are insured and non-volatile. But what happens when you're GE or Apple or Panama? You can't just flop a couple billion dollars in to a Chase checking account and call it a day. Although, you still need a safe place to store money that won't be terribly volatile. GE can buy a billion dollars of treasury bonds. Many companies need tremendous amounts of collateral on hand, amounts far in excess of the capacity of a checking account; those funds are stored in treasuries of some sort. Separately, a treasury bond is not a substitute investment for an S&P index fund. For individuals they are two totally different investments with totally different characteristics. The only reason an individual investor should compare the return of the S&P against the readily available yield of treasuries is to ensure the expected return of an equity investment can sufficiently pay for the additional risk.", "title": "" }, { "docid": "dfa933229cc96a45eb5007baee03701a", "text": "The difference between the two numbers is that the market size of a particular product is expressed as an annual number ($10 million per year, in your example). The market cap of a stock, on the other hand, is a long-term valuation of the company.", "title": "" }, { "docid": "fa789c2d09c37555757096b57dbc6b56", "text": "\"The answer depends on what is your portfolio's objective. If you are operating a multi-asset class portfolio (i.e. your portfolio has both bonds and stocks) and are targeting absolute returns, then yes, comparing a stock's beta (or correlation) to a bond benchmark makes sense. What you do with this stock's \"\"bond beta\"\" information further depends on what kind of return profile you want your multi-asset class portfolio to have. If you want stocks that appreciate in price when bond prices decline, then of course you want to buy \"\"negative bond beta\"\" stocks. If you are operating a purely relative equity portfolio (i.e. you are benchmarked to the stock market), then comparing the \"\"bond beta\"\" is of little use to you. Hope this helps.\"", "title": "" }, { "docid": "e7a66aad95b9c6b7ab472878f1956f3d", "text": "This is pretty basic question, but my head is confused :( If you buy a $1000 bond with 5% interest rate, so it would be $1050 at maturity what does it mean? * you will be paid the interest in coupons (paid in coupons until it totals $50) and at maturity paid $1000 (in one large single payment) * you get paid the full value in coupons ($1050 split by multiple coupons) Any other explanations of how a bond works are welcome, most of the stuff I could find was about what yield is, not how the bond actually works.", "title": "" }, { "docid": "f0963b264ba8f2c79655d1e78797cb36", "text": "\"The short of it is that bonds are valued based on a fundamental concept of finance called the \"\"time value of money\"\". Stated simply, $100 one year from now is not the same as $100 now. If you had $100 now, you could use it to make more money and have more than $100 in a year. Conversely, if you didn't invest it, the $100 would not buy as much in a year as it would now, and so it would lose real value. Therefore, for these two benefits to be worth the same, the money received a year from now must be more than $100, in the amount of what you could make with $100 if you had it now, or at least the rate of inflation. Or, the amount received now could be less than the amount recieved a year from now, such that if you invested this lesser amount you'd expect to have $100 in a year. The simplest bonds simply pay their face value at maturity, and are sold for less than their face value, the difference being the cost to borrow the cash; \"\"interest\"\". These are called \"\"zero-coupon bonds\"\" and they're around, if maybe uncommon. The price people will pay for these bonds is their \"\"present value\"\", and the difference between the present value and face value determines a \"\"yield\"\"; a rate of return, similar to the interest rate on a CD. Now, zero-coupon bonds are uncommon because they cost a lot. If I buy a zero-coupon bond, I'm basically tying up my money until maturity; I see nothing until the full bond is paid. As such, I would expect the bond issuer to sell me the bond at a rate that makes it worth my while to keep the money tied up. So basically, the bond issuer is paying me compound interest on the loan. The future value of an investment now at a given rate is given by FV = PV(1+r)t. To gain $1 million in new cash today, and pay a 5% yield over 10 years, a company or municipality would have to issue $1.629 million in bonds. You see the effects of the compounding there; the company is paying 5% a year on the principal each year, plus 5% of each 5% already accrued, adding up to an additional 12% of the principal owed as interest. Instead, bond issuers can offer a \"\"coupon bond\"\". A coupon bond has a coupon rate, which is a percentage of the face value of the bond that is paid periodically (often annually, sometimes semi-annually or even quarterly). A coupon rate helps a company in two ways. First, the calculation is very straightforward; if you need a million dollars and are willing to pay 5% over 10 years, then that's exactly how you issue the bonds; $1million worth with a 5% coupon rate and a maturity date 10 years out. A $100 5% coupon bond with a 10-year maturity, if sold at face value, would cost only $150 over its lifetime, making the total cost of capital only 50% of the principal instead of 62%. Now, that sounds like a bad deal; if the company's paying less, then you're getting less, right? Well yes, but you also get money sooner. Remember the fundamental principle here; money now is worth more than money later, because of what you can do with money between now and later. You do realize a lower overall yield from this investment, but you get returns from it quickly which you can turn around and reinvest to make more money. As such, you're usually willing to tolerate a lower rate of return, because of the faster turnaround and thus the higher present value. The \"\"Income Yield %\"\" from your table is also referred to as the \"\"Flat Yield\"\". It is a very crude measure, a simple function of the coupon rate, the current quote price and the face value (R/P * V). For the first bond in your list, the flat yield is (.04/114.63 * 100) = 3.4895%. This is a very simple measure that is roughly analogous to what you would expect to make on the bond if you held it for one year, collected the coupon payment, and then sold the bond for the same price; you'd earn one coupon payment at the end of that year and then recoup the principal. The actual present value calculation for a period of 1 year is PV = FV/(1+r), which rearranges to r = FV/PV - 1; plug in the values (present value 114.63, future value 118.63) and you get exactly the same result. This is crude and inaccurate because in one year, the bond will be a year closer to maturity and will return one less coupon payment; therefore at the same rate of return the present value of the remaining payout of the bond will only be $110.99 (which makes a lot of sense if you think about it; the bond will only pay out $112 if you bought it a year from now, so why would you pay $114 for it?). Another measure, not seen in the list, is the \"\"simple APY\"\". Quite simply, it is the yield that will be realized from all cash flows from the bond (all coupon payments plus the face value of the bond), as if all those cash flows happened at maturity. This is calculated using the future value formula: FV = PV (1+r/n)nt, where FV is the future value (the sum of the face value and all coupon payments to be made before maturity), PV is present value (the current purchase price), r is the annual rate (which we're solving for), n is the number of times interest accrues and/or is paid (for an annual coupon that's 1), and t is the number of years to maturity. For the first bond in the list, the simple APY is 0.2974%. This is the effective compound interest rate you would realize if you bought the bond and then took all the returns and stuffed them in a mattress until maturity. Since nobody does this with investment returns, it's not very useful, but it can be used to compare the yield on a zero-coupon bond to the yield on a coupon bond if you treated both the same way, or to compare a coupon bond to a CD or other compound-interest-bearing account that you planned to buy into and not touch for its lifetime. The Yield to Maturity, which IS seen, is the true yield percentage of the bond in time-valued terms, assuming you buy the bond now, hold it to maturity and all coupon payments are made on time and reinvested at a similar yield. This calculation is based on the simple APY, but takes into account the fact that most of the coupon payments will be made prior to maturity; the present value of these will be higher because they happen sooner. The YTM is calculated by summing the present values of all payments based on when they'll occur; so, you'll get one $4 payment a year from now, then another $4 in two years, then $4 in 3 years, and $104 at maturity. The present value of each of those payments is calculated by flipping around the future value formula: PV = FV/(1+r)t. The present value of the entire bond (its current price) is the sum of the present value of each payment: 114.63 = 4/(1+r) + 4/(1+r)2 + 4/(1+r)3 + 104/(1+r)4. You now have to solve for r, which is difficult to isolate; the easiest way to find the rate with a computer is to \"\"goal seek\"\" (intelligently guess and check). Based on the formula above, I calculated a YTM of .314% for the first bond if you bought on Sept 7, 2012 (and thus missed the upcoming coupon payment). Buying today, you'd also be entitled to about 5 weeks' worth of the coupon payment that is due on Sept 07 2012, which is close enough to the present day that the discounted value is a rounding error, putting the YTM of the bond right at .40%. This is the rate of return you'll get off of your investment if you are able to take all the returns from it, when you receive them, and reinvest them at a similar rate (similar to having a savings account at that rate, or being able to buy fractional shares of a mutual fund giving you that rate).\"", "title": "" }, { "docid": "bd4931e1968953260f3368e895dd5e48", "text": "Bonds provide protections against stock market crashes, diversity and returns as the other posters have said but the primary reason to invest in bonds is to receive relatively guaranteed income. By that I mean you receive regular payments as long as the debtor doesn't go bankrupt and stop paying. Even when this happens, bondholders are the first in line to get paid from the sale of the business's assets. This also makes them less risky. Stocks don't guarantee income and shareholders are last in line to get paid. When a stock goes to zero, you lose everything, where as a bondholder will get some face value redemption to the notes issue price and still keep all the previous income payments. In addition, you can use your bond income to buy more shares of stock and increase your gains there.", "title": "" }, { "docid": "e0941188310bb385401ab76555dbfeb1", "text": "The DLOM maybe different if the bond is more or less marketable than the equity. However, the ratio itself would be the same. So while this might affect the interest at which you are willing to lend, it would not affect the intrinsic value of the firm.", "title": "" }, { "docid": "3a54b0c239744f4ae6d1ec4de349e745", "text": "\"Bonds are valued based on all of this, using the concept of the \"\"time value of money\"\". Simply stated, money now is worth more than money later, because of what you can do with money between now and later. Case in point: let's say the par value of a bond is $100, and will mature 10 years from this date (these are common terms for most bonds, though the U.S. Treasury has a variety of bonds with varying par values and maturation periods), with a 0% coupon rate (nothing's paid out prior to maturity). If the company or government issuing the bonds needs one million dollars, and the people buying the bonds are expecting a 5% rate of return on their investment, then each bond would only sell for about $62, and the bond issuer would have to sell a par value of $1.62 million in bonds to get its $1m now. These numbers are based on equations that calculate the \"\"future value\"\" of an investment made now, and conversely the \"\"present value\"\" of a future return. Back to that time value of money concept, money now (that you're paying to buy the bond) is worth more than money later (that you'll get back at maturity), so you will expect to be returned more than you invested to account for this time difference. The percentage of rate of return is known as the \"\"yield\"\" or the \"\"discount rate\"\" depending on what you're calculating, what else you take into consideration when defining the rate (like inflation), and whom you talk to. Now, that $1.62m in par value may be hard for the bond issuer to swallow. The issuer is effectively paying interest on interest over the lifetime of the bond. Instead, many issuers choose to issue \"\"coupon bonds\"\", which have a \"\"coupon rate\"\" determining the amount of a \"\"coupon payment\"\". This can be equated pretty closely with you making interest-only payments on a credit card balance; each period in which interest is compounded, you pay the amount of interest that has accrued, to avoid this compounding effect. From an accounting standpoint, the coupon rate lowers the amount of real monies paid; the same $1m in bonds, maturing in 10 years with a 5% expected rate of return, but with a 5% coupon rate, now only requires payments totalling $1.5m, and that half-million in interest is paid $50k at a time annually (or $25k semi-annually). But, from a finance standpoint, because the payments made in the first few years are worth more than the payments made closer to and at maturity, the present value of all these coupon payments (plus the maturity payout) is higher than if the full payout happened at maturity, and so the future value of the total investment is higher. Coupon rates on bonds thus allow a bond issuer to plan a bond package in less complicated terms. If you as a small business need $1m for a project, which you will repay in 10 years, and during that time you are willing to tolerate a 5% interest rate on the outstanding money, then that's exactly how you issue the bonds; $1 million worth, to mature in 10 years and a 5% coupon rate. Now, whether the market is willing to accept that rate is up to the market. Right now, they'd be over the moon with that rate, and would be willing to buy the bonds for more than their face value, because the present value would then match the yield they're willing to accept (as in any market system, you as the seller will sell to the highest bidder to get the best price available). If however, they think you are a bad bet, they'll want an even higher rate of return, and so the present value of all coupon and maturity payments will be less than the par value, and so will the purchase price.\"", "title": "" }, { "docid": "7b817ec03dd15fd9541bdb6b536bf2bd", "text": "\"not sure if I will help or just spread more gibberish but maybe the first concept I'd look at is risk tolerance. Risk tolerance is discerning your ability to risk losing money to get better results. So you know the saying \"\"the higher the risk the higher the reward\"\"? The way most people are going to operate is somewhere on the midpoint of behavior - not doing the riskiest thing, but not doing the very most cautious thing either. So given that concept, some investments will be more appealing given different economic scenarios. Typically stocks are going to reward your investment a little more aggressively than a treasury bond if the economy is humming along. This drives prices of treasuries lower, stock yields higher. In a crappy economy, people want to move their money into conservative investments like a treasury bond. Bond prices rise while stock prices dip. If you google 'correlations between the market prices of stocks and the market prices of Treasury bonds' you will find plenty of helpful and hopefully not too convoluted articles a la http://finance.zacks.com/correlation-treasuries-stocks-10871.html Don't get freaked out by graphs, the graphs are just a way to put into a picture that correlation.\"", "title": "" }, { "docid": "f08935866a28093a6c1ec0b4ac63cb12", "text": "Okay- I follow that. When we look a shorting a name - what makes that an equity transaction rather than a debt one? I guess how does that differ from investing in a bond? I recognize the simplicity of this question. Thanks.", "title": "" } ]	fiqa
094591b1d9ab6d721d5afdd6b71384a4	Is the Net Profit the 'final word' on a company's health?	[ { "docid": "8f20d184f04a39ab58bee86c211d7adc", "text": "\"To answer your question briefly: net income is affected by many things inside and outside of management control, and must be supplemented by other elements to gain a clear picture of a company's health. To answer your question in-depth, we must look at the history of financial reporting: Initially, accounting was primarily cash-based. That is, a business records a sale when a customer pays them cash, and records expenses when cash goes out the door. This was not a perfectly accurate system, as cashflow might be quite erratic even if sales are stable (collection times may differ, etc.). To combat problems with cash-based accounting, financial reporting moved to an accrual-based system. An accrual is the recording of an item before it has fully completed in a cash transaction. For example, when you ship goods to a customer and they owe you money, you record the revenue - then you record the future collection of cash as a balance sheet item, rather than an income statement item. Another example: if your landlord charges you rent on December 31st for the past year, then in each month leading up to December, you accrue the expense on the income statement, even though you haven't paid the landlord yet. Accrual-based accounting leaves room for accounting manipulation. Enron is a prime example; among other things, they were accruing revenue for sales that had not occurred. This 'accelerated' their income, by having it recorded years before cash was ever collectible. There are specific guidelines that restrict doing things like this, but management will still attempt to accelerate net income as much as possible under accounting guidelines. Public companies have their financial statements audited by unrelated accounting firms - theoretically, they exist to catch material misstatements in the financial statements. Finally, some items impacting profit do not show up in net income - they show up in \"\"Other Comprehensive Income\"\" (OCI). OCI is meant to show items that occurred in the year, but were outside of management control. For example, changes in the value of foreign subsidiaries, due to fluctuations in currency exchange rates. Or changes in the value of company pension plan, which are impacted by the stock market. However, while OCI is meant to pick up all non-management-caused items, it is a grey area and may not be 100% representative of this idea. So in theory, net income is meant to represent items within management control. However, given the grey area in accounting interpretation, net income may be 'accelerated', and it also may include some items that occurred by some 'random business fluke' outside of company control. Finally, consider that financial statements are prepared months after the last year-end. So a company may show great profit for 2015 when statements come out in March, but perhaps Jan-March results are terrible. In conclusion, net income is an attempt at giving what you want: an accurate representation of the health of a company in terms of what is under management control. However it may be inaccurate due to various factors, from malfeasance to incompetence. That's why other financial measures exist - as another way to answer the same question about a company's health, to see if those answers agree. ex: Say net income is $10M this year, but was only $6M last year - great, it went up by $4M! But now assume that Accounts Receivable shows $7M owed to the company at Dec 31, when last year there was only $1M owed to the company. That might imply that there are problems collecting on that additional revenue (perhaps revenue was recorded prematurely, or perhaps they sold to customers who went bankrupt). Unfortunately there is no single number that you can use to see the whole company - different metrics must be used in conjunction to get a clear picture.\"", "title": "" } ]	[ { "docid": "3acc8a3a418a3f0b1d7405347b21bc9c", "text": "Revenue is not profit. The vast majority of that revenue goes to the rest of the value chain of the products (manufacturers & distributors). [Wal-Mart's profit margin is 3.77% of revenue](http://finance.yahoo.com/q/ks?s=WMT). It's like saying VISA gets all the hundreds of billions of dollars people put on their credit cards, which is true, for a short period of time. But if you dont want to do any critical thinking and just looking for confirmation of your beliefs, this infographic is great. :P", "title": "" }, { "docid": "e45d5334eef5e00e04c8f2ea4c4cc892", "text": "\"Yes, that's true, but notice what you've done here. You have given two reasons why \"\"management is unable or unwilling to spend on innovation that could generate future earnings to shareholders\"\". You have expanded on rather than contradicted the statement made by the authors of the article.\"", "title": "" }, { "docid": "0d7f4d353dab4bde326ca491b6c9bf5b", "text": "Measures like GDP, unemployment, and wages are designed to measure the health of the economy. Those are the right measures to look at. When the economy is doing well, stock prices usually do well also, but not always. The stock market went up 23% in 2009, and the economy was in the shitter. And it shouldnt matter which newspaper published the numbers. If the numbers are right, the numbers are right. You dont need to hear GDP numbers on fox news to believe them.", "title": "" }, { "docid": "ac8ebb8b553aee06cc7f8e9efc57f71a", "text": "If there are idiots saying nasty things, they will say nasty things about your competitors as well. There will ALWAYS be unhappy people. However, if there are significantly more unhappy people for you than there are for a competitor, then they're not dumb - you are doing something wrong. And you are right - you will sometimes disagree with the aggregate regarding relevant factors in judging a business. That happens, and there is currently nothing you can do about it. It does not diminish the value of the aggregate's opinion, though, for the vast majority of businesses.", "title": "" }, { "docid": "25c44d89601720a278622e8fb85a878b", "text": "When you've been running your business without a profit for 11 years (e.g. Tesla Motors), I would not call it a success. But maybe you happen to be very generous and think they should have another 11 to prove themselves.", "title": "" }, { "docid": "a37dde006cc3985b1f488161219edc97", "text": "\"Regardless of if the 'higher profits' are create from higher volumes and more workers, the key word there is PROFITS - not 'revenue', not 'income' or any similar word. PROFITS - a word used to describe the amount left AFTER paying expenses - such as the salaries of those additional workers (if any). The point is, the worker deserve a share of those profits. It is their work that has made them - in addition to the work of the CEO, of course, but still...the CEO could not have created 'better margins' or done 'better deployment of capital' if it were not for the efforts of those workers in the first place. This is the main problem with the economy right now. No one feels the responsibility to those who have helped them succeed. They keep using a 'slash and burn' financial strategy - slash salaries and benefits and burn up your labor force to extract every dollar you can for the top. The only problem is, now they're running out of things to slash and the workers they've burned have nothing left. And they wonder why the economy is in the crapper. I keep being reminded of a quote from Ladyhawke as said by the evil bishop: \"\"I raise their taxes, only to be told there's nothing left for me to tax. Imagine.\"\"\"", "title": "" }, { "docid": "b7b91053d1f4af486df95fc9edd1511e", "text": "You are correct. It's using accounting to accomplish different goals. First, relevant costs should be considered when making the decision to buy internally rather than externally. Second, by adding the possibility for a cost centre to turn a profit, even if it is only an accounting trick, means that interest are better aligned (profit motive and all). Third, you are right that on the consolidated/group level there is no real profit. It can give a better picture of actual economic performance though.", "title": "" }, { "docid": "c2c3676b2b129cfa0ccd29b2f8cffcc2", "text": "\"One of the very best case studies of the dangers of sacrificing product quality for profit, [Schlitz Brewing Company](http://en.wikipedia.org/wiki/Joseph_Schlitz_Brewing_Company) was [on the fortune 500 at one time](http://money.cnn.com/magazines/fortune/fortune500_archive/snapshots/1969/3214.html). In the 70's, Schlitz management [decided to make some changes to their beer to increase profit margins.](http://www.beerconnoisseur.com/the-fall-of-schlitz) They changed the fermentation process to a faster one, started using corn syrup instead of malt, and used hop pellets instead of fresh hops. They used unusual additives to compensate, which under certain circumstances make the beer the consistency of \"\"snot.\"\" Short-term profits went up, long-term customers stopped buying the beer. But if you want more modern examples, here are three from the [full list of 2012 fortune 500 companies](http://money.cnn.com/magazines/fortune/fortune500/2012/full_list/): * [Morgan Stanley](http://en.wikipedia.org/wiki/Morgan_Stanley#Controversies_and_lawsuits) - responsible for global economic crash, sold financial products to customers while quietly betting against them. * Bank of America - doubles interest rates on customers in good standing and now charges fees for everything, including talking to a teller. * General Motors - now builds cars with interiors made mostly of cheap plastic. edit: fixed link\"", "title": "" }, { "docid": "1e3880cd6b479618d8f67aa17c10f770", "text": "\"Marketing, namely advertising (Facebook, Google ads, maybe magazines, etc.) Despite all the nice words about \"\"healthy, green, and socially responsible\"\", the business of this company (and many, many similar ones) is not \"\"providing information\"\". It's affiliate marketing - getting people to click through to retail sites and buy stuff, on which the company earns commissions (often they also get paid for registrations). In a very real sense, their product is customers. They sell paying customers to the retail sites, and before that, they basically have to buy \"\"raw customers\"\" through advertising. The times when you could rely on getting enough people to visit your website for free are largely over - there is too much competition for peoples' attention. They can only be profitable if they can get the raw customers cheap enough, and can convert enough of them to paying customers. And this is really how it's talked about internally, in what is by now a highly organized industry: key performance measures are CPC (how much does it cost to get someone to come to your website), conversion rate (what percentage of visitors register) and ARPU (average revenue per user).\"", "title": "" }, { "docid": "656b679ad28e3cbb923d95a51b5719c2", "text": "\"The title of the submission you commented on is \"\"Antibiotic-Free Meat Business Is Booming, Thanks To Chipotle\"\". If the first sentence of your comment is \"\"Simply put this has to stop.\"\" From that, I can only reasonably infer that you think Chipotle needs to stop using antibiotic-free meat, which seems like a strange position.\"", "title": "" }, { "docid": "c931bb2f9dcdb1cc4c7d39d26a373b32", "text": "\"No no no no and no. Headline accuracy is VERY important. People don't read articles. That was true two decades ago, let alone in the web age. The title could have easily read \"\"Survey of 2,000 US CEO's finds pay jump minimum Of 27 percent last year.\"\" Accurate, still gets point across. Your explanation really concerns me because it excuses lazy and/or salacious journalism.\"", "title": "" }, { "docid": "32c9e041c72922c0a4efd5e86c9901a4", "text": "And again, not true. Ive been to literally hundreds of warehouses. The only ones with climate control are food storage warehouses that need to be below freezing, or amazon. No other company in my experience has the kind of systems in place to keep employees as comfortable as possible given the job. As for medical care, the warehouses i know the most about require an active EMT or paramedic license for medical responders in the warehouse. I remember the articles years ago about working conditions at Amazon, but ive not seen anything to prove those accusations, and ive seen plenty to convince me they either are no longer valid, or they never were in the first place", "title": "" }, { "docid": "3acf275d77964f6b617beee49dcc0d64", "text": "There are those who would suggest that due to the Efficient Market Hypothesis, stocks are always fairly valued. Consider, if non-professional posters on SE (here) had a method that worked beyond random chance, everyone seeking such a method would soon know it. If everyone used that method, it would lose its advantage. In theory, this is how stocks' values remain rational. That said, Williams %R is one such indicator. It can be seen in action on Yahoo finance - In the end, I find such indicators far less useful than the news itself. BP oil spill - Did anyone believe that such a huge oil company wouldn't recover from that disaster? It recovered by nearly doubling from its bottom after that news. A chart of NFLX (Netflix) offers a similar news disaster, and recovery. Both of these examples are not quantifiable, in my opinion, just gut reactions. A quick look at the company and answer to one question - Do I feel this company will recover? To be candid - in the 08/09 crash, I felt that way about Ford and GM. Ford returned 10X from the bottom, GM went through bankruptcy. That observation suggests another question, i.e. where is the line drawn between 'investing' and 'gambling'? My answer is that buying one stock hoping for its recovery is gambling. Being able to do this for 5-10 stocks, or one every few months, is investing.", "title": "" }, { "docid": "97576b7a5665b9d6703aa2b7af407aa2", "text": "Where we’re going, we don’t need profits Twitter Facebook LinkedIn Print this page 15 SEPTEMBER 19, 2017 By: Alexandra Scaggs Simply put, earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis. – Profs Feng Gu and Baruch Lev, in a paper for the CFA Institute’s Financial Analysts Journal Well then! This idea challenges the very heart of traditional equity-market investment analysis. The authors point out that legendary stock-picker Benjamin Graham spent hundreds of pages of his 1962 book on analysing and predicting earnings and other quarterly metrics. Earnings prediction is still central to most sell-side analysis as well. But if profits, EBITDA or sales were truly central for corporate valuation, wouldn’t markets punish regular loss-makers like Tesla and Amazon more severely? And wouldn’t there be a stronger return to predicting profits? The returns to such predictions have diminished over time, according to the authors of the paper, which might help explain the persistent underperformance by active fund managers. While the professors commit a minor chart crime below by starting the Y-axis at 1.5 per cent, it seems notable that potential gains were lower during the 2009 downturn than during the dot-com bust: The 30-year pattern of the gains from the earnings growth investment strategy is depicted in Figure 2. Again, the deterioration of gains from perfect growth prediction is evident. Clearly, the problem lies with reported earnings, not in the way investors use them. Simply put, earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis. The decline in profits’ importance can be explained by a fundamental change in the way companies create value, they say. There are lots of names for the change: The information revolution, the rise of the knowledge economy, and so on. No matter what you call it, the idea is that modern production relies less on physical capital and more on intellectual capital. Accounting and financial analysis methods have failed to adapt to this change, they say. For example, companies are required to expense R&D and sales expenses immediately, while they can amortise expenses from capital investment and acquisitions (including intangibles) over time. They argue those rules penalise the important methods of modern value creation, since R&D costs create lasting returns from new products and SG&A expenses create lasting returns from new customers. Of course, one person’s “internally generated intangibles” can be another’s “overpaid salesforce”. But the difference in accounting treatment between those costs and acquired intangibles can make it difficult to compare within industries: Thus, a company pursuing an innovation strategy based on acquisitions will appear more profitable and asset rich than a similar enterprise developing its innovations internally. Consequently, reported earnings, assets, and market multiples (P/E, book-to-market ratio) cannot be compared within industries, and earnings definitely do not reflect intrinsic value creation. And as far as we can tell, the professors aren’t lobbying to start amortising all sales costs and executive compensation. Instead, they say we should stop looking at the consequences of corporate value creation — the quarterly reports — and start looking at its causes. They suggest financial analysis based on strategic assets, which are (1) rare, (2) difficult to imitate and (3) generate net benefits, like growth in a customer base or sales. There would be four steps to this type of analysis. From the paper, with our emphasis: 1. Taking inventory of strategic assets: Compiling a list of the major strategic assets of the enterprise; distinguishing between operating and dormant assets (e.g., patents under development or licensed out versus abandoned patents), active brands (enabling the charging of a premium product price) and brands in name only, or producing oil and gas properties and those under exploration versus inactive properties. Such inventory taking establishes the foundation—active strategic assets—of the company’s competitive advantage. 2. Enhancing strategic assets: Without continued investment and replenishment, even highly productive assets will wither on the vine (recall Dell). You should ask, Is the spending on R&D, technology purchases, customer acquisition, brand support, and employee training sufficient to maintain and grow the business? Cutting R&D or employee training to “make the numbers” clearly bodes ill for future growth. 3. Defending strategic assets: These assets are vulnerable to competition (from similar products), infringement, and technological disruption, raising the question of whether the company’s assets are adequately protected by continuous innovation, patent defensive walls, and litigation. A continuous loss of market share clearly indicates a failure to protect assets. 4. Asset deployment and value creation: Are the strategic assets, along with other company resources, optimally deployed to create value (e.g., retail outlets with increasing same-store sales)? And what is this value? Note that in our analysis, the measurement of the periodic value created is a byproduct rather than the focus of the analysis. We prefer to measure value created by cash flows to avoid the multiple managerial estimates embedded in earnings. In contrast to the cash flows generally used by analysts (EBITDA), however, we add to cash flows the company’s investments in value-creating strategic assets, such as R&D, IT, and unusual brand creation expenditures, which are not really operating cash outflows. Now, if we are living in a period of secular stagnation, this could be seen as an attempt to lower the bar to make up for lackluster capital investment. (One academic literature review we found on the topic of strategic assets only cites papers from around the time of the dot-com bubble. Fancy that!) What’s more, “defending strategic assets” can sound a lot like “maintaining monopoly power”, depending on the methods companies use in their defence. So an investment analysis focussed on strategic assets might also require more aggressive anti-trust regulation. But if you accept the idea that widespread adoption of the internet brought a fundamental and irreversible change in the drivers of growth, there are worse approaches to financial analysis you can take. There’s more detail and argument in the paper, which you can find here.", "title": "" }, { "docid": "14022298e94e2e3e3adcb0b34f95ed17", "text": "\"Although I only cited product quality, I'm trying to think of examples of companies that incorporated and then immediately improved product quality, fostered good will, and treated its employees better than when they were private. None come to mind, can you think of any? Perhaps \"\"almost always\"\" was a bit of hyperbole, but in matters of cost vs. quality I'd expect publicly traded companies to prioritize short-term shareholder profit (or be sued by said shareholders.) Private companies can have more of a vested interest in the good will of their employees, product quality, and can make decisions that benefit themselves and society long-term because they do not have this fiduciary responsibility. Have you ever seen the documentary [the Corporation](http://www.thecorporation.com/index.cfm?page_id=46)? They make a compelling case that if corporations were people they'd be sociopaths (according to the ASM.)\"", "title": "" } ]	fiqa
9ea2aacb797a8be34015532e2358765d	If a startup can always issue new shares, what value is there to stocks/options?	[ { "docid": "49d5553f15ad88c88339a581ea59efa4", "text": "The short answer, probably not much. Unless you have a controlling interest in the company. If at least 50%+1 of the shareholder votes are in favor of the dilution then it can be done. There are some SEC rules that should protect against corporate looting and theft like what the Severin side is trying to make it appear as happened. However it would appear that Severin did something stupid. He signed away all of his voting right to someone who would use them to make his rights basically worthless. Had he kept his head in the game he could probably have saved himself. But he didn't. If your average startup started issuing lots of stock and devaluing existing shares significantly then I would expect it would be harder to find investors willing to watch as their investment dwindled. But if you are issuing a limited amount stock to get leverage to grow bigger then it is worth it. In the .com bubble there were quite a few companies that just issued stock to buy other companies. Eventually most of these companies got delisted because they diluted them selves to much when they were overvalued. Any company not just a startup can dilute its shares. Many if not most major companies issue stock to raise capital. This capital is then generally used to build the business further and increase the value of all shares. Most of the time this dilution is very minor (<.1%) and has little if any impact on the stock. There are rules that have to be followed as listed companies are regulated by the SEC. There are less regulations with private corporations. It looks like the dilution was combined with the buyout of the Florida company which probably contributed to the legality of the dilution. With options they are generally issued at a set price. This may be higher or lower than the reported sell price of the stock when the option is issued. The idea is over time the stock will increase in value so that those people who hold on to their options can buy the stock for the price listed on the option. I worked at an ISP start up in the 90's that made it pretty well. I left before the options were issued but I had friends still there that were issued an option at $16 a share the value of the stock at the time of the issue of the option was about 12. Well the company diluted the shares and used them to acquire more ISP's unfortunately this was about the time that DSL And cable internet took off so the dial up market tanked. The value eventually fell to .10 they did a reverse split and when they did the called in all options. The options did not have a positive cash value at any time. Had RMI ever made it big then the options could have been worth millions. There are some people from MS and Yahoo that were in early that made millions off of their options. This became a popular way for startups to attract great talent paying peanuts. They invested their time in the business hoping to strike gold. A lot of IT people got burned so this is less popular among top talent as the primary compensation anymore.", "title": "" }, { "docid": "c526e569e2ae563e14b933f146c30364", "text": "\"Companies normally do not give you X% of shares, but in effect give you a fixed \"\"N\"\" number of shares. The \"\"N\"\" may translate initially to X%, but this can go down. If say we began with 100 shares, A holding 50 shares and B holding 50 shares. As the startup grows, there is need for more money. Create 50 more shares and sell it at an arranged price to investor C. Now the percentage of each investor is 33.33%. The money that comes in will go to the company and not to A & B. From here on, A & C together can decide to slowly cut out B by, for example: After any of the above the % of shares held by B would definitely go down.\"", "title": "" }, { "docid": "b9c2c0c7b002d89409c6869f93afb653", "text": "\"It's called \"\"dilution\"\". Usually it is done to attract more investors, and yes - the existing share holders will get diluted and their share of ownership shrinks. As a shareholder you can affect the board decisions (depends on your stake of ownership), but usually you'll want to attract more investors to keep the company running, so not much you can do to avoid it. The initial investors/employees in a startup company are almost always diluted out. Look at what happened to Steve Jobs at Apple, as an example.\"", "title": "" } ]	[ { "docid": "48c4c09393444db71c1e41e3da89a24d", "text": "\"A company has 100,000 shares and 100,000 unexercised call options (company issued). Share price and strike price both at $1. What country is this related to? I ask because, in the US, most people I know associate a \"\"call\"\" option with the instrument that is equivalent to 100 shares. So 100,000 calls would be 10,000,000 shares, which exceeds the number of shares you're saying the company has. I don't know if that means you pulled the numbers out of thin air, or whether it means you're thinking of a different type of option? Perhaps you meant incentive stock options meant to be given to employees? Each one of those is equivalent to a single share. They just aren't called \"\"call options\"\". In the rest of my answer, I'm going to assume you meant stock options. I assume the fact that these options exist will slow any price increases on the underlying shares due to potential dilution? I don't think the company can just create stock options without creating the underlying shares in the first place. Said another way, a more likely scenario is that company creates 200,000 shares and agrees to float 50% of them while reserving the other 50% as the pool for incentive employee stock. They then choose to give the employees options on the stock in the incentive pool, rather than outright grants of the stock, for various reasons. (One of which is being nice to the employees in regards to taxes since there is no US tax due at grant time if the strike price is the current price of the underlying stock.) An alternative scenario when the company shares are liquidly traded is that the company simply plans to buy back shares from the market in order to give employees their shares when options are exercised. In this case, the company needs the cash on hand, or cash flow to take money from, to buy those shares at current prices. Anyway, in either case, there is no dilution happening WHEN the options get exercised. Any dilution happened before or at the time the options were created. Meaning, the total number of shares in the company was already pre-set at an earlier time. As a result, the fact that the options exist in themselves will not slow price changes on the stock. However, price changes will be impacted by the total float of shares in the company, or the impact to cash flow if the company has to buy shares to redeem its option commitments. This is almost the same thing you're asking about, but it is technically different as to timing. If this is the case, can this be factored into any option pricing models like black-scholes? You're including the effect just by considering the total float of shares and net profits from cash flow when doing your modelling.\"", "title": "" }, { "docid": "fb62ebecadd68a8092e7c5ae7522d06f", "text": "As a start-up, the initial shares can be given at various price points. So essentially they can give someone a larger percentage based on the same amount earlier, and lesser percentage to someone else for the same amount. As its a start-up the valuations can be very tricy and what matters is that whether you believe the percentage you got for the amount is right or not. It is very important to note that when you have been given an ownership in the company, how that is designated. Is it in absolute number of shares or is it in terms of percentage based on the existing shares. For example you maybe given 100 shares, without any qualification. Or you maybe given a 5% stake in the paid-up capital, that translates to 100 shares. It is always better to hold the shares in % of the total shares. Also read the contract, any dilution should require your approval. Normally start-ups once the valuation starts to go up, start creating more shares and sell these to private equity or create more shares and give it as a bonus to promoters. Hence in both cases your holding will keep getting diluted. There is a related quesiton If a startup can always issue new shares, what value is there to stocks/options?", "title": "" }, { "docid": "45c4919c1137c3120ac7d9b324d8bc58", "text": "What you want is a cashless transaction. It's part of the normal process. My employer gives me 1000 options at $1, I never need to come up with the money, the shares are bought and sold in one set of transactions, and if the stock is worth $10, I see $9000 less tax withholding, hit the account. No need for me to come up with that $1000.", "title": "" }, { "docid": "43f2d72be1a3b0a5c3f9a5aa9964ed05", "text": "If that company issues another 100 shares, shouldn't 10 of those new 100 shares be mine? Those 100 shares are an asset of the company, and you own 10% of them. When investors buy those new shares, you again own a share of the proceeds, just as you own a share of all the company's assets. A company only issues new share to raise money - it is a borrowing from investors, and in that way can be seen as an alternative to taking on loans. Both share issuing and a loan bring new capital and debt into a company. The difference is that shares don't need to be repaid.", "title": "" }, { "docid": "58fee466a1611be7e3a36f466ff3a5b7", "text": "\"Equity could mean stock options. If that's the case if the company makes it big, you'll have the option to buy stocks cheap (which can then be sold at a huge profit) How are you going to buy those without income? 5% equity is laughable. I'd be looking for 30-40% if not better without salary. Or even better, a salary. To elaborate, 5% is fine, and even normal for an early employee taking a mild pay cut in exchange for a chance at return. That chance of any return on the equity is only about 1/20 (94% of startups fail) There is no reason for an employee to work for no pay. An argument could be made for a cofounder, with direct control and influence in the company to work for equity only, but it would be a /lot/ more (that 30-40%), or an advisory role (5% is reasonable) I also just noticed you mentioned \"\"investing\"\" in the startup with cash. As an angel investor, I'd still expect far more than 5%, and preferred shares at that. More like 16-20%. Read this for more info on how equity is usually split.\"", "title": "" }, { "docid": "4978e4af9610ba7bde226f78eaa46d5a", "text": "Let's clarify some things. Companies allow for the public to purchase their shares through Initial Public Offering (IPO) (first-time) and Seasoned Public Offering (SPO) (all other times). They choose however many shares they want to issue depending on the amount of capital they want to raise. What this means is that the current owners give up some ownership % in exchange for cash (usually). In the course of IPOs and SPOs, it can happen that the public will not buy all shares if there is very little interest, but I would assume that the more probable scenario if very little interest is present is that the shares' value would take a big drop on their issuance date from the proposed IPO/SPO price. After those shares are bought by the public, they are traded on Exchanges which are a secondary and (mostly) do not affect the underlying company. The shares are exchanged from John Doe to Jane Doe as John Doe believes the market value for those shares will take a direction that Jane Doe believes in the opposite. Generally speaking, markets will find an equilibrium price where you can reasonably easily buy-sell securities as the price is not too far from what most participants in the market believe it should be. In cases where all participants agree on the direction (most often in case of a crash) it can be hard to find a party to make a trade with. Say a company just announced negative news with long-lasting effects on the business there will be a surge in sell orders with very few buyers. If you are willing to buy, you will likely very easily find a trading partner but if you are trying to sell instead then you will have to compete for the lowest price against all other sellers. All that to say that in such cases, while shares are technically sellable / purchasable, the end result can be that no shares are purchasable.", "title": "" }, { "docid": "7fb2ffdbc44f0f39716c4966623450b3", "text": "\"First, you mentioned your brother-in-law has \"\"$100,000 in stock options (fully vested)\"\". Do you mean his exercise cost would be $100,000, i.e. what he'd need to pay to buy the shares? If so, then what might be the estimated value of the shares acquired? Options having vested doesn't necessarily mean they possess value, merely that they may be exercised. Or did you mean the estimated intrinsic value of those options (estimated value less exercise cost) is $100,000? Speaking from my own experience, I'd like to address just the first part of your question: Have you treated this as you would a serious investment in any other company? That is, have you or your brother-in-law reviewed the company's financial statements for the last few years? Other than hearing from people with a vested interest (quite literally!) to pump up the stock with talk around the office, how do you know the company is: BTW, as an option holder only, your brother-in-law's rights to financial information may be limited. Will the company share these details anyway? Or, if he exercised at least one option to become a bona-fide shareholder, I believe he'd have rights to request the financial statements – but company bylaws vary, and different jurisdictions say different things about what can be restricted. Beyond the financial statements, here are some more things to consider: The worst-case risk you'd need to accept is zero liquidity and complete loss: If there's no eventual buy-out or IPO, the shares may (effectively) be worthless. Even if there is a private market, willing buyers may quickly dry up if company fortunes decline. Contrast this to public stock markets, where there's usually an opportunity to witness deterioration, exit at a loss, and preserve some capital. Of course, with great risk may come great reward. Do your own due diligence and convince yourself through a rigorous analysis — not hopes & dreams — that the investment might be worth the risk.\"", "title": "" }, { "docid": "3e77db7e9fa33441623e940265591ae1", "text": "\"When you exercise your options, you come up with cash to buy the shares. This makes you an owner of the company for shares at the share price your options let you have. Ideally, your share price is at a significant discount to what the company is worth. Being a shareholder, you gain from any share price appreciation in a sale. The only thing the \"\"60-day window\"\" applies to is whether you come up with the cash to buy fast enough, or your shares get permanently deleted from the company finances, where everyone else potentially makes more, you make nothing. The sale of the company is based on whenever the sell finalizes, which is between your company and the acquiring company.\"", "title": "" }, { "docid": "6cf789155692e1686257b5c57e274203", "text": "It depends. If the investor bought newly-issued shares or treasury shares, the company gets the money. If the investor bought shares already held by the owner, the owner gets the money. A 100% owner can decide how to structure the sale. Yet, the investor may only be willing to buy shares if the funds increase the company's working capital.", "title": "" }, { "docid": "8b82fb1b960b241080e16afd01ce6551", "text": "\"Each company has X shares valued at $Y/share. When deals like \"\"Dragon's Den\"\" in Canada and Britain or \"\"Shark Tank\"\" in the US are done, this is where the company is issuing shares valued at $z total to the investor so that the company has the funds to do whatever it was that they came to the show to get funding to do, though some deals may be loans or royalties instead of equity in the company. The total value of the shares may include intangible assets of course but part of the point is that the company is doing an \"\"equity financing\"\" where the company continues to operate. The shareholders of the company have their stake which may be rewarded when the company is acquired or starts paying dividends but that is a call for the management of the company to make. While there is a cash infusion into the company, usually there is more being done as the Dragon or Shark can also bring contacts and expertise to the company to help it grow. If the investor provides the entrepreneur with introductions or offers suggestions on corporate strategy this is more than just buying shares in the company. If you look at the updates that exist on \"\"Dragon's Den\"\" or \"\"Shark Tank\"\" at least in North America I've seen, you will see how there are more than a few non-monetary contributions that the Dragon or Shark can provide.\"", "title": "" }, { "docid": "adbdd54925b565f216b4280ab7340fb6", "text": "Selling stock means selling a portion of ownership in your company. Any time you issue stock, you give up some control, unless you're issuing non-voting stock, and even non-voting stock owns a portion of the company. Thus, issuing (voting) shares means either the current shareholders reduce their proportion of owernship, or the company reissues stock it held back from a previous offering (in which case it no longer has that stock available to issue and thus has less ability to raise funds in the future). From Investopedia, for exmaple: Secondary offerings in which new shares are underwritten and sold dilute the ownership position of stockholders who own shares that were issued in the IPO. Of course, sometimes a secondary offering is more akin to Mark Zuckerberg selling some shares of Facebook to allow him to diversify his holdings - the original owner(s) sell a portion of their holdings off. That does not dilute the ownership stake of others, but does reduce their share of course. You also give up some rights to dividends etc., even if you issue non-voting stock; of course that is factored into the price presumably (either the actual dividend or the prospect of eventually getting a dividend). And hopefully more growth leads to more dividends, though that's only true if the company can actually make good use of the incoming funds. That last part is somewhat important. A company that has a good use for new funds should raise more funds, because it will turn those $100 to $150 or $200 for everyone, including the current owners. But a company that doesn't have a particular use for more money would be wasting those funds, and probably not earning back that full value for everyone. The impact on stock price of course is also a major factor and not one to discount; even a company issuing non-voting stock has a fiduciary responsibility to act in the interest of those non-voting shareholders, and so should not excessively dilute their value.", "title": "" }, { "docid": "225f4633fccc7c851fcc68c4be913d31", "text": "When a company IPOs the underwriters sell a given percentage on IPO day and shortly thereafter. Whatever is sold on IPO day trades freely. Insiders, employees and investors who bought before the IPO only sell a percentage of their shares on IPO day. They all also agree to 'lock up' the remainder for a period of time, so that not everyone is rushing to the exits right away. Well, if you're an employee you don't per-se agree, it's just how your stock options are setup and you don't really have a say in the matter.", "title": "" }, { "docid": "aad610e3a0fb5a902164d4ff0b71f472", "text": "No. Mark-to-market valuation relies on using a competitive market of public traders to determine the share price --- from free-market trading among independent traders who are not also insiders. Any professional valuation would see through the promotional nature of the share offer. It is pretty obvious that the purchaser of a share could not turn around and sell their share for $10, unless the 'free hosting' that is worth most of the $10 follows it... and that's more of hybrid of stock and bond than pure stock. It is also pretty obvious that selling a few shares for $10 does not mean one could sell 10,000,000 shares for $10, because of the well known decreasing marginal value effect from economics. While this question seems hypothetical, as a practical matter offering to sell share of unregistered securities in a startup for $10 to the general public, is likely to run afoul of state or federal securities laws -- irregardless of the honesty of the business or any included promotional offers. See http://www.sec.gov/info/smallbus/qasbsec.htm for more information about the SEC regulations for raising capital for small businesses.", "title": "" }, { "docid": "e30c1a9481ded4a26c6feb5502718faa", "text": "My understanding is you can create a company 0 value. Then you need to either loan the company the money to buy the building (it will still have 0 value as it will have a debt equal to it's assets) or sell share to investors at any price you like to raise the money to buy the building. Once shares have value (as valued by a chartered accountant - not anyone can do this) then anyone recieving shares will have to pay income tax. This is why keeping the shares as no value for as long as possible can be preferable. Also a benefit of using share options. talk to your investors, see what they require.", "title": "" }, { "docid": "ed3a04403eb605af7ed68d5a4c79621c", "text": "The buyer can get another cosigner or you can sell the car to pay off the loan. These are your only options if financing cannot be obtained independently.", "title": "" } ]	fiqa
0ce77be7160ebe9d8b7dbfd3d35d81f7	If I own x% of company A, and A buys company B, do I own x% of B?	[ { "docid": "0dce6729624168b550256744e70137e0", "text": "No, thanks to the principle of corporate personhood. The legal entity (company C) is the owner and parent of the private company (sub S). You and C are separate legal entities, as are C and S. This principle helps to legally insulate the parties for purposes such as liability, torts, taxes, and so forth. If company C is sued, you may be financially at stake (i.e. your investment in C is devalued or made worthless) but you are not personally being sued. However, the litigant may attach you as an additional litigant if the facts of the suit merit it. But without legal separateness of corporations, then potentially all owners and maybe a number of the employees would be sued any time somebody sued the business - which is messy for companies and messy for litigants. It's also far cleaner for lenders to lend to unified business entities rather than a variety of thousands of ever-shifting shareholders. Note that this is a separate analysis that assumes the companies are not treated as partnerships or disregarded entities (tax nothings) for tax purposes, in which case an owner may for some purposes be imputed to own the assets of C. I've also ignored the consolidated tax return, which would allow C and S to file a type of corporate joint return that for some purposes treats them similarly to common entity. For the simplest variation of your question, the answer is no. You do not own the assets of a corporation by virtue of owning a few of its shares. Edit: In light of your edit to include FB and Whatsapp, and the wrinkle about corporate books. If sub S is 100% owned by company C, then you do not have any inspection rights to S because you are not a shareholder. You also do not have virtual corporation inspection rights through company C. However, if a person has inspection rights to company C, and sub S appears on the books and financial records of C, then your C rights will do the job of seeing S information. However, Facebook is a public company, so they will make regular public filings and disclosures that should at least partly cover Whatsapp. So I hedge and clear my throat by averring that my securities training is limited, but I believe that the SEC filings of a public company will as a practical matter (maybe a matter of law?) moot the inspection rights. At the very least, I suspect you'd need a proper purpose (under DGCL, for example), to demand the inspection, and they will have already made extensive disclosures that I believe will be presumptively sufficient. I defer to more experienced securities experts on that question, but I don't believe inspection rights are designed for public companies.", "title": "" }, { "docid": "04acb8714d3f5125a24a1f51c8810149", "text": "Ok, so imagine I own x% of Facebook and Facebook buys WhatsApp, does this mean I own x% of WhatsApp? Yea definitely , you own x% of Whatsapp assuming Facebook buys 100% of WhatApps which is in this case How much shares of FaceBook do I need to own to have access to WhatsApp's books? As WhatsApp is a privately held company by Facebook , Facebook is not obliged to reveal the books of WhatsApp , though some not all of the books of WhatsApp may appear in Facebook financial report , it really depends on Facebook Accounting policy.", "title": "" } ]	[ { "docid": "cc8cef33e546ee51c18107a33497d461", "text": "A buy out is agreed by shareholders. Plus most countries have regulation protecting minority interest. Depending on the terms of buy out, you may get equivalent shares of buyer company or cash or both.", "title": "" }, { "docid": "33559cb95204fca917084c32f4a7cebd", "text": "\"None of that is filtered my way as a \"\"part owner\"\". Sure it is, it's just not always obvious. When a company makes money it either: Other then the fourth option, the first three all increase the total value of the company. If you owned 1% of a company that was worth X, and is now worth X+1, the value of that 1% ownership should go up as well. One model of the value of a share of stock is the present value of all future cash flows that the company produces for its shareholders, which would be either through dividends, earnings (provided that they are invested back into the company) or through liquidation (sale). So as earnings increase (or more accurately as projected future earnings increase), so does the value of a share of the company. Also note that the payment of dividends causes the price of a stock to go down when the dividend is paid, since that's equity (cash) that's leaving the company, reducing the value of the company by an equivalent amount. Of course, there's also something to be said for the behavioral aspect of investing, meaning that people sometimes invest in companies that they like, and sell stock of companies that they don't like or disagree with (e.g. Nordstrom's).\"", "title": "" }, { "docid": "07e9ba160f7d41c687da37d2a78030c8", "text": "You need to be clear about who gets your money: If you pay the existing owner $25K and (s)he gives you half the business, then you now own half of a $50K business an the original owner has an extra $25K in spending cash. The value of the business has not changed. If you contribute $25 to the company, new equity shares are created. Shares should be priced correctly, meaning you now own $25K worth of shares in a company worth $75k, so you should have 1/3 of the outstanding shares (counting both old and new shares). If you get more or less than this, then the transaction has happened in an unfair way. If this is a public company, that would most likely be illegal and the SEC may throw you in jail. If it was a private company and your friend created enough shares that you own half the company, then (s)he has given you a gift. If you are contributing to the company at a fair price, you would need to contribute $50K in order to end up with half the equity of the new and now more valuable firm. In that case the firm would be worth $100K after your contribution. Bottom line, this is a common and not complex transaction and should end up with a completely fair outcome. Any unfair situation you can imagine is probably based on false assumptions or a situation where a non-arms-length transaction is transferring wealth contrary to normal rules and procedures.", "title": "" }, { "docid": "6cf789155692e1686257b5c57e274203", "text": "It depends. If the investor bought newly-issued shares or treasury shares, the company gets the money. If the investor bought shares already held by the owner, the owner gets the money. A 100% owner can decide how to structure the sale. Yet, the investor may only be willing to buy shares if the funds increase the company's working capital.", "title": "" }, { "docid": "0781346fa724fd4cdd54d85a61f25b62", "text": "I almost agree. I am not completely sure about the ownership of stock, but to have the majority ownership of any company you must own more than 50% of a company's outstanding shares. Although a board in majority, could out vote a majority shareholder in most cases depending on the company policy regarding shareholders and the general law of the country, and to how the company is managed.", "title": "" }, { "docid": "ac5f6d63f5ddfbe95132e9cb560a5580", "text": "Get involved a lawyer and Accountant. Without it you may not be sure what you are getting. What exactly will 30% mean for me? It will mean exactly what gets written in contract. It can mean you are owner of 30% of the company. If this is structured as partnership, it would also mean you are party to 30% loss. It can mean by current valuation, you get x fixed shares. In future if the directors creates more shares, your % ownership can get diluted. Or anything else. It all depends on what is written in contract and how the contract is structured. Is there anything I should I be aware of before agreeing? Get a draft and talk to a Lawyer and Accountant, they should be able to tell you exactly what it means and you can then decide if you agree to it or not; or need this contract worded differently.", "title": "" }, { "docid": "5113b7444d0fc0998ef14da59956b5ec", "text": "I agree with the other comments that you should not buy/hold your company stock even if given at a discount. If equity is provided as part of the compensation package (Options/Restrictive Stock Units RSU)then this rule does not apply. As a matter of diversification, you should not have majority equity stake of other companies in the same sector (e.g. technology) as your employer. Asset allocation and diversification if done in the right way, takes care of the returns. Buying and selling on the same day is generally not allowed for ESPP. Taxation headaches. This is from personal experience (Cisco Systems). I had options issued in Sept 2008 at 18$ which vested regularly. I exited at various points - 19$,20$,21$,23$ My friend held on to all of it hoping for 30$ is stuck. Options expire if you leave your employment. ESPP shares though remain.", "title": "" }, { "docid": "2e9d46483c7e5daea7763087588139b5", "text": "Open Google finance and divide the Market Capitalization by the total price. That will give you the total number of shares outstanding. Now see the number of shares you could buy for $1000(40 shares of $25 each or 10 shares of 100 shares each). Now divide the number of shares you own, by the number of shares outstanding in the company and multiply it by 100(i.e (Shares you own/shares Outstanding) * 100). That will give you the percentage or stake of the company you own(With $1000, don't expect it to be a very large number). Now ask your self the question, Is it worth it if I can buy x % of this company for $1000? If the answer is yes, go ahead and buy it. To answer your question in short, NO! it does not matter whether you buy 10 shares for $100 or 40 shares for $25. Cheers", "title": "" }, { "docid": "8be243534531945387a55667d9391d39", "text": "\"As an owner of a share of a business you also \"\"own\"\" profits made by the business. But you delegate company management to reinvest those profits, on your behalf, to make even more profits. So your share of the business is a little money-making machine that should grow, without you having to pay taxes on the dividends and without you having to decide where to reinvest your share of the profit.\"", "title": "" }, { "docid": "3bdc9f43a6dbeae09b8d7384d8c5badd", "text": "\"The first 3 are the same as owning stock in a company would be measured in shares and would constitute some percentage of the overall shares outstanding. If there are 100 shares in the company in total, then owning 80 shares is owning 80% is the same as owning 80% of the common stock. This would be the typical ownership case though there can also be \"\"Restricted stock\"\" as something to note here. Convertible debt would likely carry interest charges as well as the choice at the end of becoming stock in the company. In this case, until the conversion is done, the stock isn't issued and thus isn't counted. Taking the above example, one could have a note that could be worth 10 shares but until the conversion is done, the debt is still debt. Some convertible debt could carry options or warrants for the underlying stock as there was the Berkshire convertible notes years ago that carried a negative interest rate that was studied in \"\"The Negative Coupon Bond\"\" if you want an example here. Options would have the right but not the obligation to buy the stock where there are \"\"Incentive Stock Options\"\" to research this in more depth. In this case, one could choose to not exercise the option and thus no stock changes hands. This is where some companies will experience dilution of ownership as employees and management may be given options that put more shares out to the public. Issuing debt wouldn't change the ownership and isn't direct ownership unless the company goes through a restructuring where the creditors become the new stock holders in the case of a Chapter 11 situation in the US. Note that this isn't really investing in a small business as much as it is making a loan to the company that will be paid back in cash. If the company runs into problems then the creditor could try to pursue the assets of the company to be repaid.\"", "title": "" }, { "docid": "c0a75c6f74188ba156f3b7ab5fda265f", "text": "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.", "title": "" }, { "docid": "6812554ac6a6fe2c714ab6e6f19a657c", "text": "\"Note that these used to be a single \"\"common\"\" share that has \"\"split\"\" (actually a \"\"special dividend\"\" but effectively a split). If you owned one share of Google before the split, you had one share giving you X worth of equity in the company and 1 vote. After the split you have two shares giving you the same X worth of equity and 1 vote. In other words, zero change. Buy or sell either depending on how much you value the vote and how much you think others will pay (or not) for that vote in the future. As Google issues new shares, it'll likely issue more of the new non-voting shares meaning dilution of equity but not dilution of voting power. For most of us, our few votes count for nothing so evaluate this as you will. Google's founders believe they can do a better job running the company long-term when there are fewer pressures from outside holders who may have only short-term interests in mind. If you disagree, or if you are only interested in the short-term, you probably shouldn't be an owner of Google. As always, evaluate the facts for yourself, your situation, and your beliefs.\"", "title": "" }, { "docid": "0ada391b851e4f03449e58bdfff9259c", "text": "\"Many thanks for thedetailed response, appreciate it. But I am still not clear on the distinction between a public company and the equity holders. Isn't a public company = shareholders + equity holders? Or do you mean \"\"company\"\" = shareholders+equity holders + debt holders?\"", "title": "" }, { "docid": "c526e569e2ae563e14b933f146c30364", "text": "\"Companies normally do not give you X% of shares, but in effect give you a fixed \"\"N\"\" number of shares. The \"\"N\"\" may translate initially to X%, but this can go down. If say we began with 100 shares, A holding 50 shares and B holding 50 shares. As the startup grows, there is need for more money. Create 50 more shares and sell it at an arranged price to investor C. Now the percentage of each investor is 33.33%. The money that comes in will go to the company and not to A & B. From here on, A & C together can decide to slowly cut out B by, for example: After any of the above the % of shares held by B would definitely go down.\"", "title": "" }, { "docid": "00d21b3746e0c66b39ff8538ccd42fcd", "text": "\"Owning more than 50% of a company's stock normally gives you the right to elect a majority, or even all of a company's (board of) directors. Once you have your directors in place, you can tell them who to hire and fire among managers. There are some things that may stand in the way of your doing this. First, there may be a company bylaw that says that the directors can be replaced only one \"\"class\"\" at a time, with three or four \"\"classes.\"\" Then it could take you two or three years to get control of the company. Second, there may be different classes of shares with different voting rights, so if e.g. \"\"A\"\" shares controlled by the founding family gives them ten votes, and \"\"B\"\" shares owned by the other shareholders, you may have a majority of total shares and be outvoted by the \"\"A\"\" shares.\"", "title": "" } ]	fiqa
41ba851236f73b19d7bfb66d5a73de24	Is it really possible to get rich in only a few years by investing?	[ { "docid": "1cf7b44ccbe3ed58f6170f0f01d982bc", "text": "Yes, it's possible. However, it's not likely, at least not for most people. Earning a million is not that difficult, but when you talk about billions that's an entirely different story. I think the key point that you're missing is leverage. It's common knowledge that Warren Buffett likes to have a huge cash warchest at his disposal and does not soak himself in debt. However, in his early years Buffett did not get to where he's at by investing only his own money. He ran what was basically a hedge fund and leveraged other peoples' money in the market. This magnified his returns quite substantially. If you look at Buffett's investments, you'll notice that he had a handful of HUGE wins in his portfolio and many more just mediocre success stories. Not everything he invested in turned to gold, but his portfolio was rocketed by the large wins that continued to compound over many years because he held them for so long. Also, consider the fact that Buffett's wealth is largely measured in Berkshire stock. This stock is a reflection of anticipated future earnings by the company. There's no way that alone could turn $10k in 1950 into $50B today... could it? Why not? Take the two founders of Google for example, they became billionaires in short order when Google had it's IPO and basically started in a garage with very little cash. Of course, they didn't do this by buying and selling shares. There are many paths to earnings enormous sums of money like the people you're talking about, but one characteristic that the richest people in society seem to have in common is that they all own their own companies.", "title": "" }, { "docid": "9dca1c03c28fffa96353262e8587b694", "text": "To get rich in a short time, it's more likely what you want to do is go into business. You could go into a non-investment business such as opening a restaurant or starting a tech company, of course. Warren Buffett was working in investing, which is quite a bit different than just buying stocks: The three ways to get rich investing I can think of are: I think the maximum real (after-inflation) return you can really count on over a lot of years is in the 5-6% range at most, maybe less. Here's a post where David Merkel argues 3-4% (assuming cash interest is close to zero real return): http://alephblog.com/2009/07/15/the-equity-premium-is-no-longer-a-puzzle/ At that rate you can double every 10-15 years. Any higher rate is probably risking much lower returns. I often post this argument against that on investment questions: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ Agree with you that lots of people seem to think they can make up for not saving money by picking a winning investment. Lots of people also use the lottery as a retirement strategy. I'm not sure this is totally irrational, if for some reason someone just can't save. But I'm sure it will fail for almost all the people who try it.", "title": "" }, { "docid": "6624eb2ad2488e72f86201f096a0e884", "text": "You are probably right that using a traditional buy and hold strategy on common equities or funds is very unlikely to generate the types of returns that would make you a millionaire in short order. However, that doesn't mean it isn't possible. You just have to accept a more risk to become eligible for such incredible returns that you'd need to do that. And by more risk I mean a LOT more risk, which is more likely to put you in the poorhouse than a mansion. Mostly we are talking about highly speculative investments like commodities and real estate. However, if you are looking for potential to make (or more likely lose) huge amounts of money in the stock market without a very large cache of cash. Options give you much more leverage than just buying a stock outright. That is, by buying option contracts you can get a much larger return on a small movement in the stock price compared to what you would get for the same investment if you bought the stock directly. Of course, you take on additional risk. A normal long position on a stock is very unlikely to cause you to lose your entire investment, whereas if the stock doesn't move far enough and in the right direction, you will lose your entire investment in option contracts.", "title": "" }, { "docid": "df9b1b2efa85ba277ffd48a061bf2790", "text": "10 year US Treasury bonds are currently yielding 3.46%. If you're offered an investment that looks better than that, you should ask yourself why big investors are putting their money in US Treasuries instead of what you've been offered. And obviously at 3.46% per year, you're not going to get rich quick -- it will take you over twenty years to double your money, and that's without allowing for inflation.", "title": "" }, { "docid": "d6e7b1b0641929d6e87e5f84295c43ab", "text": "Short answer: Not likely. Long answer: As a rule of thumb, over the long run if you are generating 20% compounded returns on your money consistently, you are doing very good. Since in the average case your 10k would compound to $61.4k YoY, you are very unlikely to be rich in a decade starting with 10k.", "title": "" } ]	[ { "docid": "af1e7f772ced48852837068b40ff5770", "text": "Investments earn income relative to the principal amounts invested. If you do not have much to invest, then the only way to 'get rich' by investing is to take gambles. And those gambles are more likely to fail than succeed. The simplest way for someone without a high amount of 'capital' [funds available to invest] to build wealth, is to work more, and invest in yourself. Go to school, but only for proven career paths. Take self-study courses. Learn and expand your career opportunities. Only once you are stable financially, have minimal debt [or, understand and respect the debt you plan to pay down slowly, which some people choose to do with school and house debt], and are able to begin contributing regularly to investment plans, can you put your financial focus on investing. Until then, any investment gains would pale in comparison to gains from building your career.", "title": "" }, { "docid": "3b463b0f734e7d008506b1e57b6c5756", "text": "\"(Congrats on earning/saving $3K and not wanting to blow it all on immediate gratification!) I currently have it invested in sector mutual funds but with the rise and fall of the stock market, is this really the best way to prepare long-term? Long-term? Yes! However... four years is not long term. It is, in fact, borderline short term. (When I was your age, that was incomprehensible too, but trust me: it's true.) The problem is that there's an inverse relationship between reward and risk: the higher the possible reward, the greater the risk that you'll lose a big chunk of it. I invest that middle-term money in a mix of junk high yield bond funds and \"\"high\"\" yield savings accounts at an online bank. My preferences are HYG purchased at Fidelity (EDIT: because it's commission-free and I buy a few hundred dollars worth every month), and Ally Bank.\"", "title": "" }, { "docid": "3bf230205bb1a357e7a52292f2a695eb", "text": "\"There's several approaches to the stock market. The first thing you need to do is decide which you're going to take. The first is the case of the standard investor saving money for retirement (or some other long-term goal). He already has a job. He's not really interested in another job. He doesn't want to spend thousands of hours doing research. He should buy mutual funds or similar instruments to build diversified holdings all over the world. He's going to have is money invested for years at a time. He won't earn spectacular amazing awesome returns, but he'll earn solid returns. There will be a few years when he loses money, but he'll recover it just by waiting. The second is the case of the day trader. He attempts to understand ultra-short-term movements in stock prices due to news, rumors, and other things which stem from quirks of the market and the people who trade in it. He buys a stock, and when it's up a fraction of a percent half an hour later, sells it. This is very risky, requires a lot of attention and a good amount of money to work with, and you can lose a lot of money too. The modern day-trader also needs to compete with the \"\"high-frequency trading\"\" desks of Wall Street firms, with super-optimized computer networks located a block away from the exchange so that they can make orders faster than the guy two blocks away. I don't recommend this approach at all. The third case is the guy who wants to beat the market. He's got long-term aspirations and vision, but he does a lot more research into individual companies, figures out which are worth buying and which are not, and invests accordingly. (This is how Warren Buffett made it big.) You can make it work, but it's like starting a business: it's a ton of work, requires a good amount of money to get going, and you still risk losing lots of it. The fourth case is the guy who mostly invests in broad market indexes like #1, but has a little money set aside for the stocks he's researched and likes enough to invest in like #3. He's not going to make money like Warren Buffett, but he may get a little bit of an edge on the rest of the market. If he doesn't, and ends up losing money there instead, the rest of his stocks are still chugging along. The last and stupidest way is to treat it all like magic, buying things without understanding them or a clear plan of what you're going to do with them. You risk losing all your money. (You also risk having it stagnate.) Good to see you want to avoid it. :)\"", "title": "" }, { "docid": "f36cd41b21b29b8de79e613e25b725aa", "text": "Currencies are a zero-sum game. If you make money, someone else will lose it. Because bank notes sitting in a pile don't create anything useful. But shares in companies are different, because companies actually do useful things and make money, so it's possible for all investors to make money. The best way to benefit is generally to put your money into a low-cost index fund and then forget about it for at least five years.", "title": "" }, { "docid": "8953063491a0162c87cdf123213b6f1a", "text": "I think it's because there are people who build entire wealth-gain strategies around certain conditions. When those conditions change, their mechanism of gaining wealth is threatened and they may take a short term loss as they transform their holdings to a new strategy.", "title": "" }, { "docid": "f9d0671f97e043bc4c5aab149a7f419b", "text": "It is not unheard of. Celebrity investors such as Warren Buffet and Carl Icahn gained notoriety by more than doubling investments some years, with a few very stellar trades and bets. Doubling, as in a 100% gain, is actually conservative if you want to play that game, as 500%, 1200% and greater gains are possible and were achieved by the two otherwise unrelated people I mentioned. This reality is opposite of the comparably pitiful returns that Warren Buffet teaches baby boomers about, but compounding on 2-5% gains annually is a more likely way to build wealth. It is unreasonable to say and expect that you will get the outcome of doubling an investment year over year.", "title": "" }, { "docid": "b6b4d48dae563f6f3dc7b9d654d5b22a", "text": "If you are going to work on making as much money as humanly possible, then you ought to consider investing in the market. [Compound Stock Earnings](http://www.compoundstockearnings.com) agrees that investing in stocks is a fantastic technique to acquire prosperity on your own. Believe it or not, it’s the greatest source of wealth in the history of the world. For that reason, you need to ensure that you get started at the earliest opportunity.", "title": "" }, { "docid": "025adc914ef3b24720ad4fd4af995e8d", "text": "\"I did once read a book titled \"\"How I made a million dollars on the stock market\"\". It sounded realistic enough to be a true story. The author made it clear on the first page that (a) this was due to some exceptional circumstances, (b) that he would never again be able to pull off something like this, and (c) you would never be able to pull of something like this, except with extreme luck. (The situation was small company A with a majority shareholder, other small company B tries to gain control by buying all the shares, the majority shareholder of A trying to prevent this by buying as many shares as possible, share price shooting up ridiculously, \"\"smart\"\" traders selling uncovered shorts to benefit when the price inevitably drops, the book author buying $5,000 worth of shares because they were going up, and then one enormous short squeeze catching out the traders. And he claimed having sold his shares for over a million - before the price dropped back to normal). Clearly not a matter of \"\"playing your cards right\"\", but of having an enormous amount of luck.\"", "title": "" }, { "docid": "85900ebc68789698db6be8a22f18f029", "text": "As others have shown, if you assume that you can get 6% and you invest 15% of a reasonable US salary then you can hit 1 million by the time you retire. If you invest in property in a market like the UK (where I come from...) then insane house price inflation will do it for you as well. In 1968 my parents bought a house for £8000. They had a mortgage on it for about 75% of the value. They don't live there but that house is now valued at about £750,000. Okay, that's close to 60 years, but with a 55 year working life that's not so unreasonable. If you assume the property market (or the shares market) can go on rising forever... then invest in as much property as you can with your 15% as mortgage payments... and watch the million roll in. Of course, you've also got rent on your property portfolio as well in the intervening years. However, take the long view. Inflation will hit what a million is worth. In 1968, a million was a ridiculously huge amount of money. Now it's 'Pah, so what, real rich people have billions'. You'll get your million and it will not be enough to retire comfortably on! In 1968 my parents salaries as skilled people were about £2000 a year... equivalent jobs now pay closer to £50,000... 25x salary inflation in the time. Do that again, skilled professional salary in 60 years of £125000 a year... so your million is actually 4 years salary. Not being relentlessly negative... just suggesting that a financial target like 'own a million (dollars)' isn't a good strategy. 'Own something that yields a decent amount of money' is a better one.", "title": "" }, { "docid": "dc13b77121e726d4bd44e842f8bf0db8", "text": "ChrisW's comment may appear flippant, but it illustrates (albeit too briefly) an important fact - there are aspects of investing that begin to look exactly like gambling. In fact, there are expressions which overlap - Game Theory, often used to describe investing behavior, Monte Carlo Simulation, a way of convincing ourselves we can produce a set of possible outcomes for future returns, etc. You should first invest time. 100 hours reading is a good start. 1000 pounds, Euros, or dollars is a small sum to invest in individual stocks. A round lot is considered 100 shares, so you'd either need to find a stock trading less than 10 pounds, or buy fewer shares. There are a number of reasons a new investor should be steered toward index funds, in the States, ETFs (exchange traded funds) reflect the value of an entire index of stocks. If you feel compelled to get into the market this is the way to go, whether a market near you of a foreign fund, US, or other.", "title": "" }, { "docid": "274f148b0a145f15618ebf92b4b0a936", "text": "\"You most definitely can invest such an amount profitably, but it makes it even more important to avoid fees, um, at all costs, because fees tend to have a fixed component that will be much worse for you than for someone investing €200k. So: Edit: The above assumes that you actually want to invest in the long run, for modest but relatively certain gains (maybe 5% above inflation) while accepting temporary downswings of up to 30%. If those €2000 are \"\"funny money\"\" that you don't mind losing but would be really excited about maybe getting 100% return in less than 5 years, well, feel free to put them into an individual stock of an obscure small company, but be aware that you'd be gambling, not investing, and you can probably get better quotes playing Roulette.\"", "title": "" }, { "docid": "47d9f11485eb276a283de6d2ec44239b", "text": "The basic problem here is that you need to have money to invest before you can make a profit from it. Now if you have say $500K or more, you can put that in mutual funds and live modestly off the profits. If you don't have that $500K to start out with, you're either looking at a long time frame to accumulate it - say by working a job for 30+ years, and contributing the max to your 401k - or are playing the market trying to get it. The last is essentially gambling (though with somewhat better odds than casinos or horse racing), and puts you up against the Gambler's Ruin problem: https://en.wikipedia.org/wiki/Gambler's_ruin You also, I think, have a very mistaken idea about the a typical investor's lifestyle. Take for instance the best known one, Warren Buffet. No offence to him, but from everything I've read he lives a pretty boring life. Spends all day reading financial reports, and what sort of life is that? As for flying places being exciting, ever tried it? I have (with scientific conferences, but I expect boardrooms are much the same), and it is boring. Flying at 30,000 ft is boring, and if it's a commercial flight, unpleasant as well. A conference room in London, Paris, or Milan is EXACTLY the same as a conference room in Podunk, Iowa. Even the cities outside the conference rooms are much of a muchness these days: you can eat at McDonalds in Paris or Shanghai. Only way to find interest is to take time from your work to get outside the conference rooms & commercial districts, and then you're losing money.", "title": "" }, { "docid": "63fde89d7c05259fa2e50d06f04f7286", "text": "Even straight index funds grow at about 6-7%. on average, or over long periods of time. In short time periods (quarters, years), they can fluctuate anywhere from -10% to +20%. Would you be happy if your bank account lost 10% of its value the week before you had to pay the bill for the repairs? Is it appropriate to invest small amounts for short periods of time? In general, no. Most investments are designed for long term appreciation. Even sophisticated financial companies can't do any better than 1 or 2% (annualized) on short-term cash reserves. Where you can make a huge difference is on the cost side. Bargain with suppliers, or wait for sales on retail items. Both will occasionally forego their margin on certain items in order to try to secure future business, which can make a difference of 20% or more in the cost of repairs.", "title": "" }, { "docid": "4f230c86d7d8e9b1b4340c47982736a2", "text": "\"At what rate? \"\"Millions\"\"? No one would start at that rate, but the mid-100k range is standard for Harvard undergrads entering finance, plus generous benefits and bonuses. But the structure in most institutions weeds most of these people out after five years. That's fine for most people, who are just trying to pay off loans, buy a house, and maybe feel secure starting a business. People who stay for 5-10 years could certainly be in the million range when bonuses and benefits are considered.\"", "title": "" }, { "docid": "1f844c3721d14b0eb0bbbb2963e0852d", "text": "I researched quite a bit around this topic, and it seems that this is indeed false. Long ter asset growth does not converge to the compound interest rate of expected return. While it is true that standard deviations of annualized return decrease over time, because the asset value itself changes over time, the standard deviations of the total return actually increases. Thus, it is wrong to say that you can take increased risk because you have a longer time horizon. Source", "title": "" } ]	fiqa
d4b6bdb9f59886a9b379e8693eac546f	When paying estimated quarterly taxes, can I prorate the amount based on the irregular payment due dates?	[ { "docid": "205ee66f682f0c4c21792a31c0241a1e", "text": "Varying the amount to reflect income during the quarter is entirely legitimate -- consider someone like a salesman whose income is partly driven by commissions, and who therefore can't predict the total. The payments are quarterly precisely so you can base them on actual results. Having said that, I suspect that as long as you show Good Intent they won't quibble if your estimate is off by a few percent. And they'll never complain if you overpay. So it may not be worth the effort to change the payment amount for that last quarter unless the income is very different.", "title": "" }, { "docid": "2f73770a2da33ab40245475e5bc5ee82", "text": "\"You may want, or at least be thinking of, the annualized method described in Pub 505 http://www.irs.gov/publications/p505/ch02.html#en_US_2015_publink1000194669 (also downloadable in PDF) and referred to in Why are estimated taxes due \"\"early\"\" for the 2nd and 3rd quarters only? . This doesn't prorate your payments as such; instead you use your income and deductions etc for each of the 3,2,3,4-month \"\"quarters\"\" to compute a prorated tax for the partial year, and pay the excess over the amount already paid. If your income etc amounts are (nearly) the same each month, then this computation will result in payments that are 3,2,3,4/12ths of 90% of your whole-year tax, but not if your amounts vary over the year. If you do use this method (and benefit from it) you MUST file form 2210 schedule AI with your return next filing season to demonstrate that your quarterly computations, and payments, met the requirements. You need to keep good per-period (or per-month) records of all tax-relevant amounts, and don't even try to do this form by hand, it'll drive you nuts; use software or a professional preparer (who also uses software), but I'd expect someone in your situation probably needs to do one of those anyway. But partnership puts a wrinkle on this. As a partner, your taxable income and expense is not necessarily the cash you receive or pay; it is your allocated share of the partnership's income and expenses, whether or not they are distributed to you. A partnership to operate a business (like lawyers, as opposed to an investment partnership) probably distributes the allocated amounts, at least approximately, rather than holding them in the partnership; I expect this is your year-end draw (technically a draw can be any allowed amount, not necessarily the allocated amount). In other words, your husband does earn this money during the year, he just receives it at the end. If the year-end distribution (or allocation if different) is significant (say more than 5% of your total income) and the partnership is not tracking and reporting these amounts (promptly!) for the IRS quarters -- and I suspect that's what they were telling you \"\"affects other partners\"\" -- you won't have the data to correctly compute your \"\"quarterly\"\" taxes, and may thus subject yourself to penalty for not timely paying enough. If the amount is reasonably predictable you can probably get away with using a conservative (high-side) guess to compute your payments, and then divide the actual full-year amounts on your K-1 over 12 months for 2210-AI; this won't be exactly correct, but unless the partnership business is highly seasonal or volatile it will be close enough the IRS won't waste its time on you. PS- the \"\"quarters\"\" are much closer to 13,9,13,17 weeks. But it's months that matter.\"", "title": "" } ]	[ { "docid": "7f0fededa670a411cea1e495d339388f", "text": "I went through this too. There's a safe-harbor provision. If you prepay as estimated tax payments, 110% of your previous year's tax liability, there's no penalty for underpayment of the big liquidity-event tax liability. https://www.irs.gov/publications/p17/ch04.html That's with the feds. Your state may have different rules. You would be very wise indeed to hire an accountant to prepare your return this year. If I were you I'd ask your company's CFO or finance chief to suggest somebody. Congratulations, by the way.", "title": "" }, { "docid": "33815eb947ceaf1d6ce9d49424d4d5eb", "text": "As was once famously said, Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes. — Benjamin Franklin, 1789 It's very likely that either the company or you personally is going to have to pay taxes on that money. Really the only way to avoid it would be if the company spent that money on next year's expenses, and paid the bill before the end of this year. Of course you can only do that if the recipient is willing to receive their money so far in advance, which isn't necessarily the case since they would pay more taxes this year as a result. As for whether it's better to have the company pay the tax or for you to do as your accountant suggests, there are a lot of factors that go into that equation, and my gut feeling is that your accountant already ran it both ways and is suggesting the better choice.", "title": "" }, { "docid": "bae6e8d76b98b2ba96a5520be36c2c8f", "text": "I believe moving reimbursement has to be counted as income no matter when you get it. I'd just put it under miscellaneous income with an explanation.", "title": "" }, { "docid": "0dbe615376361cbe5aee13c01dac142b", "text": "\"Hearing somewhere is a level or two worse than \"\"my friend told me.\"\" You need to do some planning to forecast your full year income and tax bill. In general, you should be filing a quarterly form and tax payment. You'll still reconcile the year with an April filing, but if you are looking to save up to pay a huge bill next year, you are looking at the potential of a penalty for under-withholding. The instructions and payment coupons are available at the IRS site. At this point I'm required to offer the following advice - If you are making enough money that this even concerns you, you should consider starting to save for the future. A Solo-401(k) or IRA, or both. Read more on these two accounts and ask separate questions, if you'd like.\"", "title": "" }, { "docid": "653e490ace6c1b315324cea013d7d9ef", "text": "Not correct. First - when you say they don't tax the reimbursement, they are classifying it in a way that makes it taxable to you (just not withholding tax at that time). In effect, they are under-withholding, if these reimbursement are high enough, you'll have not just a tax bill, but penalties for not paying enough all year. My reimbursements do not produce any kind of pay stub, they are a direct deposit, and are not added to my income, not as they occur, nor at year end on W2. Have you asked them why they handle it this way? It's wrong, and it's costing you.", "title": "" }, { "docid": "dbc4805402e3c2f938447a313d0ac5fe", "text": "\"I've consulted with 5-6 accountants and people who've had the issue before. The advice I received boils down to: \"\"If you do not attach your 83b with your personal tax return it is not effective. However you can still correct the requirement to file it along with your tax return, because you are within the 3 year window of when the return was originally due.\"\" So you can amend your return/file it late within a certain window and things should be OK. The accountants that have confirmed this are Vanessa Kruze, Wray Rives and Augie Rakow - all of them corporate and credible accountants. You also need to keep onto the confirmation the IRS sent you in case of an audit. There is nothing on IRS.gov about attaching your 83b on a filed late or amended return but those accountants are people who say they've seen it happen frequently, have consulted with the IRS for solutions and that's the one they'd advise one to do in such situation. disclaimer: I am not a CPA\"", "title": "" }, { "docid": "a13a67170ffc59dbf2ae2485ac4f2bd9", "text": "I do something pretty simple when figuring 1099 income. I keep track of my income and deductible expenses on a spreadsheet. Then I do total income - total expenses * .25. I keep that amount in a savings account ready to pay taxes. Given that your estimates for the quarterly payments are low then expected, that amount should be more then enough to fully fund those payments. If you are correct, and they are low, then really what does it matter? You will have the money, in the bank, to pay what you actually owe to the IRS.", "title": "" }, { "docid": "2ed3c177786d18301727f0854afccc2d", "text": "\"In the USA there are two ways this situation can be treated. First, if your short position was held less than 45 days. You have to (when preparing the taxes) add the amount of dividend back to the purchase price of the stock. That's called adjusting the basis. Example: short at $10, covered at $8, but during this time stock paid a $1 dividend. It is beneficial for you to add that $1 back to $8 so your stock purchase basis is $9 and your profit is also $1. Inside software (depending what you use) there are options to click on \"\"adjust the basis\"\" or if not, than do it manually specifically for those shares and add a note for tax reviewer. Second option is to have that \"\"dividednd payment in lieu paid\"\" deducted as investment expence. But that option is only available if you hold the shorts for more than 45 days and itemize your deductions. Hope that helps!\"", "title": "" }, { "docid": "b80a4da09befcb5e2df91a2c39fd52a4", "text": "\"You report it when the expense was incurred/accrued. Which is, in your case, 2014. There's no such thing as \"\"accounts payable\"\" on tax forms, it is an account on balance sheet, but most likely it is irrelevant for you since your LLC is probably cash-based. The reimbursement is a red-herring, what matters is when you paid the money.\"", "title": "" }, { "docid": "4462ce3779ad4d896b290b0c34ec9834", "text": "There are penalties for failure to file and penalties for failure to pay tax. The penalties for both are based on the amount of tax due. So you would owe % penalties of zero, otherwise meaning no penalties at all. The IRS on late 1040 penalties: Here are eight important points about penalties for filing or paying late. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time. If the IRS owes you a refund, April 15 isn't much of a deadline. I suppose the real deadline is April 15, three years later - that's when the IRS keeps your refund and it becomes property of the Treasury. Of course, there's little reason to wait that long. Don't let the Treasury get all your interest.", "title": "" }, { "docid": "798b7e6bc74d6616c7519f59123450e2", "text": "\"The IRS provides a little more information on the subject on this FAQ: Will I be charged interest and penalties for filing and paying my taxes late?: If you did not pay your tax on time, you will generally have to pay a late-payment penalty, which is also called a failure to pay penalty. Some guidance on what constitutes \"\"reasonable cause\"\" is found on the IRS page Penalty Relief Due to Reasonable Cause: The IRS will consider any sound reason for failing to file a tax return, make a deposit, or pay tax when due. Sound reasons, if established, include: Note: A lack of funds, in and of itself, is not reasonable cause for failure to file or pay on time. However, the reasons for the lack of funds may meet reasonable cause criteria for the failure-to-pay penalty. In this article from U.S. News and World Report, it is suggested that the IRS will generally waive the penalty one time, if you have a clean tax history and ask for the penalty to be waived. It is definitely worth asking them to waive the penalty.\"", "title": "" }, { "docid": "5923619c7a3b18fc6934a3f2d6b95dc8", "text": "You will not necessarily incur a penalty. You can potentially use the Annualized Income Installment method, which allows you to compute the tax due for each quarter based on income actually earned up to that point in the year. See Publication 505, in particular Worksheet 2-9. Form 2210 is also relevant as that is the form you will use when actually calculating whether you owe a penalty after the year is over. On my reading of Form 2210, if you had literally zero income during the first quarter, you won't be expected to make an estimated tax payment for that quarter (as long as you properly follow the Annualized Income Installment method for future quarters). However, you should go through the calculations yourself to see what the situation is with your actual numbers.", "title": "" }, { "docid": "785d81e7e261c8f73ca537ce8b2c9d75", "text": "\"There are a couple of things that are missing from your estimate. In addition to your standard deduction, you also have a personal exemption of $4050. So \"\"D\"\" in your calculation should be $6300 + $4050 = $10,350. As a self-employed individual, you need to pay both the employee and employer side of the Social Security and Medicare taxes. Instead of 6.2% + 1.45%, you need to pay (6.2% + 1.45%) * 2 = 15.3% self-employment tax. In addition, there are some problems with your calculation. Q1i (Quarter 1 estimated income) should be your adjusted annual income divided by 4, not 3 (A/4). Likewise, you should estimate your quarterly tax by estimating your income for the whole year, then dividing by 4. So Aft (Annual estimated federal tax) should be: Quarterly estimated federal tax would be: Qft = Aft / 4 Annual estimated self-employment tax is: Ase = 15.3% * A with the quarterly self-employment tax being one-fourth of that: Qse = Ase / 4 Self employment tax gets added on to your federal income tax. So when you send in your quarterly payment using Form 1040-ES, you should send in Qft + Qse. The Form 1040-ES instructions (PDF) comes with the \"\"2016 Estimated Tax Worksheet\"\" that walks you through these calculations.\"", "title": "" }, { "docid": "b6302253c06243087d1f4e543d757815", "text": "Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0).", "title": "" }, { "docid": "e9382eb16f4d6ce49d0ad28fe94ebd29", "text": "The trickiest thing is the federal tax. It's typical to withhold 25% federal on this type of event. If your federal marginal rate was already towards the top of that bracket, you'll owe the missing 3% as you enter the 28% bracket. Nothing awful, just be aware.", "title": "" } ]	fiqa
a3e85f9b707c92004a7cfe7cdfd6e38a	Can banks deny that you've paid your loan?	[ { "docid": "a3b002ea82cb6beda3efb0966543bceb", "text": "Maybe there's more to this story, because as written, your sister seems, well, a little irrational. Is it possible that the bank will try to cheat you and demand that you pay a loan again that you've already paid off? Or maybe not deliberately cheat you, but make a mistake and lose track of the fact that you paid? Sure, it's POSSIBLE. But if you're going to agonize about that, what about all the other possible ways that someone could cheat you? What if you go to a store, hand over your cash for the purchase, and then the clerk insists that you never gave him any cash? What if you buy a car and it turns out to be stolen? What if you buy insurance and when you have a claim the insurance company refuses to pay? What if someone you've never met or even heard of before suddenly claims that you are the father of her baby and demands child support? Etc etc. Realistically, banks are fanatical about record-keeping. Their business is pretty much all about record-keeping. Mistakes like this are very rare. And a big business like a bank is unlikely to blatantly cheat you. They can and do make millions of dollars legally. Why should they break the law and risk paying huge fines and going to prison for a few hundred dollars? They may give you a lousy deal, like charge you outrageous overdraft fees and pay piddling interest on your deposit, but they're not going to lie about how much you owe. They just don't. I suggest that you not live your life in fear of all the might-be's. Take reasonable steps to protect yourself and get on with it. Read contracts before you sign, even if the other person gets impatient while you sit there reading. ESPECIALLY if the other person insists that you sign without reading. When you pay off a loan, you should get a piece of paper from the bank saying the loan has been paid. Stuff this piece of paper in a filing cabinet and keep it for years and years. Get a copy of your credit report periodically and make sure that there are no errors on it, like incorrect loan balances. I check mine once every year or two. Some people advise checking it every couple of months. It all depends how nervous you are and how much time you want to spend on it. Then get on with your life. Has your sister had some bad experience with loans in the past? Or has she never borrowed money and she's just confused about how it works? That's why I wonder if there's more to the story, if there's some basis for her fears.", "title": "" }, { "docid": "00ec6c7e972cbfe2469ba2c0d16f1b02", "text": "Yes, if their record keeping is faulty or failed. It is best to keep all records of repayment. Incomplete records such as signing for a loan yet no repayment receipt can be at least a headache and at most expensive. The most important document is a record of 0 balance then there is nothing that the courts will allow creditors to collect if their records are faulty.", "title": "" }, { "docid": "40ae70712ee0d2fee4c95c13d1d2069d", "text": "If the loan is for a car, or mortgage there is specific paperwork that is processed when the loan payments have been completed. For other types of loans ask the lender, what will they give you regarding the payoff of the loan. Keep this paperwork, in hard copy and electronic form forever.", "title": "" } ]	[ { "docid": "952ca1d90bac05577db80d5258d82c06", "text": "\"Never forget that student lenders and their collection agencies are dangerous and clever predators, and you, the student borrower, are their legal prey. They look at you and think, \"\"food.\"\" My friend said she never pays her student loans and nothing has happened. She's wrong. Something has happened. She just doesn't know about it yet. Each unpaid bill, with penalties, has been added to the balance of her loan. Now she owes that money also. And she owes interest on it. That balance is probably building up very fast indeed. She's playing right into the hands of her student lender. They are smiling about this. When the balance gets large enough to make it worthwhile, her student lender will retain an aggressive collection agency to recover the entire balance. The agency will come after her in court, and they are likely to win. If your friend lives in the US, she'll discover that she can't declare bankruptcy to escape this. She has the bankruptcy \"\"reform\"\" act of 2006, passed during the Bush 43 regime, to thank for this. A court judgement against her will make it harder for her to find a job and even a spouse. I'm not saying this is right or just. I believe it is wrong and unjust to make university graduates into debt slaves. But it is true. As for being paid under the table, I hope your friend intends on dying rather than retiring when she no longer can work due to age. If she's paid under the table she will not be eligible for social security payments. You need sixteen calendar quarters of social security credit to be eligible for payments. I know somebody like this. It's a hell of a way to live, especially on weekends when the local church feeding programs don't operate. Paying people under the table ought to be a felony for the business owner.\"", "title": "" }, { "docid": "d18ebd16192f0d891dec26f9c5cef108", "text": "I think in such situations a good rule of thumb may be - if you are asked to pay significant sums of money upfront before anything is done, stop and ask yourself, what would you do if they don't do what they promised? They know who you are, but usually most you know is a company name and phone number. Both can disappear in a minute and what are you left with? If they said they'd pay off the debt and issue the new loan - fine, let them do it and then you pay them. If they insist on having money upfront without delivering anything - unless it's a very big and known and established company you probably better off not doing it. Either it's a scam or in the minuscule chance they are legit you still risking too much - you're giving money and not getting anything in return.", "title": "" }, { "docid": "d2930f58b82be1037bcd97026c3c9461", "text": "The reason the loan amount is showing is because it is a default - the fact that you live in a non-recourse state doesn't change the fact that a loan obligation that had your name on it was defaulted upon. I don't think there is much you can do now given that your name was still on the mortgages.", "title": "" }, { "docid": "2709f354fcd1ff6a1eb9b1c54e51016e", "text": "\"If you take a loan, you make a contract with your lender, let's call them \"\"bank\"\" (even if it might not be a real bank). This loan contract contains an agreed-upon way of paying back the loan. Both sides agreed upon these conditions. Any change of it (like paying back early) needs the consent of both sides. So, in general, no, you cannot just pay back everything earlier unless the other side accepts this change of the contract. Consider it from the bank's point of view: They want to earn money by getting the interest you have to pay when you pay back everything nice and slowly. It is their business. They plan on these expected revenues etc. So if, for whatever reason, you have to pay back the whole remaining loan at once, you create a revenue loss for the bank and are liable for this financial damage. In German the term for this is \"\"Vorfälligkeitsentschädigung\"\" which translates to \"\"prepayment penalty\"\" or \"\"acceleration fee\"\". You just have to pay it, so in the end you come out like if you were paying back the loan in the agreed-upon fashion. However, many loan contracts contain the option to pay back early at specific points in time in specific amounts and under specific conditions.\"", "title": "" }, { "docid": "05f2384f318fceeaea2560c1da8ccd3d", "text": "\"If the answer were \"\"no,\"\" you still found the 'black swan' type exception that proves the answer to be \"\"yes,\"\" right? My experience is this - again just my experience, my bank - When by balance goes below $10, I have the account trigger an email. I wrote a check I forgot to register and subtract, so the email was sent and the account balance in fact showed negative. I transferred to cover the check and the next day, there was a history that didn't go negative, the evening deposit was credited prior to check clearing. I set up my bills on line. I set a transfer in advance for the same dollar amount as a bill that was due, e.g. $1000 transfer for a $1000 bill. I woke up to an email, and the account showed the bill was paid prior to the transfer. So one line showed going -$900, and the next line +$100 after transfer. Even though it's the same online process. Again, the next day the history re-ordered to look like I was never negative. But even on a day I know I'm having payments issued, I can never just ignore that email. The first time this happened, I asked the bank, and they said if the negative went until the next day, I'd get an overdraft/short balance notice. This is a situation to ask your bank how they handle this.\"", "title": "" }, { "docid": "1ea12d08b27c305c365845315d008efb", "text": "This is called a fraudulent conveyance because its purpose is to prevent a creditor from getting repaid. It is subject to claw back under US law, which is a fancy way of saying that your friend will have to pay the bank back. Most jurisdictions have similar laws. It is probably a crime as well, but that varies by jurisdiction.", "title": "" }, { "docid": "30ad621797b92569cef86bde4d7261c8", "text": "A bank is putting money on the line for you when they loan you money, which is not something they have to do. Not telling them what you intend to do with the money they are giving you, when asked, is fraud, which if you are caught will put you into very deep trouble.", "title": "" }, { "docid": "28ae310b1e58177ed295db70764fc0fc", "text": "My bank did fine the first couple years of handling my escrow, then out of the blue, totally messed it up and cost me a lot of time straightening it all out with them as well as straightening out with my taxing authority. I told them to send me the balance of the escrow and cancel it, that I would handle it from then on and they did. There was a qualification that I met, I just can't remember what that was. I too have a lot of equity and was never late on a payment. I also manage it via direct deposit from my paychecks into interest bearing accounts.", "title": "" }, { "docid": "fcb69c6454fee8382ec9cc86dbd5cbca", "text": "\"Not really. Unless you can show that there was an intent for you to have the money repaid (basically - a written loan agreement), no court will accept your claim. This is one of the situations you can see frequently on \"\"Judge Judy\"\" and such, and the decision is always the same: unless there's a written (or you convince the judge about a verbal) agreement that it is a loan - it is a gift.\"", "title": "" }, { "docid": "e04a6a482c4d33b7cb0fdf8682ac7c1c", "text": "Send a well-documented payment to the original creditor. Do it in such a way that you would have the ability to prove that you sent a payment if they reject it. Should they reject it, demonstrate that to the credit reporting bureaus.", "title": "" }, { "docid": "90aa732c8acaa39ca745a812f96591f0", "text": "Apart from the reasons currently given (which have to do with personal relations), wouldn't a good reason to take the loan from the bank be to build up a credit history and/or improve your credit score?", "title": "" }, { "docid": "0958b66627b633e8aad1be86ef5d6d85", "text": "IMO they were just being dicks. I don't know if they are required to provide the payoff amount, but they should be able to at any point in time. edit: I have mortgage experience. I didn't see this too often, but borrowers sometimes payoff/include other debts on refis. This requires a payoff statement from their creditors. I've never heard of a closing getting pushed back to the next month due to a creditor not being able to provide the payoff.", "title": "" }, { "docid": "80828498cde79837d07401b801a5ae03", "text": "Maybe. As other have said, doing this deliberately is fraud, but almost impossible to prove unless you've lied on the loan documents or discussed your plans with witnesses. The lender may consider negotiating a partial write-down of the loan, but that is far from their only option. Depending on the details of the loan agreement they may be able to garnish your wages, seize your property, or walk into your business with a sheriffs' deputy and empty your cash register. They may also be able to add their costs for recovering the money to your debt.", "title": "" }, { "docid": "df3445c4c5220e2ca5bb66345da094b1", "text": "This does sound a bit implausible, even if it is true it is pretty grossly irresponsible and you probably shouldn't just let it slide... However there is no real benefit in wading in with accusations, I suspect that the most likely scenario is that your tenet simply didn't have the money and was looking for a way to delay payment. This may well not be particularly malicious towards you, they may just be unable to pay and need a bit of room to maneuver. In this case the wise thing is to challenge them but without forcing them to admit that they might have lied, perhaps by suggesting that they might have been mistaken about dropping off the money but it's no big deal and negotiate a resolution. In these situations where it is one persons word against another giving them the opportunity to save face often pays off. Equally you want to make it absolutely clear that putting a wad of cash in your mailbox is not an acceptable way to pay.", "title": "" }, { "docid": "1a5a1da92420013f72c201f2ccd6593c", "text": "\"I can't think of any conceivable circumstance in which the banker's advice would be true. (edit: Actually, yes I can, but things haven't worked that way since 1899 so his information is a little stale. Credit bureaus got their start by only reporting information about bad debtors.) The bureaus only store on your file what gets reported to them by the institution who extended you the credit. This reporting tends to happen at 30, 60 or 90-day intervals, depending on the contract the bureau has with that institution. All credit accounts are \"\"real\"\" from the day you open them. I suspect the banker might be under the misguided impression the account doesn't show up on your report (become \"\"real\"\") until you miss a payment, which forces the institution to report it, but this is incorrect-- the institution won't report it until the 30-day mark at the earliest, whether or not you miss a payment or pay it in full. The cynic in me suspects this banker might give customers such advice to sabotage their credit so he can sell them higher-interest loans. UDAAP laws were created for a reason.\"", "title": "" } ]	fiqa
8e66a89706cdd3e23f9cb7d07284010c	What's the folly with this stock selection strategy	[ { "docid": "1dc5ad53dbebd7ef9cc8e2a028298b67", "text": "\"You are probably going to hate my answer, but... If there was an easy way to ID stocks like FB that were going to do what FB did, then those stocks wouldn't exist and do that because they would be priced higher at the IPO. The fact is there is always some doubt, no one knows the future, and sometimes value only becomes clear with time. Everyone wants to buy a stock before it rises right? It will only be worth a rise if it makes more profit though, and once it is established as making more profit the price will be already up, because why wouldn't it be? That means to buy a real winner you have to buy before it is completely obvious to everyone that it is going to make more profit in the future, and that means stock prices trade at speculative prices, based on expected future performance, not current or past performance. Now I'm not saying past and future performance has nothing in common, but there is a reason that a thousand financially oriented websites quote a disclaimer like \"\"past performance is not necessarily a guide to future performance\"\". Now maybe this is sort of obvious, but looking at your image, excluding things like market capital that you've not restricted, the PE ratio is based on CURRENT price and PAST earnings, the dividend yield is based on PAST publications of what the dividend will be and CURRENT price, the price to book is based on PAST publication of the company balance sheet and CURRENT price, the EPS is based on PAST earnings and the published number of shares, and the ROI and net profit margin in based on published PAST profits and earnings and costs and number of shares. So it must be understood that every criteria chosen is PAST data that analysts have been looking at for a lot longer than you have with a lot more additional information and experience with it. The only information that is even CURRENT is the price. Thus, my ultimate conclusive point is, you can't based your stock picks on criteria like this because it's based on past information and current stock price, and the current stock price is based on the markets opinion of relative future performance. The only way to make a good stock pick is understand the business, understand its market, and possibly understand world economics as it pertains to that market and business. You can use various criteria as an initial filter to find companies and investigate them, but which criteria you use is entirely your preference. You might invest only in profitable companies (ones that make money and probably pay regular dividends), thus excluding something like an oil exploration company, which will just lose money, and lose it, and lose some more, forever... unless it hits the jackpot, in which case you might suddenly find yourself sitting on a huge profit. It's a question of risk and preference. Regarding your concern for false data. Google defines the Return on investment (TTM) (%) as: Trailing twelve month Income after taxes divided by the average (Total Long-Term Debt + Long-Term Liabilities + Shareholders Equity), expressed as a percentage. If you really think they have it wrong you could contact them, but it's probably correct for whatever past data or last annual financial results it's based on.\"", "title": "" } ]	[ { "docid": "8f81cfe7826c35c5015dcfe8210c013b", "text": "\"I don't know really is the best investment strategy. People think that they have to know everything to make money. But realistically, out of the hundreds of thousands of publicly traded securities, you really can only invest in a tiny number of them. Of the course of a week, you literally have more than a million \"\"buy\"\" or \"\"don't buy\"\" decisions, because the prices of those securities fluctuate every day. Simply due to the fact that there are so many securities, you cannot know what everything is going to do. You have to say \"\"I don't know\"\". Also, when you do understand something, it is usually fairly priced. So will you make money on it? \"\"I don't know\"\". Only very rarely will you find something that you actually understand well and it is significantly undervalued. You can be looking at a company a day for two years before you find it. But people get trigger happy. They bet on 51%/49% odds when they should only bet on 90%/10% odds or higher. If you are forced to bet on everything, it makes sense that you bet on everything you believe is greater than 50% chance of winning. But since you cannot bet on everything, you should only bet on the highest quality bets, those with greater than 90% chance of winning. To find such a bet, you may have to shuffle through 100 different companies and only make 2-3 bets. You are looking for something that is at least 2 standard deviations away from the mean. People are not good at doing a lot of work, most of which yields nothing, to find one big payoff. They are wired to only look at the present, so they take the best bet they can see at the moment, which is often barely above 50% (and with any misjudgment, it may actually be well below 50%). And people are not good at understanding compound/geometric growth. You can keep multipling 10% gains (1.10 * 1.10 * 1.10 ...), but that can all be wiped out by multiplying by one zero, which is why taking a 51%/49% bet is so dangerous (even though technically it is an advantageous one). They forget to adjust for the geometric aspect of compounding. A 99%/1% bet is one you should take, but if you are allowed to repeat it and you keep going all-in, you will eventually lose and have $0, which is the same as if you took a single all-in bet that has 0% chance of winning. As Buffett says, if you are only allowed to make 20 investments over a lifetime, you will most likely do better because it prevents you from making many of these mistakes.\"", "title": "" }, { "docid": "e76b027a9e1943e499ed139aa5f86886", "text": "The top ten holdings for these funds don't overlap by even one stock. It seems to me they are targeting an index for comparison, but making no attempt to replicate a list of holdings as would, say, a true S&P index.", "title": "" }, { "docid": "d8ff7ca00fec2541fdf41386bef1ea37", "text": "\"Share prices change (or not) when shares are bought and sold. Unless he's sitting on a large percentage of the total shares, the fact that he isn't selling or buying means he's having no effect ar all on the stock price, and unless there's a vote war going on in the annual meeting his few stockholder votes aren't likely to have much effect there either (though there's always the outside chance of his being a tiebreaker). On the other hand, there's nothing inherently wrong with holding shares for a very long time and just taking the dividends (\"\"clipping coupons\"\"). Buy-and-hold is a legitimate strategy. Basically: His reason is wrong, but his action may be right, and you should probably just not ask.\"", "title": "" }, { "docid": "0f88856dbbc3fe0d416396b92487da2d", "text": "\"Well, everyone knows that a lot of funds have a strict policy to own a market-cap based part of shares from all listed companies above a certain threshold. Now, if I would go and inflate my share price and market cap, they would be forced to buy in; you can argue that this is \"\"just exploiting a weakness of the market\"\", but for me that's simply fraud.\"", "title": "" }, { "docid": "99a35d8a21693b605106176989414fed", "text": "This is Rob Bennett, the fellow who developed the Valuation-Informed Indexing strategy and the fellow who is discussed in the comment above. The facts stated in that comment are accurate -- I went to a zero stock allocation in the Summer of 1996 because of my belief in Robert Shiller's research showing that valuations affect long-term returns. The conclusion stated, that I have said that I do not myself follow the strategy, is of course silly. If I believe in it, why wouldn't I follow it? It's true that this is a long-term strategy. That's by design. I see that as a benefit, not a bad thing. It's certainly true that VII presumes that the Efficient Market Theory is invalid. If I thought that the market were efficient, I would endorse Buy-and-Hold. All of the conventional investing advice of recent decades follows logically from a belief in the Efficient Market Theory. The only problem I have with that advice is that Shiller's research discredits the Efficient Market Theory. There is no one stock allocation that everyone following a VII strategy should adopt any more than there is any one stock allocation that everyone following a Buy-and-Hold strategy should adopt. My personal circumstances have called for a zero stock allocation. But I generally recommend that the typical middle-class investor go with a 20 percent stock allocation even at times when stock prices are insanely high. You have to make adjustments for your personal financial circumstances. It is certainly fair to say that it is strange that stock prices have remained insanely high for so long. What people are missing is that we have never before had claims that Buy-and-Hold strategies are supported by academic research. Those claims caused the biggest bull market in history and it will take some time for the widespread belief in such claims to diminish. We are in the process of seeing that happen today. The good news is that, once there is a consensus that Buy-and-Hold can never work, we will likely have the greatest period of economic growth in U.S. history. The power of academic research has been used to support Buy-and-Hold for decades now because of the widespread belief that the market is efficient. Turn that around and investors will possess a stronger belief in the need to practice long-term market timing than they have ever possessed before. In that sort of environment, both bull markets and bear markets become logical impossibilities. Emotional extremes in one direction beget emotional extremes in the other direction. The stock market has been more emotional in the past 16 years than it has ever been in any earlier time (this is evidenced by the wild P/E10 numbers that have applied for that entire time-period). Now that we are seeing the losses that follow from investing in highly emotional ways, we may see rational strategies becoming exceptionally popular for an exceptionally long period of time. I certainly hope so! The comment above that this will not work for individual stocks is correct. This works only for those investing in indexes. The academic research shows that there has never yet in 140 years of data been a time when Valuation-Informed Indexing has not provided far higher long-term returns at greatly diminished risk. But VII is not a strategy designed for stock pickers. There is no reason to believe that it would work for stock pickers. Thanks much for giving this new investing strategy some thought and consideration and for inviting comments that help investors to understand both points of view about it. Rob", "title": "" }, { "docid": "1b21e111173e3ecdcd7780e47437aa2b", "text": "\"There are two things going on here, neither of which favors this approach. First, as @JohnFx noted, you should be wary of the sunk-cost fallacy, or throwing good money after bad. You already lost the money you lost, and there's no point in trying to \"\"win it back\"\" as opposed to just investing the money you still have as wisely as possible, forgetting your former fortune. Furthermore, the specific strategy you suggest is not a good one. The problem is that you're assuming that, whenever the stock hits $2, it will eventually rebound to $3. While that may often happen, it's far from guaranteed. More specifically, assuming the efficient market hypothesis applies (which it almost certainly does), there are theorems that say you can't increase your expected earning with a strategy like the one you propose: the apparent stability of the steady stream of income is offset by the chance that you lose out if the stock does something you didn't anticipate.\"", "title": "" }, { "docid": "bedb312ce400331910fcd7c5eccf3b41", "text": "My reaction to this is that your observation @D.W. is spot on correct: It sounds like long-term market timing: trying to do a better job than the rest of the market at predicting, based upon a simple formula, whether the market is over-priced or under-priced. I read the post by the founder of Valuation Informed Indexing, Rob Bennet. Glance at the comments section. Rob clearly states that he doesn't even use his own strategy, and has not owned, nor traded, any stocks since 1996! As another commenter summarizes it, addressing Rob: This is 2011. You’ve been 100% out of stocks — including indexes — since 1996? That’s 15 years of taking whatever the bond market, CDs or TIPS will yield (often and currently less than 2%)... I’m curious how you defend not following your own program even as you recommend it for others? Rob basically says that stocks haven't shown the right signals for buying since 1996, so he's stuck with bonds, CD's and fixed-income instead. This is a VERY long-term horizon point of view (a bit of sarcasm edges in from me). Answering your more general question, what do I think of this particular Price/ Earnings based ratio as a way to signal asset allocation change i.e. Valuation Informed Investing? I don't like it much.", "title": "" }, { "docid": "d69f5e6cf8b569f776788242ee66c6a8", "text": "\"Chris - you realize that when you buy a stock, the seller gets the money, not the company itself, unless of course, you bought IPO shares. And the amount you'd own would be such a small portion of the company, they don't know you exist. As far as morals go, if you wish to avoid certain stocks for this reason, look at the Socially Responsible funds that are out there. There are also funds that are targeted to certain religions and avoid alcohol and tobacco. The other choice is to invest in individual stocks which for the small investor is very tough and expensive. You'll spend more money to avoid the shares than these very shares are worth. Your proposal is interesting but impractical. In a portfolio of say $100K in the S&P, the bottom 400 stocks are disproportionately smaller amounts of money in those shares than the top 100. So we're talking $100 or less. You'd need to short 2 or 3 shares. Even at $1M in that fund, 20-30 shares shorted is pretty silly, no offense. Why not 'do the math' and during the year you purchase the fund, donate the amount you own in the \"\"bad\"\" companies to charity. And what littleadv said - that too.\"", "title": "" }, { "docid": "18fce050e0c4f56603652a1fe3692f0b", "text": "I'll just add this: In the best hedge funds and proprietary trading funds, stock selection is approached very scientifically in order to minimize losses/maximize gains. Researchers think of a trading idea and carefully test it to see which methods of stock selection work and how well, and finally they combine them. Every day researchers update their models based on the past performance of each indicator. All this is just too much work to be done manually. Firms use machine learning methods to understand markets. They try to figure out what is normal, what did not happen correctly at a specific time, what will happen in future. For instance, they use deep learning networks to look at unlabeled data, and figure out what is normal and what is not. These networks can analyze an unstructured haystack of noise, and separate out the signal. This is very relevant to finance and markets because finding the patterns and anomalies in market data has been the bread and butter of traders for decades. Deep learning networks give us applications like feature learning. By 'features,' I'm referring to certain attributes in data that indicate an event. By anticipating them, we can help predict future price movements. New technology is allowing us to break new ground in managing risk, to be a-typical and manage risk in ever-improving ways. It's the responsibility of every trader, whether working for themselves or others, to take advantage of this technology to improve the collective investing experience. I care very deeply about this. I have many close friends, in the finance world and without, who have lost large amounts of money to poor trade tools and lack of transparency.", "title": "" }, { "docid": "715832a0ce5dd6bfc23d850927768807", "text": "One of my university professors suggested doing this systematically to get access to shareholder meetings where there is typically a nice dinner involved. As long as the stock price + commission is less than the price of a nice restaurant it's actually not a bad idea.", "title": "" }, { "docid": "6c134ebc1ace5a864bb15aa77dfb3407", "text": "\"Don't compare investing with a roll of the dice, compare it with blackjack and the decision to stand or hit, or put more money on the table (double down or increase bet size) , based on an assessment of the state of the table and history. A naive strategy of say \"\"always hitting to 16\"\" isn't as awful as randomly hitting and standing (which, from time to to time will draw to 21 fair and square) , but there's a basic strategy that gets close to 50% and by increasing or decreasing bet based on counting face cards can get into positive expectations. Randomly buying and selling stock is randomly hitting. Buying a market index fund is like always hitting to 16. Determining an asset allocation strategy and periodically rebalancing is basic strategy. Adjusting allocations based on business cycle and economic indicators is turning skill into advantage.\"", "title": "" }, { "docid": "61a3236acf34529cae6bfa96e07ccccb", "text": "\"As Dheer pointed out, the top ten mega-cap corporations account for a huge part (20%) of your \"\"S&P 500\"\" portfolio when weighted proportionally. This is one of the reasons why I have personally avoided the index-fund/etf craze -- I don't really need another mechanism to buy ExxonMobil, IBM and Wal-Mart on my behalf. I like the equal-weight concept -- if I'm investing in a broad sector (Large Cap companies), I want diversification across the entire sector and avoid concentration. The downside to this approach is that there will be more portfolio turnover (and expense), since you're holding more shares of the lower tranches of the index where companies are more apt to churn. (ie. #500 on the index gets replaced by an up and comer). So you're likely to have a higher expense ratio, which matters to many folks.\"", "title": "" }, { "docid": "45a8ae902750a2970edde773d6d2b1a0", "text": "That makes sense. So it's sort of a thoughtless process on a short time scale, but if you add up all that noise over time you could (potentially) end up with a more meaningful position than if you had valued and bet on each stock individually. And I could see how these things could spread along a chain to unrelated stocks as well...", "title": "" }, { "docid": "95c307473b769daf340b2e899be1f5d1", "text": "If I'm buying preferred stock with liquidation preferences, I care what that class of equity is worth. I don't give a shit what common is worth. The article takes a pretty banal point - common may not be worth what other classes are worth - and tries to make it into a conspiracy, which is fucking stupid.", "title": "" }, { "docid": "db3816bf403891ee9fd6cf579b261951", "text": "What you found is that when your were on website X on day y when you clicked on the link they told you to buy 7 stocks and you performed an experiment, but the values went down. Somebody else on website A on day B saw a lightly different list, they may have been flat. But if you were on website W on day D that list hit the jackpot. Which of the three decided that the people running the ad knew what they were talking about? They could have tailored the list based on the nature of the website. Sports and recreation ones on ESPN, high tech on a computer focus site. They could have varied the size of the lit, they could have varied the way they described their analysis. They could have even varied the name of the expert to make it sound familiar or authoritative. What you found was a marketing plan. It may have been a scam, or it may have been just a way to try and convince you they know what they were doing. If you clicked on the wrong list, they probably lost you as a potential customer, unless you can convince yourself that they were close, and deserve a second look....", "title": "" } ]	fiqa
718eb354d32d2ec4ea306371dd38f108	Paid cash for a car, but dealer wants to change price	[ { "docid": "071b3b8ff236f00fddadf437f90e4066", "text": "Let me get this straight. I would stand my ground. Your son negotiated in good faith. Either they messed up, or they are dishonest. Either way your son wasn't the one supposed to know all the internal rules. I don't think it matters if they cashed the check or not. I would tell them if they have cashed it, that is even more evidence the deal was finalized. But even if they they didn't cash it, it only proves they are very disorganized. If for some reason your son feels forced to redo the deal, have him start the negotiations way below the price that was agreed to. If the deal for some strange reason gets voided don't let him agree to some sort of restocking fee.", "title": "" }, { "docid": "9db9532178ba35de15a402f67b59a31a", "text": "I had a similar situation when I was in college. The difference was that the dealer agreed to finance and the bank they used wanted a higher interest rate from me because of my limited credit history. The dealer asked for a rate 5 percentage points higher than what they put on the paperwork. I told them that I would not pay that and I dropped the car off at the lot with a letter rescinding the sale. They weren't happy about that and eventually offered me financing at my original rate with a $1000 discount from the previously agreed-upon purchase price. What I learned through that experience is that I didn't do a good-enough job of negotiating the original price. I would suggest that your son stop answering phone calls from the dealership for at least 1 week and drive the car as much as possible in that time. If the dealer has cashed the check then that will be the end of it. He owes nothing further. If the dealer has not cashed the check, he should ask whether they prefer to keep the check or if they want the car with 1000 miles on the odometer. This only works if your son keeps his nerve and is willing to walk away from the car.", "title": "" }, { "docid": "d3131fea694d5ac842c532e951554e55", "text": "\"I'm sorry to hear you've made a mistake. Having read the contract of sale we signed, I do not see any remedy to your current situation. However, I'm interested in making sure I do not take advantage of you. As such, I'll return the vehicle, you can return my money plus the bank fees I paid for the cashiers check, tax, title, and registration, and I will look at buying a vehicle from another dealership. This seems to be the most fair resolution. If I were to pay for your mistake at a price I did not agree to, it would not be fair to me. If you were to allow this vehicle to go to me at the price we agreed to, it wouldn't be fair to you. If I were to return the car and begin negotiations again, or find a different car in your lot, it would be difficult for us to know that you were not going to make a similar mistake again. At this point I consider the sale final, but if you'd prefer to have the vehicle back as-is, returning to us the money we gave you as well as the additional costs incurred by the sale, then we will do so in order to set things right. Chances are good you will see them back down. Perhaps they will just cut the additional payment in half, and say, \"\"Well, it's our mistake, so we will eat half the cost,\"\" or similar, but this is merely another way to get you to pay more money. Stand firm. \"\"I appreciate the thought, but I cannot accept that offer. When will you have payment ready so we can return the car?\"\" If you are firm that the only two solutions is to keep the car, or return it for a full refund plus associated costs, I'd guess they'd rather you keep the car - trust me, they still made a profit - but if they decide to have it returned, do so and make sure they pay you in full plus other costs. Bring all your receipts, etc and don't hand over the keys until you have the check in hand. Then go, gladly, to another dealership that doesn't abuse its customers so badly. If you do end up keeping the car, don't plan on going back to that dealership. Use another dealership for warranty work, and find a good mechanic for non-warranty work. Note that this solution isn't legally required in most jurisdictions. Read your contract and all documentation they provided at the time of sale to be sure, but it's unlikely that you are legally required to make another payment for a vehicle after the sale is finalized. Even if they haven't cashed the check, the sale has already been finalized. What this solution does, though, is put you back in the driver's seat in negotiating. Right now they are treating it as though you owe them something, and thus you might feel an obligation toward them. Re-asserting your relationship with them as a customer rather than a debtor is very important regardless of how you proceed. You aren't legally culpable, and so making sure they understand you aren't will ultimately help you. Further, dealerships operate on negotiation. The primary power the customer has in the dealership is the power to walk away from a deal. They've set the situation up as though you no longer have the power to walk away. They didn't threaten with re-possession because they can't - the sale is final. They presented as a one-path situation - you pay. Period. You do have many options, though, and they are very familiar with the \"\"walk away\"\" option. Present that as your chosen option - either they stick with the original deal, or you walk away - and they will have to look at getting another car off the lot (which is often more important than making a profit for a dealership) or selling a slightly used car. If they've correctly pushed the title transfer through (or you, if that's your task in your state) then your brief ownership will show up on carfax and similar reports, and instantly reduces the car's worth. Having the title transfer immediately back to the dealership doesn't look good to future buyers. So the dealership doesn't want the car back. They are just trying to extract more money, and probably illegally, depending on the laws in your jurisdiction. Reassert your position as customer, and decide now that you'll be fine if you have to return it and walk away. Then when you communicate that to them, chances are good they'll simply cave and let the sale stand as-is.\"", "title": "" }, { "docid": "137a3e87be092013b7b45a65eb330fc6", "text": "The sales manager and/or finance manager applied a rebate that did not apply. It's their fault. They have internal accounts to handle these situations as they do come up from time to time. The deal is done. They have no legal ground.", "title": "" }, { "docid": "cd99c77ee8b7febe66494eacc2d709d6", "text": "I have one additional recommendation: if the dealer continues to press the issue, tell them that they need to drop it, or you will write a Yelp review in excruciating detail about the entire experience. Used car dealers are very aware of their Yelp presence and don't like to see recent, negative reviews because it can cost them a lot of new business. (I'm assuming this is a used car. If it's a new car, you could go over their heads and bring up the problem with the manufacturer. Dealers hate it when you go directly to the manufacturer with a dealer complaint.)", "title": "" }, { "docid": "3f008d3c6f65df99406062ccbf7d77e7", "text": "Don't take the car back! The dealership wants you to take it back to try and earn more money. Simply stated, the dealerships hate paid up front cash deals. They make money on the financing. So to call back and try to up their fee is them realizing their not making a large enough profit. Say thank you and move on. The deal is done!!", "title": "" }, { "docid": "58543b29e1af5f251960eed3c0cb0e77", "text": "On the surface this sounds ridiculous, which makes me suspect that there might be something that the dealer intends to cling on to; otherwise it sounds like the dealer should be ashamed to even call your son about its own incompetence. I'd recommend politely refusing the request since said mistake didn't happen on your end, and wait to see if the dealer comes back with some sort of argument.", "title": "" }, { "docid": "1cee712904c22253683819c081aae7fc", "text": "I've been an F&I Manager at a new car dealership for over ten years, and I can tell you this with absolute certainty, your deal is final. There is no legal obligation for you whatsoever. I see this post is a few weeks old so I am sure by now you already know this to be true, but for future reference in case someone in a similar situation comes across this thread, they too will know. This is a completely different situation to the ones referenced earlier in the comments on being called by the dealer to return the vehicle due to the bank not buying the loan. That only pertains to customers who finance, the dealer is protected there because on isolated occasions, which the dealer hates as much as the customer, trust me, you are approved on contingency that the financing bank will approve your loan. That is an educated guess the finance manager makes based on credit history and past experience with the bank, which he is usually correct on. However there are times, especially late afternoon on Fridays when banks are preparing to close for the weekend the loan officer may not be able to approve you before closing time, in which case the dealer allows you to take the vehicle home until business is back up and running the following Monday. He does this mostly to give you sense of ownership, so you don't go down the street to the next dealership and go home in one of their vehicles. However, there are those few instances for whatever reason the bank decides your credit just isn't strong enough for the rate agreed upon, so the dealer will try everything he can to either change to a different lender, or sell the loan at a higher rate which he has to get you to agree upon. If neither of those two things work, he will request that you return the car. Between the time you sign and the moment a lender agrees to purchase your contract the dealer is the lien holder, and has legal rights to repossession, in all 50 states. Not to mention you will sign a contingency contract before leaving that states you are not yet the owner of the car, probably not in so many simple words though, but it will certainly be in there before they let you take a car before the finalizing contract is signed. Now as far as the situation of the OP, you purchased your car for cash, all documents signed, the car is yours, plain and simple. It doesn't matter what state you are in, if he's cashed the check, whatever. The buyer and seller both signed all documents stating a free and clear transaction. Your business is done in the eyes of the law. Most likely the salesman or finance manager who signed paperwork with you, noticed the error and was hoping to recoup the losses from a young novice buyer. Regardless of the situation, it is extremely unprofessional, and clearly shows that this person is very inexperienced and reflects poorly on management as well for not doing a better job of training their employees. When I started out, I found myself in somewhat similar situations, both times I offered to pay the difference of my mistake, or deduct it from my part of the sale. The General Manager didn't take me up on my offer. He just told me we all make mistakes and to just learn from it. Had I been so unprofessional to call the customer and try to renegotiate terms, I would have without a doubt been fired on the spot.", "title": "" }, { "docid": "2a44e8cbf7e4a965cdc2a692b9e07023", "text": "\"As others have said, if the dealer accepted payment and signed over ownership of the vehicle, that's a completed transaction. While there may or may not be a \"\"cooling-off period\"\" in your local laws, those protect the purchaser, not (as far as I know) the seller. The auto dealer could have avoided this by selling for a fixed price. Instead, they chose to negotiate every sale. Having done so, it's entirely their responsibility to check that they are happy with their final agreement. Failing to do so is going to cost someone their commission on the sale, but that's not the buyer's responsibility. They certainly wouldn't let you off the hook if the final price was higher than you had previously agreed to. He who lives by the fine print shall die by the fine print. This is one of the reasons there is huge turnover in auto sales staff; few of them are really good at the job. If you want to be kind to the guy you could give him the chance to sell you something else. Or perhaps even offer him a $100 tip. But assuming the description is correct, and assuming local law doesn't say otherwise (if in any doubt, ask a lawyer!!!), I don't think you have any remaining obligation toward them On the other hand, depending on how they react to this statement, you might want to avoid their service department, just in case someone is unreasonably stupid and tries to make up the difference that was.\"", "title": "" }, { "docid": "63cc41b9a6b889d94dfc4cb8f422a265", "text": "Lets look at it this way. Your son bought the car and then 2 days later, he wants to change the price. Will the dealership let him do that after all the paperwork is signed?", "title": "" }, { "docid": "2335e2302d6eee2c43c7bfdc105a902e", "text": "As mhoran_psprep and others have already said, it sounds like the sale is concluded and your son has no obligation to return the car or pay a dime more. The only case in which your son should consider returning the car is if it works in his favor--for example, if he is able to secure a similar bargain on a different car and the current dealer buys the current car back from your son at a loss. If the dealer wants to buy the car back, your son should first get them to agree to cover any fees already incurred by your son. After that, he should negotiate that the dealer split the remaining difference with him. Suppose the dealership gave a $3000 discount, and your son paid $1000 in title transfer, registration, and any other fees such as a cashier's check or tax, if applicable. The remaining difference is $2000. Your son should get half that. In this scenario, the dealer only loses half as much money, and your son gains $1000 for his trouble.", "title": "" }, { "docid": "b90152e12b9beda4523a34625545dbca", "text": "\"Your son is in the right. But he broke the \"\"unwritten\"\" rules, which is why the car dealer is upset. Basically, cars are sold in the United States at a breakeven price. The car company makes ALL its money on the financing. If everyone bought \"\"all cash,\"\" the car companies would not be profitable. No one expected anyone, least of all your son, a \"\"young person,\"\" to pay \"\"all cash.\"\" When he did, they lost all the profit on the deal. On the other hand, they signed a contract, your son met all the FORMAL requirements, and if there was an \"\"understanding\"\" (an assumption, actually), that the car was supposed to be financed, your son was not part of it. Good for him. And if necessary, you should be prepared to back him up on court.\"", "title": "" }, { "docid": "ca41100d583073f7e920e91d5bf8d4b2", "text": "If the discount is only for financed car then their software application should have accepted the payment (electronic transfer ID) from financed bank. In this case the bank should have given the payment on behalf of your son. I believe the dealer know in advance about the paper work and deal they were doing with your son. Financing a car is a big process between dealer and bank.", "title": "" } ]	[ { "docid": "b72227cdfe352fa48872d135288cc532", "text": "Yes, of course it is. Car dealers are motivated to write loans even more than selling cars at times. When I bought a new car for the first time in my life, in my 40's, it took longer to get the finance guy out of my face than to negotiate and buy the car. The car dealer selling you the used car would be happy to package the financing into the selling price. Similar to how 'points' are used to adjust the actual cost of a mortgage, the dealer can tinker with the price up front knowing that you want to stretch the payment out a bit. To littleadv's point, 3 months isn't long, I think a used car dealer wold be happy to work with you.", "title": "" }, { "docid": "12262c326568149698533a3c185be27c", "text": "If a shop offers 0% interest for purchase, someone is paying for it. e.g., If you buy a $X item at 0% interest for 12 months, you should be able to negotiate a lower cash price for that purchase. If the store is paying 3% to the lender, then techincally, you should be able to bring the price down by at least 2% to 3% if you pay cash upfront. I'm not sure how it works in other countries or other purchases, but I negotiated my car purchase for the dealer's low interest rate deal, and then re-negotiated with my preapproved loan. Saved a good chunk on that final price!", "title": "" }, { "docid": "bcd026c79da30d4424b9df38978406a4", "text": "\"The question is about the dealer, right? The dealer isn't providing this financing to you, Alfa is, and they're paying the dealer that same \"\"On the Road\"\" price when you finance the purchase. So the dealer gets the same amount either way. The financing, through Alfa, means your payments go to Alfa. And they're willing to give you 3,000 towards purchase of the car at the dealer in order to motivate those who can afford payments but not full cash for the car. They end up selling more cars this way, keeping the factories busy and employees and stockholders happy along the way. At least, that's how it's supposed to work out.\"", "title": "" }, { "docid": "49be8a82d19df5fa7b139fed606d7d12", "text": "But.. what I really want to know.... is it illegal, particularly the clause REQUIRING a trade in to qualify for the advertised price? The price is always net of all the parts of the deal. As an example they gave the price if you have $4000 trade in. If you have no trade in, or a trade in worth less than 4K, your final price for the new car will be more. Of course how do you know that the trade in value they are giving you is fair. It could be worth 6K but they are only giving you a credit of 4K. If you are going to trade in a vehicle while buying another vehicle the trade in should be a separate transaction. I always get a price quote for selling the old car before visiting the new car dealer. I do that to have a price point that I can judge while the pressure is on at the dealership.. Buying a car is a complex deal. The price, interest rate, length of loan, and the value of the trade in are all moving parts. It is even more complex if a lease is involved. They want to adjust the parts to be the highest profit that you are willing to agree to, while you think that you are getting a good deal. This is the fine print: All advertised amounts include all Hyundai incentives/rebates, dealer discounts and $2500 additional down from your trade in value. +0% APR for 72 months on select models subject to credit approval through HMF. No payments or 90 days subject to credit approval. Value will be added to end of loan balance. 15MY Sonata - Price excludes tax, title, license, doc, and dealer fees. MSRP $22085- $2036 Dealer Discount - $500 HMA Lease Cash - $500 HMA Value Owner Coupon - $1000 HMA Retail Bonus Cash - $500 HMA Military Rebate - $500 HMA Competitive Owner Coupon - $400 HMA College Grad Rebate - $500 HMA Boost Program - $4000 Trade Allowance = Net Price $12149. On approved credit. Certain qualifications apply to each rebate. See dealer for details. Payment is 36 month lease with $0 due at signing. No security deposit required. All payment and prices include HMA College Grad Rebate, HMA Military Rebate, HMA Competitive Owner Coupon and HMA Valued Owner Coupon. Must be active military or spouse of same to qualify for HMA Military Rebate. Must graduate college in the next 6 months or within the last 2 years to qualify for HMA College Grad rebate. Must own currently registered Hyundai to qualify for HMA Valued Owner Coupon. Must own qualifying competitive vehicle to qualify for HMA Competitive Owner Coupon.", "title": "" }, { "docid": "b605715d4578ff53e0f1b6bc6e390df0", "text": "The car deal makes money 3 ways. If you pay in one lump payment. If the payment is greater than what they paid for the car, plus their expenses, they make a profit. They loan you the money. You make payments over months or years, if the total amount you pay is greater than what they paid for the car, plus their expenses, plus their finance expenses they make money. Of course the money takes years to come in, or they sell your loan to another business to get the money faster but in a smaller amount. You trade in a car and they sell it at a profit. Of course that new transaction could be a lump sum or a loan on the used car... They or course make money if you bring the car back for maintenance, or you buy lots of expensive dealer options. Some dealers wave two deals in front of you: get a 0% interest loan. These tend to be shorter 12 months vs 36,48,60 or even 72 months. The shorter length makes it harder for many to afford. If you can't swing the 12 large payments they offer you at x% loan for y years that keeps the payments in your budget. pay cash and get a rebate. If you take the rebate you can't get the 0% loan. If you take the 0% loan you can't get the rebate. The price you negotiate minus the rebate is enough to make a profit. The key is not letting them know which offer you are interested in. Don't even mention a trade in until the price of the new car has been finalized. Otherwise they will adjust the price, rebate, interest rate, length of loan, and trade-in value to maximize their profit. The suggestion of running the numbers through a spreadsheet is a good one. If you get a loan for 2% from your bank/credit union for 3 years and the rebate from the dealer, it will cost less in total than the 0% loan from the dealer. The key is to get the loan approved by the bank/credit union before meeting with the dealer. The money from the bank looks like cash to the dealer.", "title": "" }, { "docid": "1c4d36d1c862dd9d2cccce47377bcd2c", "text": "Fair enough. I was just trying to save them money. If it were me, I'd call up the dealer first and threaten to contact local media if they didn't void the contract. In the end though a lawyer is probably the best bet. Even just having them write a letter to send over would probably get them to nullify it.", "title": "" }, { "docid": "e3c30faa6ac6413950fd269befe2b073", "text": "Absolutely do not pay off the car if you aren't planning to keep it. The amount of equity that you have from a trade in vehicle will always be a variable when negotiating a new car purchase. By applying cash (a hard asset) to increase your equity, you are trading a fixed amount for an unknown, variable amount. You are also moving from a position of more certainty for a position of less certainty. You gain nothing by paying off the car, whereas the dealer can negotiate away a larger piece of the equity in the vehicle.", "title": "" }, { "docid": "2ef47bc6e77a08529092f461b85d993b", "text": "\"The lead story here is you owe $12,000 on a car worth $6000!! That is an appalling situation and worth a lot to get out of it. ($6000, or a great deal more if the car is out of warranty and you are at risk of a major repair too.) I'm sorry if it feels like the payments you've made so far are wasted; often the numbers do work out like this, and you did get use of the car for that time period. Now comes an \"\"adversary\"\", who is threatening to snatch the car away from you. I have to imagine they are emotionally motivated. How convenient :) Let them take it. But it's important to fully understand their motivations here. Because financially speaking, the smart play is to manage the situation so they take the car. Preferably unbeknownst that the car is upside down. Whatever their motivation is, give them enough of a fight; keep them wrapped up in emotions while your eye is on the numbers. Let them win the battle; you win the war: make sure the legal details put you in the clear of it. Ideally, do this with consent with the grandfather \"\"in response to his direct family's wishes\"\", but keep up the theater of being really mad about it. Don't tell anyone for 7 years, until the statute of limitations has passed and you can't be sued for it. Eventually they'll figure out they took a $6000 loss taking the car from you, and want to talk with you about that. Stay with blind rage at how they took my car. If they try to explain what \"\"upside down\"\" is, feign ignorance and get even madder, say they're lying and they won, why don't they let it go? If they ask for money, say they're swindling. \"\"You forced me, I didn't have a choice\"\". (which happens to be a good defense. They wanted it so bad; they shoulda done their homework. Since they were coercive it's not your job to disclose, nor your job to even know.) If they want you to take the car back, say \"\"can't, you forced me to buy another and I have to make payments on that one now.\"\"\"", "title": "" }, { "docid": "da9bc8b786e7314a869004e0ffd56ad0", "text": "\"So there are a few angles to this. The previous answers are correct in saying that cash is different than financing and, therefore, the dealer can rescind the offer. As for financing, the bank or finance company can give the dealership a \"\"kickback\"\" or charge a \"\"fee\"\" based on the customer's credit score. So everyone saying that the dealers want you to finance....well yes, so long as you have good credit. The dealership will make the most money off of someone with good credit. The bank charges a fee to the dealership for the loan to a customer with bad credit. Use that tactic with good credit...no problem. Use that tactic with bad credit.....problem.\"", "title": "" }, { "docid": "6d5910124726284e0e65d9ed7ffacf81", "text": "\"I love John's answer, but I just can't help myself from adding my 2 cents, even though it's over 5 years later. I sold cars for a while in the late 90s, and I mostly agree with John's answer. Where I disagree though, is that where I worked, the salesperson did not have ANY authority to make a sale. A sales manager was required to sign off on every sale. That doesn't mean that the manager had to interact with the buyer, that could all be handled behind the scenes, but the pricing and even much of the negotiating strategies were dictated by the sales managers. Some of the seasoned salespeople would estimate numbers on their own, but occasionally you'd hear the managers still chew them out with \"\"I wish you wouldn't have said that\"\". Of course, every dealership is different. Additional purchase advice: There is a strategy that can work well for the buyer, but only in scenarios where the salesperson is trying to prevent you from leaving. They may start interrupting you as you are packing up, or blocking your path to the door, or even begging. If this happens, they are obviously desperate for whatever reason. In this case, if you came prepared with research on a good price that you are comfortable with, then shoot lower and hold firm to the point of near exhaustion. Not so low that that they realize you're too far away- they will let you leave at that point. It needs to be within a reasonable amount, perhaps at most 1-2% of the purchase price. Once you detect the salesperson is desperate, you finally move up to your goal number or possibly a little lower. Typically the salesperson will be so happy to have gotten you to move at all that they'll accept. And if the managers are fed up too (like 45 minutes after close), they'll accept too. I saw this happen multiple times in a high pressure scenario. I also used it once myself as a buyer. If you are planning to purchase options that can be added at the dealer rather than from the factory, keep them up your sleeve at first. Get your negotiations down to where you are a little further apart than the invoice price of the option, then make your move. For example, suppose the option you want retails for $350 with an invoice of $300. Get within about $400 of the dealer. Then offer to pay their price, but only if they throw in the option you want. This will throw them completely off guard because they didn't expect it and all of their calculations were based on without it. If they say yes, you effectively moved $100 and they moved $300. It's much more likely that they'll agree to this than taking $300 off the price of the car. (I'm guessing the reason for this is partially due to how their accounting works with sticker price vs aftermarket price, and partially psychological.) Note, this works best with new cars, and make sure you only do this if it's for items they can add after the fact. Even if they don't have the part in stock it's ok, they can give you an IOU. But if the option requires a car change to something they don't have on the lot, it will probably just make them mad.\"", "title": "" }, { "docid": "230bf99815c0f1b4b3d8aea5c08f2c0f", "text": "The car dealership doesn't care where you get the cash; they care about it becoming their money immediately and with no risk or complications. Any loan or other arrangements you make to raise the cash is Your Problem, not theirs, unless you arrange the loan through them.", "title": "" }, { "docid": "f66e25bacedbdcc71660c7a8b122bb2e", "text": "The only issue I can see is that the stranger is looking to undervalue their purchase to save money on taxes/registration (if applicable in your state). Buying items with cash such as cars, boats, etc in the used market isn't all that uncommon - I've done it several times (though not at the 10k mark, more along about half of that). As to the counterfeit issue, there are a couple avenues you can pursue to verify the money is real: *it's the preferred means of payment advocated by some prominent personal financial folks, including Dave Ramsey", "title": "" }, { "docid": "bb120e9ee3bcedb436bdfa4189180a21", "text": "There is no rule that says the dealer has to honor that deal, nor is there any that says he/she won't. However, if you are thinking of financing through though the dealership they are likely to honor the deal. They PREFER you finance it. If you finance it through the dealer the salesman just got TWO sales (a car and a loan) and probably gets a commission on both. If you finance it through a third party it makes no difference to the dealer, it is still a cash deal to them because even though you pay off the car loan over years, the bank pays them immediately in full.", "title": "" }, { "docid": "dc5fd5eeb9a1417fa39f3985391b0af7", "text": "NEVER combine the negotiations for trade-in of an old car and purchase of a new one (and/or financing), if you can avoid doing so. Dealers are very good at trading off one against the other to increase their total profit, and it's harder for you to walk away when you have to discard the whole thing. These are separate transactions, each of which can be done with other parties. Treat them as such.", "title": "" }, { "docid": "9adbfcff4d4780479c1deb5a8d63900e", "text": "\"The retailer can sell for whatever price they like, with the caveats that if they consistently sell at a loss they will go out of business and if they set the price too high they will not sell anything! As you mentioned, RRP is only a recommended price, the manufacturer cannot enfore it at all for legal reasons. Having said that I used to work in retail (not cars) and if we discounted a certain manufacturers products and they found out about it, we would find they had suddenly run out of stock when we tried to order more. So manufacturers do have some control over this type of thing depending on how \"\"underhand\"\" they want to be about it. My background is in retail management but not selling cars, but my understanding is the law regards RRP is the same.\"", "title": "" } ]	fiqa
45a6711b2b92d11e7b81e6b5585e024a	What is a Student Loan and does it allow you to cover a wide range of expenses relating to school?	[ { "docid": "826e4f8be008fa2732fe046f77af39f1", "text": "Student loan is a class of unsecured loan. The characteristics that define a student loan are, primarily, that it is a loan that is intended to be used by someone who is currently a student. Beyond that, though, there are many variations. The different kinds of requirements usually have to do with who is eligible for the loan, and with what the loan is allowed to be used to pay. Some loans have other limitations, such as only being allowed to be directly paid to the institution. Some student loans are federally guaranteed (meaning the Federal Government will repay the bank if you default). Those have a lower interest rate, typically, and often have more stringent requirements, such as only full-time students being eligible, being need-based, and limitations on what the loan's funds can be used for. See studentaid.ed.gov for more information. Many private student loans have quite lax limitations. Some for example have nearly no limitation as to what they can fund; many are allowed to be taken out by part-time students and even non-degree-seeking students in some cases. Private loans usually have somewhat higher rates (as they're entirely unsecured) to go along with the lower restrictions and higher borrowing limits. You'd have to see the specific details of any particular loan to know what it's allowed to pay for, so if you choose this route, know what you plan to use it to pay for before you go looking.", "title": "" }, { "docid": "39e2e45e8bcc7adf720d1c39d4c7aa85", "text": "\"Is a student loan a type of loan or just a generic name used to refer to a loan for someone who is going back to school? A student loan from the federal government is a specific type of loan used for education purposes (i.e. attending college). They have guidelines associated with them that are very flexible as compared to a student loan from a private bank. If a student loan is a different type of loan, does it only cover the costs of going to the school? Every student at a university has a \"\"budget\"\" or the \"\"cost of attendance\"\". That includes direct and indirect costs. Direct costs are ones billed directly to you (i.e. tuition, room and board - should you choose to live on campus, and associated fees). Indirect costs are such things like books, travel expenses (if you live out of state), and personal things. Direct costs are controlled by the school. Indirect costs are estimated. The school will usually conduct market research to determine the costs for indirect items. Some students go above that, and some go below. For example, transportation is an indirect cost. A school could set that at $500. There are students who will be above that, and some below that. If you choose not to live on campus, then rent and food will become an indirect cost. Student loans can cover up to 100% of your budget (direct and indirect added together). If your total budget is $60,000 (tuition, room and board, transportation, books, supplies, etc.) Then you are able to borrow up to that amount ($60,000). However, because your budget is both direct and indirect costs, you will only be billed for your direct costs (tuition, etc.). So if your direct costs equal $50,000 and your student loan was certified for $60,000, then you will get that $10,000 back in the form of a refund from the school. That does not mean you don't have to pay it back - you still do. But that money is meant for indirect costs (i.e. books, rent - if you're not staying on campus, etc.). If your school is on semesters vs quarters, then that amount is divided between the terms. Summer term is not factored in, that's another process. Also with student loans, there are origination costs - the money associated with processing a loan. A good rule of thumb is to never borrow more than you need. Source: I used to work in financial aid at my college.\"", "title": "" }, { "docid": "5e68a7f16bbbafd367c5aa932c0fa551", "text": "The short answer is that you can use student loans for living expenses. Joe provides a nice taxonomy of loans. I would just add that some loans are not only guaranteed, but also subsidized. Essentially the Government buys down the rate of the loan. The mechanics are that a financial aid package might consist of grants, work study (job), subsidized, and guaranteed loans. One can turn down one or more of the elements of the package. All will be limited in some form. The work study will have a maximum number of hours and generally has low pay. Many find better deals working in the businesses surrounding the college or starting their own services type business. The grants rarely cover the full cost of tuition and books. The loans will both be limited in amount. It mainly depends on what you qualify for, and generally speaking the lower the income the more aid one qualifies for. Now some students use all their grant, all their loan money and buy things that are not necessary. For example are you going to live in the $450/month dorm, or the new fancy apartments that are running $800/month? Are you going to use the student loan money to buy a car? Will it be a new BMW or a 8 year old Camary? I see this first hand as I live near a large university. The pubs are filled with college students, not working, but drinking and eating every night. Many of them drive very fancy cars. The most onerous example of this is students at the military academies. Attendees have their books and tuition completely paid for. They also receive a stipend, and more money can be earned over the summer. They also all qualify for a 35K student loan in their junior year. Just about every kid, takes this loan. Most of those use the money to buy a car. I know a young lady who did exactly that, and so did many of her friends. So kids with a starting pay of 45K also start life with a 35K. Buying a nice car in the military is especially silly as they cannot drive it while deployed and they are very likely to be deployed. At least, however, they are guaranteed a starting job with a nice starting pay, and upward potential. College kids who behave similarly might not have it as good. Will they even find work? Will the job have the ability to move up? How much security is in the job? One might say that this does not apply to engineers and such, but I am working with a fellow with a computer science degree who cannot find a job and has not worked in the past 6 months. This even though the market is super hot right now for computer engineers. So, in a word, be very careful what you borrow.", "title": "" }, { "docid": "d4a1db6b750a6c8d3195b9d7fb913135", "text": "Short answer: student loans are loans given to people that are currently enrolled in school and yes, you can use them for personal expenses. Long answer: be very careful because you can easily be financially ruined if you borrow too much and can't repay it quickly. Once the loans get beyond a certain size relative to your income, you can find it hard to stay ahead of the interest payments let alone actually pay off the principal. These are the facts you need to know:", "title": "" } ]	[ { "docid": "0d451afa068fba7cee2fe211e4678508", "text": "Depending on the student loan, this may be improper usage of the funds. I know the federal loans I received years ago were to be used for education related expenses only. I would imagine most, if not all, student loans would have the same restrictions. Bonus Answer: You must have earned income to contribute to an IRA (e.g. money received from working (see IRS Publication 590 for details)). So, if your earmarked money is coming from savings only, then you would not be eligible to contribute. As far as whether you can designate student loans for the educational expenses and then used earned income for an IRA I would imagine that is fine. However, I have not found any documentation to support my assumption.", "title": "" }, { "docid": "6cc093b7114fdde405610af59e208c26", "text": "Just to be clear, private student loans fall in the same category. The only meaningful difference is that they do not qualify for the federal forgiveness program (described above) and usually don't have subsidized interest rates which generally makes them even worse. They similarly follow you for life. There is no way out. If you're referring to regular, private loans, then that's kind of a non-sequitur since the topic is student loans. Not trying to be pedantic, just want to make sure anyone hoping to learn more understands how horrible student loans are if you can't pay them back.", "title": "" }, { "docid": "c8fcd729c504730cd96afd2987df495a", "text": "OK 40k vs 10k per year. That's 120k in loans difference. At 6% interest over 20 years that's roughly 200k (10k) a year to pay for school. Do you really think most people will get 10k a year extra because they when to Berkeley instead of Iowa state?", "title": "" }, { "docid": "9988d3b8411fc7579ae2b5955c69a7bc", "text": "I'm guessing you're asking about the US. Please add a location tag to your question. Unfortunately you cannot claim expenses paid for someone other than yourself or your dependents. In IRS publication 970, that deals with education credits, they give the following guidance: Expenses paid by others. Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Also, you should keep the gift tax in mind: your help to your friend is only exempt from gift tax if you pay the tuition directly (i.e.: you write the check to the school cashier, not to your friend). If you give the money to your friend, it is subject to gift tax (which you have to pay). In some cases, someone who is not family may in fact qualify to become your dependent. For that he must live with you (in the same household), and be supported by you and not have any significant income. If that's the case with you and your friend, you might be able to claim him as a dependent and get some significant tax benefits, including the education credits. Consult your tax adviser if its relevant to your situation.", "title": "" }, { "docid": "4dba527ceeb1a824675dbc76b6a6cc12", "text": "\"Let me run some simplistic numbers, ignoring inflation. You have the opportunity to borrow up to 51K. What matters (and varies) is your postgraduation salary. Case 1 - you make 22K after graduation. You pay back 90 a year for 30 years, paying off at most 2700 of the loan. In this case, whether you borrow 2,800 or 28,000 makes no difference to the paying-off. You would do best to borrow as much as you possibly can, treating it as a grant. Case 2 - you make 100K after graduation. You pay back over 7K a year. If you borrowed the full 51, after 7 or 8 years it would be paid off (yeah, yeah, inflation, interest, but maybe that might make it 9 years.) In this case, the more you borrow the more you have to pay back, but you can easily pay it back, so you don't care. Invest your sponsorships and savings into something long term since you know you won't be needing to draw on them. Case 3 - you make 30K after graduation. Here, the payments you have to make actually impact how much disposable income you have. You pay back 810 a year, and over 30 years that's about 25K of principal. It will be less if you account for some (even most) of the payment going to interest, not principal. Anything you borrow above 25K (or the lower, more accurate amount) is \"\"free\"\". If you borrow substantially less than that (by using your sponsorship, savings, and summer job) you may be able to stop paying sooner than 30 years. But even if you borrow only 12K (or half the more accurate number), it will still be 15 years of payments. Running slightly more realistic versions of these calculations where your salary goes up, and you take interest into account, I think you will discover, for each possible salary path, a number that represents how much of your loan is really loan: everything above that is actually a grant you do not pay back. The less you are likely to make, the more of it is really grant. On top of that, it seems to me that no matter the loan/grant ratio, \"\"borrow as much as you can from this rather bizarre source\"\" appears to be the correct answer. In the cases where it's all loan, you have a lot of income and don't care much about this loan payment. Borrowing the whole 51K lets you invest all the money you get while you're a student, and you can use the returns on those investments to make the loan payments.\"", "title": "" }, { "docid": "26ab88c2da901106d4f0286c66eec052", "text": "it's just a passthrough security essentially. sofi packages a bunch of loans, refinances them for the student, and you invest in sofi corporate debt as they pass through the returns on the loan to you in the form of bond cpns. i mean its not exactly the same, but its pretty close", "title": "" }, { "docid": "74d11f73384f97df8cd325a8fd3f3011", "text": "\"First, it's clear from your story that you very likely should be able to receive some financial aid. That may be in the form of loans or, better, grants in which you just get free money to attend college. For example, a Pell grant. You won't get all you'd need for a free ride this way, but you can really make a dent in what you'd pay. The college may likely also provide financial aid to you. In order to get any of this, though, you have to fill out a FAFSA. There are deadlines for this for each state and each college (there you would ask individually). I'd get looking into that as soon as you can. Do student loans have to be paid monthly? Any loan is a specific agreement between a lender and a borrower, so any payment terms could apply, such as bimonthly or quarterly. But monthly seems like the most reasonable assumption. Generally, you should assume the least favorable (reasonably likely) terms for you, so that you are prepared for a worst-case scenario. Let's say monthly. Can I just, as I had hoped, borrow large sums of money and only start paying them after college? Yes. That is a fair summary of all a student loan is. Importantly, though, some loans are federal government subsidized loans for which the interest on the loan is paid for you as long as you stay in college + 6 months (although do check that is the current situation). Unsubsidized loans may accrue interest from the start of the loan period. If you have the option, obviously try hard to get the subsidized loans as the interest can be significant. I made a point to only take subsidized loans. WARNING: Student loans currently enjoy a (nearly?) unique status in America as being one of the only loan types that are not forgivable in bankruptcy. This means that if you leave college with $100,000 in debt that begins accruing interest, there is no way for you to get out of it short of fleeing the country or existence. And at that point the creditors may come after your mother for the balance. These loans can balloon into outrageous amounts due to compounding interest. Please have a healthy fear of student loans. For more on this, listen to this hour long radio program about this. Would a minimum wage job help, Of course it will \"\"help\"\" but will it \"\"help enough\"\"? That depends on how much you work. If you make $7.50/hr and work 20 hrs/week for all but 3 weeks of the year, after taxes you will be adding about $6,000 to offset your costs. In 3 years of college (*see below), that's $18,000, which, depending on where you go, is not bad at helping defray costs. If you are at full-time (40 hrs), then it is $12k/yr or $36k toward defraying costs. These numbers are nothing to sniff at. Do you have any computer/web/graphics skills? It's possible you could find ways to make more than minimum wage if you learn some niche IT industry skill. (If I could go back and re-do those years I wouldn't have wasted much time delivering pizzas and would have learned HTML in the 90s and would have potentially made some significant money.) would college and full-time job be manageable together? That's highly specific to each situation (which job? how far a commute to it? which major? how efficient are you? how easily do you learn?) but I would say that, for the most part, it's not a good idea, not only for the academic-achievement side of it, but the personal-enrichment aspect of college. Clubs, sports, relationships, activities, dorm bull sessions, all that good stuff, they deserve their space and time and it'd be a shame to miss out on that because you're on the 2nd shift at Wal-Mart 40hrs/week. How do I find out what scholarships, grants, and financial aid I can apply for? Are you in a high school with a career or guidance counselor? If so, go to that person about this as a start. If not, there are tons of resources out there. Public libraries should have huge directories of scholarships. The Federal Student Loan program has a website. There are also a lot of resources online found by just searching Google for scholarships--though do be careful about any online sources (including this advice!). Sermon: Lastly, please carefully consider the overall cost vs. benefit to you. College in 2012 is anything but cheap. A typical price for a textbook is $150 or more. Tuition and board can range over $40k at private colleges. There is a recent growing call for Americans to re-think the automatic nature of going to college considering the enormous financial burden it puts many families under. Charles Murray, for one, has put out a book suggesting that far too many students go to college now, to society's and many individuals' detriment (he's a controversial thinker, but I think some of his points are valid and actually urgent). With all that said, consider ways to go to college but keep costs down. Public colleges in your state will almost always be significantly cheaper than private or out-of-state. Once there, aim for As and Bs--don't cheat yourself out of what you pay for. And lastly, consider a plan in which you complete college in three years, by attending summer courses. This website has a number of other options for helping to reduce the cost of college.\"", "title": "" }, { "docid": "de45ba78caece33cee1171e59931e8ce", "text": "maybe everyone who has responded needs to look closer at the income base repayment plan for student loans. What this means is he payment does not even cover his interest rate so each month he makes his payment the loan grows, does not decrease. This is not a simple interest loan which is irritating because car dealerships do not even use a non-simple interest loan any longer. So, well your suggestions are well intended what is your suggestion now knowing that his monthly payments is not reducing his loan but actually his loan is growing exponentially each month. I also like the comment where the average student loan is $30,000, I would like to know in what state that is. That may work for a community college or a student who is reliant on parents to supplement their income so they can go to classes, however for someone who is working and going to school that person must opt out for night classes and online classes which definitely increases the cost of your classes. Right now the cost per credit hour is in the $550- 585 range.", "title": "" }, { "docid": "7dfc844b75cd10275b5848313a3e88bc", "text": "A tip I tend to put in here that doesn't directly relate to student loan payments, but does matter: Don't focus so much on student loan payments that you find yourself needing to tap short-term credit sources to make ends meet. Making a $100 payment on a 6% interest student loan and then needing to charge a $100 car repair on your 19% interest credit card is not a sound financial move.", "title": "" }, { "docid": "e3e58d223a5031306e05985a5cbdf450", "text": "\"No idea what you are trying to say here. You default on a loan, student or otherwise, by not paying. That is what creates the default, but you still owe it. Student loans actually can be discharged, but it is very uncommon and an uphill battle. You have to prove \"\"undue hardship\"\" which has a rather high standard. The last firm I worked at did manage to get a large amount of student loans discharged for someone who was in a car wreck and became a quadriplegic after incurring the student loan. And even that was not an easy case, my old firm was actually rather pleased at their success.\"", "title": "" }, { "docid": "49e9a01c74b4a5f021796aee71d6cfc4", "text": "Actually, a few lenders now will offer a consolidation loan that will consolidate both Federal and private student loans. One example is Cedar Ed, http://cedaredlending.com/PrivateConsolidationLoan.htm", "title": "" }, { "docid": "add28e6f8f11a6cdf64ace8c5ad55d49", "text": "Just one more thing to consider: a friend of mine had some student loan debt left over from graduate school. Years later, through his employer, he was able to apply for and receive a grant that paid off the remainder of his student loan. It was literally free money, and a significant amount, too. The windfall was a little bittersweet for him because he had been making extra payments over the years. The cap on the grant was something like $50k and he wasn't able to use all of it because he had been aggressive in paying it down. (Still, free money is free money.) Sure, this is a unique situation, but grants happen.", "title": "" }, { "docid": "8700cf158da8042aaddd73f9043e4aef", "text": "\"This election only applies to payments that you make within 120 days of your having received loan money. These wouldn't be required payments, which is why they are called \"\"early\"\" payments. For example, let's say that you've just received $10,000 from your lender for a new loan. One month later, you pay $500 back. This election decides how that $500 will be applied. The first choice, \"\"Apply as Refund,\"\" means that you are essentially returning some of the money that you initially borrowed. It's like you never borrowed it. Instead of a $10,000 loan, it is now a $9,500 loan. The accrued interest will be recalculated for the new loan amount. The second choice, \"\"Apply as Payment,\"\" means that your payment will first be applied to any interest that has accrued, then applied to the principal. While you are in school, you don't need to make payments on student loans. However, interest is accruing from the day you get the money. This interest is simple interest, which means that the interest is only based on the loan principal; the interest is not compounding, and you are not paying interest on interest. After you leave school and your grace period expires, you enter repayment, and you have to start making payments. At this point, all the interest that has accrued from the time you first received the money until now is capitalized. This means that the interest is added to your loan principal, and interest will now be calculated on this new, larger amount. To avoid this, you can pay the interest as you go before it is capitalized, which will save you from having to pay even more interest later on. As to which method is better, just as they told you right on the form, the \"\"Apply as Refund\"\" method will save you the most money in the long run. However, as I said at the beginning, this election only applies if you make a payment within 120 days from receiving loan funds. Since you are already out of school and in repayment, I don't think it matters at all what you select here. For any students reading this and thinking about loans, I want to issue a warning. Student loans can ruin people later in life. If you truly feel that taking out a loan is the only way you'll be able to get the education you need, minimize these as much as possible. Borrow as little as possible, pay as much as you can as early as you can, and plan on knocking these out ASAP. Great Lakes has a few pages that discuss these topics:\"", "title": "" }, { "docid": "1111a10783218d5f296a11a5194599b7", "text": "Who says they don't? In the United Kingdom the Bank of England and the Bank of Scotland print the money. In some other countries (like Hong Kong, Israel, and the US) commercial banks were issuing the currency at some point of time, but now the governments do that. The problem with commercial banks issuing currency is the control. If a bank is allowed to print money - how can the amount of currency be controlled? If it is controlled by the government then the bank will be just a printing press, so what's the point? And since governments now want to control the monetary policy, banks have no reason to just be printing presses for the government, the governments have their own. edit Apparently in Hong Kong it is still the case, as I'm sure it is in some other places in the world as well.", "title": "" }, { "docid": "caa37ce8bf0d3565f7b7a877958d16fb", "text": "ASSUMING THIS IS A QUESTION OF U.S. SECURITIES LAWS You didn't explain whether you're related to the mother and son, but I'll assume you are. If that's the case, this really wouldn't qualify as a solicited sale. It wasn't advertised publicly for sale, and there is already (I assume) a long-standing relationship between the parties. In such a case, this would be a perfectly legal and normal type of transaction, so I can't see any reason for concern. That being said, you would be wise to contact the state securities regulation agency where you live to ensure you're on firm ground. The law pertaining to the solicited sale of securities normally targets instances where people are trying to do private stock offerings and are seeking investors, in which case there are a number of different state and federal agencies and regulations that come into play. The situation you've described does not fall under these types of scenarios. Good luck!", "title": "" } ]	fiqa
d82a02f945a54fc422788f0a78519644	Owing state tax Interest and a result of living in Maryland and working in Virginia	[ { "docid": "b6302253c06243087d1f4e543d757815", "text": "Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0).", "title": "" }, { "docid": "56f67bbeaa7ca7107ea754648e799f3b", "text": "The reciprocity agreement in the Washington DC area means that you only pay income taxes where you live, not where you work. Because you live in Maryland you only need to pay income taxes to Maryland. You need to do the following things. Line 3. If you are not subject to Virginia withholding, check the box on this line. You are not subject to withholding if you meet any one of the conditions listed below. Form VA-4 must be filed with your employer for each calendar year for which you claim exemption from Virginia withholding. (a) You had no liability for Virginia income tax last year and you do not expect to have any liability for this year. ... (d) You are a domiciliary or legal resident of Maryland, Pennsylvania or West Virginia whose only Virginia source income is from salaries and wages and such salaries and wages are subject to income taxation by your state of domicile. My company has its only office in Maryland, and conducts all of its business there. Several of our employees are Virginia residents who commute to work on a daily basis. Are we required to withhold Virginia income tax from their wages? No. Because your company is not paying wages to employees for services performed in Virginia, you are not required to withhold Virginia tax. If you would like to withhold the tax as a courtesy to your employees, you may register for a Virginia withholding tax account online or by submitting a Registration Application. Additional withholding per pay period under agreement with employer. If you are not having enough tax withheld, you may ask your employer to withhold more by entering an additional amount on line 2.", "title": "" } ]	[ { "docid": "937e178303c71f9a48e8980a920490ce", "text": "This loss would be unrealized and, assuming you're a cash-basis tax-payer, you would not be able to take a loss on your 2014 tax return. This is similar to if you held a stock that lost 50% of its value. You wouldn't be able to claim this loss until you finally sold it. The link that User58220 posted may come into play if you converted your UAH back to USD.", "title": "" }, { "docid": "866b5c9cc2f9d0044adca9577f629247", "text": "\"You'll need to read carefully the German laws on tax residency, in many European (and other) tax laws the loss of residency due to absence is conditioned on acquiring residency elsewhere. But in general, it is possible to use treaties and statuses so that you end up not being resident anywhere, but it doesn't mean that the income is no longer taxed. Generally every country taxes income sourced to it unless an exclusion applies, so if you can no longer apply the treaty due to not being a resident - you'll need to look for general exclusions in the tax law. I don't know how Germany taxes scholarships under the general rules, you'll have to check it. It is possible that they're not taxed. Many people try to raise the argument of \"\"I'm not a resident\"\" to avoid income taxes altogether on earnings on their work - this would not work. But with a special kind of income like scholarship, which may be exempt under the law, it may. Keep in mind, that the treaty has \"\"who is or was immediately before visiting a Contracting State a resident of the other Contracting State\"\" language in some relevant cases, so you may still apply it in the US even if no longer resident in Germany.\"", "title": "" }, { "docid": "f4f65d96de623386d5e4864d46eaf2ed", "text": "\"You are on the right track, for tax purposes its all ordinary income at the end of 2016. If the free lance \"\"employer\"\" will withhold fed,state and local tax, then that takes care of your estimated tax. If they can't or won't, you will need to make those estimates and make payments quarterly for the fed and state tax at your projected tax liability. Or, you can bump up withholding by your day job employer and cover your expected tax liability at year end without making estimated tax payments.\"", "title": "" }, { "docid": "390d6a4321ba550ab4081a7c24fe69a9", "text": "As a resident of New York State you will, in addition to the Federal income tax handled by the IRS, be responsible for state and local income taxes. For New York the state tax forms are also used to determine your New York city tax. If HR was either not aware of the local tax requirement for New York or you filled out the New York State version of the W-4 incorrectly you may have had too little tax withheld for New York state. The refund from the IRS is not dependent on the refund/owe status for state and local taxes. It is possible that your state taxes are fine but that you owe taxes to the city. That tax you owe to the city will reduce the refund from the state and may require you to pay money to New York. Of course if you do itemize, what you pay to the state and city may result in deductions on your federal form. If you owe back taxes to the state or local government this could result in the IRS seizing a federal refund, but that doesn't happen right away.", "title": "" }, { "docid": "c2796ecbc91f8c0146494e2f952bc726", "text": "\"Well a definitive answer would require a lot of information. Instead of posting that kind of info online, you should take a look at the instructions for Form 2210 and in particular \"\"Schedule AI -- Annualized Income Installment Method,\"\" which corrects the penalty for highly variable income. Using this form you will likely be able to avoid the penalty, but it is hard to know for sure.\"", "title": "" }, { "docid": "cb4536ff81ae83fd90bb89bcd1aae70a", "text": "In Maryland, a landlord must hold your security deposit in an escrow account and pay you interest when returning the deposit. The interest is simple interest; it does not compound. The interest rate that they must pay has changed over the last 43 years. Before October 1, 2004, the rate was 4%. Until January 1, 2015, the rate was 3%. Currently, the rate is 1.5% OR the simple interest rate accrued at the daily U.S. Treasury yield curve rate for one year, as of the first business day of each year, whichever is greater. (This year, the rate is 1.5%.) Maryland's Department of Housing and Community Development has a Security Deposit Calculator for easy calculation of this interest; however, it only works for deposits since January 1, 2015. It is unclear to me whether the interest rate in effect is the one that was in place when the security deposit was made, or if the rate changes over the years. At most, if you get 4% interest every year, I would expect you to receive $429.76, which is $158 + ($158 * 4% * 43). The interest is accrued every 6 months, so you would not get any interest for the 3 months that you rented in your 44th year. (With the new law that took effect this year, interest is accrued monthly.) At least, if the interest rate changes with the new laws, I would expect you to receive $413.18, which is $158 + ($158 * 4% * 32.5) + ($158 * 3% * 10.25) + ($158 * 1.5% * 0.5). Some text on the Security Deposit Calculator suggests that the laws for Prince George's County are different than the rest of the state. If you are in that county, you'll need to check the local ordinances to see what security deposit policies apply.", "title": "" }, { "docid": "2c3f715ad21d7342bb9dcc0b681bad51", "text": "\"As ApplePie discusses, \"\"tax bracket\"\" without any modifiers refers to a single jurisdiction's marginal tax rate. In your case, this is either your California's \"\"tax bracket\"\" or your Federal \"\"tax bracket\"\" (not including marginal Social Security and Medicare taxes). But if someone says \"\"combined state and federal tax bracket\"\", they probably mean the combination of your state and federal income tax brackets (again, lot including sales taxes, business and occupational taxes, social security taxes, and medicare taxes). The math to combine the state and federal marginal tax rates is a bit tricky, because most people can deduct either their state and local income taxes, or their state and local general sales taxes when computing their income for federal income tax purposes. (The federal \"\"alternative minimum tax\"\" restricts this deduction for some people.) For a single person earning $ 100,000 of salaries and wages in California, whose state income taxes are close to their standard deduction, the calculations for the combined marginal income tax rate look something like this: As mentioned above, this understates the tax bite on marginal \"\"earned income\"\". To find the true marginal rate, we need to add in Social Security taxes, Medicare taxes, sales taxes, and business & occupation taxes. The Social Security and Medicare taxes are sometimes called \"\"self employment taxes\"\". This math omits unemployment insurance and workers' compensation insurance, because those taxes are typically capped well below $ 100,000 per year of income. This math also omits B & O taxes, because this question is California specific. If an employer wishes to increase an employee's pay by $ 1,076.50, the first $ 76.50 will go to the employer's share of Social Security and Medicare taxes. The remaining $ 1,000.00 will be subject to the combined marginal income tax rate discussed above, plus will have $ 76.50 go to the employee's share of Social Security and Medicare taxes. The employee might buy some extra things with some of their extra money, and pay sales tax on them. In 2016, a 9 % sales tax rate was common in California's largest cities. The IRS estimated that (for a single person with no dependents making $ 100,000 per year who did not buy a boat, RV, motor vehicle, or major home construction), about 9 % of their marginal gross income was subject to sales tax.\"", "title": "" }, { "docid": "7455319de0de59050f5b59e53c48bbe1", "text": "\"I am not a lawyer nor a tax accountant, so if such chimes in here I'll gladly defer. But my understanding is: If you're romantically involved and living together you're considered a \"\"household\"\" and thus your finances are deemed shared for tax purposes. Any money your partner gives you toward paying the bills is not considered \"\"rent\"\" but \"\"her contribution to household expenses\"\". (I don't know the genders but I'll call your partner \"\"her\"\" for convenience.) This is not income and is not taxed. On the off chance that the IRS actually investigated your arrangement, don't call any money she gives you \"\"rent\"\": call it \"\"her contribution to living expenses\"\". If you were two (or more) random people sharing a condo purely for economic reasons, i.e. you are not a family in any sense but each of you would have trouble affording a place on your own, it's common for all the room mates to share the rent or mortgage, utilities, etc, but for one person to collect all the money and write one check to the landlord, etc. Tax law does not see this as the person who writes the check collecting rent from the others, it's just a book-keeping convenience, and so there is no taxable transaction. (Of course the landlord owes taxes on the rental income, but that's not your problem.) In that case it likely would be different if one person outright owned the place and really was charging the others rent. But then he could claim deductions for all the expenses of maintaining it, including depreciation, so if it really was a case of room mates sharing expenses, the taxable income would likely be just about zero anyway. So short answer: If you really are a \"\"couple\"\", there are no taxable transactions here. If the IRS should actually question it, don't refer to it as \"\"collecting rent\"\" or any other words that imply this is a business arrangement. Describe it as a couple sharing expenses. (People sometimes have created tax problems for themselves by their choice of words in an audit.) But the chance that you would ever be audited over something like this is probably remote. I suppose that if at some point you break up, but you continue to live together for financial reasons (or whatever reasons), that could transform this into a business relationship and that would change my answer.\"", "title": "" }, { "docid": "6680baf685557a9bde7d1dc30b851ff3", "text": "You elected to defer paying taxes by contributing to an IRA. Lawmakers simply want to make sure that they collect those taxes by requiring you to either withdraw the money (incurring a tax liability) or pay a penalty (tax).", "title": "" }, { "docid": "608b9a57aea1d893428fa4e580031074", "text": "\"Yes, you must file North Carolina AND South Carolina income tax. If you live in one state and work in another, the income is potentially taxed twice. Most states give a credit for taxes paid to the other state. Often you pay the tax in the state where you worked, and then if the tax rate in the state where you live is higher, you pay the difference. But the details depend on the tax laws of the two states involved. I'm not an expert on either Carolina's tax laws. Start by getting the forms and instructions from both states and see what they say. Or if you're using tax software, see if it handles this case. If someone else on here knows the specifics of the tax laws for the Carolinas, I gladly yield. :-) Many states establish \"\"reciprocity agreements\"\" with other states, usually the neighboring states, that generally say that if the state you live in and the state you work in are both party to the agreement, then you only pay tax in the state you live in. This simplifies things a lot. Unfortunately, neither North Carolina nor South Carolina have such agreements with each other or with any other state.\"", "title": "" }, { "docid": "52a75d02a2beef424a950f133c568c09", "text": "\"One is a choice the other is not. While they are both liabilities on the balance sheet, in the real world they are quite different. We do not feel as much ownership over our money that goes to interest payments as we do over our tax payments. Taxes pay for our government and the services it provides. Interest, on the other hand, is what we pay in order to have a bank loan us money. Similar to paying for a good or service obtained from some other business, we do not feel we have a say in what the bank does with that money. If we disapprove of a business' practices, we stop doing business with them; assuming there are other choices. We can not practically avoid dealing with our government. We certainly feel that we should have a say in what is done with our tax money. I doubt there is anyone in the world that completely approves of their government's spending. It is very easy to feel marginalized with regard to our tax payments. For example, some people feel resentment because their taxes fund the welfare rolls. All that said, I believe there is little overlap between the two groups. It seems to me that you are referring to those with large amounts of high interest (e.g. credit card) debt. I doubt that a large percentage of them are scouring the tax laws, looking for deductions and loopholes. If they had that mindset, they would also be working hard to get out of the hole they are in. In summary, we choose to pay a financial adviser, to take out a loan or to obtain a credit card. We do not choose to pay taxes. Since taxes are supposed to pay for our government and things which should benefit everyone, we want a say in what is done with it. This is also the case because it is forced on us. (\"\"Fine son, I'll lend you some money, but I don't want you buying cigarettes with it.\"\") Since our say is limited and we likely will not approve of everything our government does, we want to exert what control we do have: reduce our payments as best we can.\"", "title": "" }, { "docid": "a89ab2d6bd9760664b9f5741aabdd05f", "text": "I know nothing about this, but found this link which suggests for H&R Block specifically: I kept searching and I found the section. It's at the end in the Credits section under 'other backup withholding'. Hopefully this helps someone else in the future.", "title": "" }, { "docid": "2d258d9865dc769c64e985ecef06366c", "text": "1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player.", "title": "" }, { "docid": "80ed7ff7872aad98ec7049c29856c5f0", "text": "\"It is the presupposition that makes this a rather ridiculous question. Makes me curious, would this be a civil or criminal crime? If you are convinced that this presupposition of illegality is a thing, talk to a lawyer. Yes, there may be consequences of doing any variety of actions while you owe the IRS, and while you do not owe the IRS. As an unincorporated business the IRS does not stop you from gaining an additional source of income to pay them with. Perhaps lenders might not help you with capital. As an incorporated business no state is going to ask you if you \"\"owe back taxes\"\" before they allow you to pay them to register your business in their state. This isn't legal advice, I'm just assuming there is no legal advice to give based on your presupposition, to your original question, I'm going to go with no.\"", "title": "" }, { "docid": "633610f24a14b185912959e22bc4e990", "text": "Welcome to the working world. I will answer these a bit out of order. C) Your withholding has almost zero chance of being correct. Just about everyone has to pay or gets a refund. I typically shoot for +- of $1000, and that is tough. A) Your W-2 is where you adjust the amount of tax that is withheld. You should fill out a new one as soon as possible. You can use a paycheck calculator to figure out the proper tax that should be withheld. B) No. D) Yes you will owe Utah state tax. See this site. The rub of this all is that you may have to pay Idaho tax prior to being refunded your Federal. If you want to avoid this file your federal return as soon as possible (Goal: File by 7 Feb). You should have the return in 3 weeks or less (presuming you are owed one). That will give you plenty of time to file and pay any Idaho tax owed. I say all of this because you may be tempted to go to a tax preparation shop and take an advance on your income tax return. Those loans are for people that hate money and are designed to tempt the foolish. They are only slightly better than payday loans.", "title": "" } ]	fiqa
85e150fa64bd639eb4f2da94f0be6c0e	Is it true that if I work 6 months per year, it is better than to work for 1 calendar year and take a break for 1 year?	[ { "docid": "344241e97f47c88641abdf33a1855e6a", "text": "In many cases spanning across years will indeed be beneficial. Deductions: You get to take twice as much in deductions (twice the standard deduction, or itemizing - if you can) when you span over two years than in one. IRA: You can only contribute in years when you have earned income. You have all the income in year 1 and none in year 2 - you can only contribute in year 1. You have half of the income in year 1 and half of the income in year 2 - you can contribute in both years (up to the limit/earned income, whichever is less). Social Security: You get 4 credits for each year you earned ~16K in. You earned 32K in year 1, and nothing in year 2 - you get 4 credits. You split it in half for each year - you get 8 credits. The list can go on. If you can do the planning ahead of time and can chose the time periods of your work freely (which is not something most people can do), you can definitely plan ahead with taxes in mind. This is called Tax Planning.", "title": "" }, { "docid": "b069d22b7c968294f963f273dd8ee0a9", "text": "Yes, if you can split your income up over multiple years it will be to your advantage over earning it all in one year. The reasons are as you mentioned, you get to apply multiple deductions/credits/exemptions to the same income. Rather than just 1 standard deduction, you get to deduct 2 standard deductions, you can double the max saved in an IRA, you benefit more from any non-refundable credits etc. This is partly due to the fact that when you are filing your taxes in Year 1, you can't include anything from Year 2 since it hasn't happened yet. It doesn't make sense for the Government to take into account actions that may or may not happen when calculating your tax bill. There are factors where other year profit/loss can affect your tax liability, however as far as I know these are limited to businesses. Look into Loss Carry Forwarded/Back if you want to know more. Regarding the '30% simple rate', I think you are confusing something that is simple to say with something that is simple to implement. Are we going to go change the rules on people who expected their mortgage deduction to continue? There are few ways I can think of that are more sure to cause home prices to plummet than to eliminate the Mortgage Interest Deduction. What about removing Student Loan Interest? Under a 30% 'simple' rate, what tools would the government use to encourage trade in specific areas? Will state income tax deduction also be removed? This is going to punish those in a state with a high income tax more than those in states without income tax. Those are all just 'common' deductions that affect a lot of people, you could easily say 'no' to all of them and just piss off a bunch of people, but what about selling stock though? I paid $100 for the stock and I sold it for $120, do I need to pay $36 tax on that because it is a 'simple' 30% tax rate or are we allowing the cost of goods sold deduction (it's called something else I believe when talking about stocks but it's the same idea?) What about if I travel for work to tutor individuals, can I deduct my mileage expenses? Do I need to pay 30% income tax on my earnings and principal from a Roth IRA? A lot of people have contributed to a Roth with the understanding that withdrawals will be tax free, changing those rules are punishing people for using vehicles intentionally created by the government. Are we going to go around and dismantle all non-profits that subsist entirely on tax-deductible donations? Do I need to pay taxes on the employer's cost of my health insurance? What about 401k's and IRA's? Being true to a 'simple' 30% tax will eliminate all 'benefits' from every job as you would need to pay taxes on the value of the benefits. I should mention that this isn't exactly too crazy, there was a relatively recent IRS publication about businesses needing to withhold taxes from their employees for the cost of company supplied food but I don't know if it was ultimately accepted. At the end of the day, the concept of simplifying the tax law isn't without merit, but realize that the complexities of tax law are there due to the complexities of life. The vast majority of tax laws were written for a reason other than to benefit special interests, and for that reason they cannot easily be ignored.", "title": "" } ]	[ { "docid": "339d49d5b65d8ed6af0512df1af4aced", "text": "http://www.bls.gov/news.release/ebs.t05.htm So... Average american gets 16 days PTO, and 7.6 paid holidays. None of it required by law. Edit: Average american in the first year of their job in 1996. Didn't bother looking for current rates, as I doubt it has changed substantially. More current data can be researched and compiled from here: http://www.bls.gov/ncs/ebs/benefits/2013/benefits_leave.htm", "title": "" }, { "docid": "bc594698dd1ad6a756b63a6805e32759", "text": "\"The \"\"more money\"\" aspect is only true if you ignore the lack of symmetry between employment and contracting. Consulting is another story altogether. Companies are willing to pay consultants for a number of reasons but the most important is deniability. If a decision is recommended and goes wrong then the consultants can be sued. Liability cover is expensive. Cynicism aside, it often isn't cost-effective to keep specialists permanently on the payroll for tasks that are performed once a year. Recently I've noticed that the nature of consulting is changing. Companies are starting to assemble brains-trusts of internal consultants who can create and manage projects while outsourcing only the labour-intensive data-collection roles. Expect this to have a big impact on the management consulting industry.\"", "title": "" }, { "docid": "4e62fc6e00568377464344ba872101dc", "text": "Not necessarily. If you have a family you may be less likely to leave your job because you depend on the income a lot more than if you were single or without kids. When you are responsible for the well being of others you will think twice before quitting your job or slacking off.", "title": "" }, { "docid": "35076340ce8ba0d08e3aada52ca26d28", "text": "\"The big difference is that you get your money earlier at the start. Suppose you start on a random day with payday on the last day of the month (monthly), or on every 2nd wednesday (biweekly), and it takes 3 days for payroll to \"\"ramp up\"\" (ie, if payday is within 3 days on your start date, your next paycheck is not on the next payday, but on the one after). If we assume every month has 30 days (to keep things simple), it is an average of 4+5+...+33 days until you get your first paycheck with monthly pay, an average of 18.5 days. For weekly it is a bit trickier Assuming you get hired at a random date here, with being a paydate: time until you get paid: an average of 10.5 days. So you get your first pay an average of 8 days earlier. Later on, that 3 day thing no longer occurs, and now the company holds an average of 6.5 days of your pay \"\"due to you\"\" with biweekly paychecks, and about 14.5 days with weekly paychecks if you have monthly pay. So with monthly pay, on average your bank account has 8 fewer days of your pay in it at all times. This happens when you are first hired, and persists over the length of your employment. Now suppose you save that extra money (on average): Suppose you have an investment at 4% (after inflation). Over 40 years those 8 days of pay invested at 4% grow to 38 days of pay, a free month. What more, if the company has problems making payroll, you'll get a warning (to, say, look for another job) an average of 8 days sooner, and/or have the money in your account. Having someone owe you money is usually worse than having the money in your bank account.\"", "title": "" }, { "docid": "40264269e1eace6e2b7e1e792b72561f", "text": "\"The cost of paying tax should be considered an additional financial expense, and the administrative burden of filing those taxes should be considered an additional labour 'expense'. Simplified, your question is asking how to determine whether these additional expenses are 'worth' it. There are many ways to calculate what your time is 'worth'. Consider two situations where you may consider picking up additional part time work at minimum wage: 1) If you are working 80 hours a week at a stressful but high-paying job, working another 5 hours a week at minimum wage would likely not be worth your time [both because you already make 'a lot' of money, and also because your time is limited and therefore precious]. 2) If you are working 20 hours a week at minimum wage, then another 5 hours a week at the same job would likely be worth your time [both because it would increase your income by 25%, and also because it would not put a heavy strain on your light schedule]. These two extreme examples highlight the inferred principle that I think generally applies to weigh such decisions: Competes with: In your specific example, the actual 'work' component will happen regardless of the money aspect. That is, your wife will be providing these services regardless. So your question is essentially \"\"would it be worth it for my wife to make $5k, given that she would pay tax on that money and would bear the burden of administrating the tax filings etc.?\"\" We can't answer this directly, because it relates to what your wife values. If doing this would make the activity (which is otherwise just a hobby) an unwanted chore, then it may not be worth the post-tax income. If doing this would not impact her enjoyment of the teaching, but would add on an unwanted ~1 hour / week of paperwork, is it worth spending 50 hours over the course of the year, to earn $5k? I assume the answer then would be \"\"yes\"\".\"", "title": "" }, { "docid": "a27d47d6874f98fefe7e802e6ffcff4d", "text": "Very good point. However, I would say stability. Say I could just continue doing this one the side of my regular job, couldn't I do both? Edit: I don't know why I keep getting down voted... I'm literally just asking valid questions.", "title": "" }, { "docid": "b1f0e80992cc6ebe4835b16f84a76560", "text": "In addition to the other comments there are things like training costs. Lower paid employees tend to turn over more quickly so instead of training one employee for 4 weeks and staying for 3 years you spend 12 weeks over that same time period as the minimum wage employees each only stay for a year. Also, you aren't necessarily scheduling all three people at the same time, it might be 3 part time workers at $12 an hour covering one role vs. one full time $20 employee working 40 hours a week.", "title": "" }, { "docid": "b6d77235a21a853831a355be838e8dc5", "text": "It depends on the vesting schedule and the likelihood you'll be there long enough to get any vesting. A typical 6 year schedule gets you 20% after 2 years. You already know you'll be there 1 year, so now you need to decide if you'll last 2 years. Unless you know for sure you won't last 2 years, you should take the match on the 4%. Suppose your retirement plan earns 10%. If you leave before 2 years, compared with your 18% you're only behind by 8% return. But if you last 2 years, you'd be making a 32% return on that same amount. After 3 years you'd make 54%, and up it goes from there until you hit a 120% return after 6 years. I'd take the match simply because you have a lot more to gain than you have to lose if you leave early.", "title": "" }, { "docid": "7c1e38777f47d8af6a0319a751443f2a", "text": "If you're worried about investing all at once, you can deploy your starting chunk of cash gradually by investing a bit of it each month, quarter, etc. (dollar-cost averaging). The financial merits and demerits of this have been debated, but it is unlikely to lose you a lot of money, and if it has the psychological benefit of inducing you to invest, it can be worth it even if it results in slightly less-than-optimal gains. More generally, you are right with what you say at the end of your question: in the long run, when you start won't matter, as long as you continue to invest regularly. The Boglehead-style index-fund-based theory is basically that, yes, you might save money by investing at certain times, but in practice it's almost impossible to know when those times are, so the better choice is to just keep investing no matter what. If you do this, you will eventually invest at high and low points, so the ups and downs will be moderated. Also, note that from this perspective, your example of investing in 2007 is incorrect. It's true that a person who put money in 2007, and then sat back and did nothing, would have barely broken even by now. But a person who started to invest in 2007, and continued to invest throughout the economic downturn, would in fact reap substantial rewards due to continued investing throughout the post-2007 lows. (Happily, I speak from experience on this point!)", "title": "" }, { "docid": "88ad101812c46ae30dfe93a1ece147d7", "text": "\"It's correct. Be sure of your personal opportunity cost and not that you're letting the tax tail wag the dog just to score \"\"tax free\"\". Your upside is $3,700 (single) or $7,000 (married) in taxes saved until you're out of the 0% zone. Is that worth not receiving an income? Even if your savings are such that you don't need to work for income for a fiscal year, how would this affect the rest of your career and lifetime total earning prospects? Now, maybe: Otherwise, I'd hope you have solid contacts in your network who won't be fazed by a resume gap and be delighted to have a position open for you in 2019 (and won't give you the \"\"mother returning to the workforce\"\" treatment in salary negotiations).\"", "title": "" }, { "docid": "ced95c7f856d00f3baffa4ed91352d54", "text": "In addition to taking into account your deductions, as mentioned by @bstpierre, you also need to account for vacation, and other time off such as sick days. You also need to estimate what percentage of the year you expect to be working and pro-rate your salary accordingly. For example it is not uncommon to use 40 weeks out of the year which is about 77% of the time. Also check to see if you would be eligible for unemployment for the times you are not working. I suspect not. But in any case, you might want to use worst case scenario figures to see if it is worth it, especially in this economy.", "title": "" }, { "docid": "1f2b1c80021a42a970172356909ca6e1", "text": "It seems there is never a reason to have a gap. Unless you spent that time watching TV, you were still working, even if the pay was lousy. Even the act of looking for employment is a startup business exploring the sales and marketing space. If you actually wanted that time to watch TV, you can list a sabbatical.", "title": "" }, { "docid": "b7b691b09ae341c38fe213061e04c5eb", "text": "Financial benefit? No. No matter whether you are paid based on a salary or by the hour, the frequency of your pay check has no effect since at the end of the year you will have received the exact same amount of money. Psychological benefit? Well, from the many answers and comments on this page that seem to think there is a difference, then apparently there is a large psychological difference. Whether that is a benefit or not, I guess, depends on your personality.", "title": "" }, { "docid": "d166466ac86547e98f3af083b70638b1", "text": "break fast is easy to make, lunch and dinner can be prepped on sundays. check out the sundaymealprep subreddit. there are tons of easy to make recipes, and you will save literally thousands every year. if that still doesnt seem appealing, just imagine that you are being paid to cook your own food because that is pretty much what is happening.", "title": "" }, { "docid": "d77ab23210a7114e701f2903f115c064", "text": "This article is misleading in it's universality of its findings. It does have a control group, which is a good start, but the findings are based on call-center employees whose functions are almost perfectly suited for remote work. In a way, we already knew this because of how much call-center work is outsourced and outside of provincial management (in other words, most companies don't bother housing customer service call centers at company headquarters). Let's see them try to replicate those results with other industries. Treating the ability to work from home as a panacea is just as foolish as believing that workers can't ever be remote. The truth is that individual personalities and, more importantly, an individual's work functions are better suited for remote work than others and it takes good management to understand why they take the strategy they take with regards to remote work. All in all, the study might be a good case study for encouraging remote work among call-center employees, but any further extrapolation of that for other industries is going to be a baseless claim influenced by personal agendas.", "title": "" } ]	fiqa
483adc5887f032265ad4f7f5ce00fff4	Understanding the Nasdaq insider trading information	[ { "docid": "3321714d2fa90664f38ceb9d771844d8", "text": "\"Usually insiders are in a better position than you to understand their business, but that doesn't mean they will know the future with perfect accuracy. Sometimes they are wrong, sometimes life events force them to liquidate an otherwise promising investment, sometimes their minds change. So while it is indeed valuable information, as everything in fundamental analysis it must be taken with a grain of salt. Automatic Sell I think these refer to how the sell occurred. Often the employees don't get actual shares but options or warrants that can be converted to shares. Or there may be special predetermined arrangements regarding when and how the shares may be traded. Since the decision to sell here has nothing to do with the prospects of the business, but has to do with the personal situation of the employee, it's not quite the same as outright selling due to market concerns. Some people, for instance, are not interested in holding stock. Part of their compensation is given in stock, so they immediately sell the stock to avoid the headache of watching an investment. This obviously doesn't indicate that they expect the company will go south. I think automatic sell refers to these sorts of situations, but your broker should provide a more detailed definition. Disposition (Non Open Market) These days people trade through a broker, but there's nothing stopping you from taking the physical shares and giving them to someone in exchange for say a stack of cash. With a broker, you only \"\"sell\"\" without considering who is buying. The broker then finds buyers for you according to their own system. If selling without a broker you can also be choosy with who is buying, and it's not like anybody can just call up the CEO and ask to buy some stock, so it's a non-open market. Ultimately though it's still the insider selling. Just on a different exchange. So I would treat this as any insider sell - if they are selling, they may be expecting the stock to become less valuable. indirect ownership I think this refers to owning an entity that in turn owns the asset. For instance CEO of XYZ owns stock in ACME, but ACME holds shares of XYZ. This is a somewhat complicated situation, it comes down to whether you think they sold ACME because of the exposure to XYZ or because of some other risk that applies only to ACME and not XYZ. Generally speaking, I don't think you would find a rule like \"\"if insider transactions of so and so kinds > X then buy\"\" that provides guaranteed success. If such a rule was possible it would have been exploited already by the professionals. The more sensible option is to consider all data available to you and try to make a holistic evaluation. All of these insider activities can be bullish or bearish depending on many other factors.\"", "title": "" }, { "docid": "3638cff72da83652ce2702193f1f578f", "text": "Their argument is mostly nonsense. Take someone like Tim Cook, CEO of Apple. He has a not very large salary, and makes a lot more money through stock bonuses. You would never, ever expect him to buy Apple shares. And assuming that he doesn't want to end up one day as the richest man in the cemetery, you would expect him to sell significant numbers of shares, independent on whether he expects Apple to go up or down.", "title": "" }, { "docid": "207152c866713c4fb93d1b514aba393e", "text": "Insiders are prevented from buying or selling shares except at certain periods right after information is disclosed publicly. But. People have bills to pay and kids to put through college and whatnot. So an insider can set up a plan where shares are sold on a specific schedule and they have no control over number of shares or timing. These plans (covered under rule 10b5-1) allow insiders to generate cash flow without immoderately benefiting from their inside information. Sales under these plans can mostly be ignored when trying to figure out the fortunes of a company from insider trades.", "title": "" } ]	[ { "docid": "d7416b21f6347f09dade3b4dcc48f697", "text": "Compensation information is available in the annual reports (10-k filings) which are available from the SEC EDGAR system or, generally, the company's website. Additionally, insider transactions are reported to the SEC so you can see when an insider buys or sells stock or exercises options received as compensation. Background: Nowadays board and officers seem to secretly steal money from shareholders through options and other ways. The stock buybacks that people think should boost the earnings per stock is in reality issued back to the management of the company and is a more stealth way to take money from the company compared to take higher salaries. ... How do you know this is happening if you don't know where to go to get the data needed to determine whether or not this is happening? Do you really think company share buybacks involve just the amount of shares to pay an executive? Apple has bought back $117,000,000,000 worth of shares from the fourth quarter 2012 through the second quarter 2016, and paid a pretty substantial amount in dividends over the same period. Do you really think these shares were simply handed to the executives? The huge pension funds and other huge investors would not let this slide for very long if it were even close to being true. Don't come to an unfounded conclusion then seek data to prove your position. Look at and analyze data THEN come to a conclusion.", "title": "" }, { "docid": "e91568442c62ae8fd211508590dd3e9d", "text": "\"NASDAQ OMX Group owns NASDAQ, a stock exchange. It is a corporation, and is listed on the NASDAQ as NDAQ. It makes money by: source NASDAQ also charges for market data services, found in the NASDAQ \"\"Datastore\"\". Other information about the fees charged by NYSE and NASDAQ may be found in the Investopedia article The NYSE And Nasdaq: How They Work.\"", "title": "" }, { "docid": "fb67ec3740545851f323621075d7a83c", "text": "There are about 250 trading days in a year. There are also about 1,900 stocks listed on the NYSE. What you're asking for would require about 6.2M rows of data. Depending on the number of attributes you're likely looking at a couple GB of data. You're only getting that much information through an API or an FTP.", "title": "" }, { "docid": "d2f46271309d4bffce070c378740742b", "text": "In principle I agree with you. However the allegation is that the people managing the IPO withheld crucial information and informed insiders against investing. Maybe the allegations are false, but it should still be looked into. If the IPO shared crucial details with insider traders while keeping it from the public at large that would affect the investor's risk-assessment of a stock, that's insider trading and should be punished accordingly.", "title": "" }, { "docid": "52e41eaf6ab2a990bfe7c69d2d688a11", "text": "There are lots of good answers on here already. There are actually lots of answers for this question. Lots. I have years of experience on the exchange feed side and there are hundreds and thousands of variables. All of these variables are funneled into systems owned by large financial institutions (I used to manage these - and only a few companies in the world do this so not hard to guess who I work for). Their computers then make trades based on all of these variables and equations. There are variables as whacky as how many times was a company mentioned in an aggregate news feed down to your basic company financials. But if there is a way to measure a company (or to just guess) there is an equation for it plugged into a super computer at a big bank. Now there are two important factors on why you see this mad dash in the morning: Now most of the rest of the day is also automated trades but by the time you are an hour into market open the computers for the most part have fulfilled their calendar buys. Everyone else's answer is right too. There is futures contracts that change, global exchange info changes, options expiring, basic news, whatever but all of these are amplified by the calendar day changing.", "title": "" }, { "docid": "0683565621aff565ab849e4edfad786a", "text": "\"You have to read some appeals court cases see scholar.google.com , as well as SEC enforcement actions on sec.gov to get an understanding of how the SEC operates. http://www.sec.gov/spotlight/insidertrading/cases.shtml There are court created guidelines for how insider trading would be proven There is no clear line, but it is the \"\"emergency asset injunctions\"\" (freezing your assets if you nailed a suspiciously lucrative trade) you really want to avoid, and this is often times enforced/reported by the brokers themselves since the SEC does not have the resources to monitor every account's trading activities. There are some thin lines, such as having your lawyer file a lawsuit, and as soon as it is filed it is technically public so you short the recipient's stock. Or having someone in a court room updating you on case developments as soon as possible so you can make trades (although this may just be actually public, depending on the court). But the rules create the opportunities Also consider that the United States is the most strict country in this regard, there are tons of capital markets and the ideals or views of \"\"illegal insider trading\"\" compared to \"\"having reached a level of society where you are privileged to obtain this information\"\" vary across the board contains charts of countries where an existing insider trading prohibition is actually enforced: http://repository.law.umich.edu/cgi/viewcontent.cgi?article=1053&context=articles https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2005/BD_The_world.pdf Finally, consider some markets that don't include equities, as trading on an information advantage is only applicable to things the SEC regulates, and there are plenty of things that agency doesn't regulate. So trying to reverse engineer the SEC may not be the most optimal use of energy\"", "title": "" }, { "docid": "e90bc51f61b066d9836b9256a4e20c78", "text": "I do not believe that this was a case of insider trading. As an example, one of the executives sold only 4% of his total. Now consider that between the 3 of them, the amount sold was only $1.8M. These amounts are minuscule and are in no way indicative of any misconduct. My opinion.", "title": "" }, { "docid": "9d9cfa352ce07f9aa89d06d2a710373e", "text": "I don't see it in any of the exchange feeds I've gone through, including the SIPs. Not sure if there's something wrong with Nasdaq Last Sale (I don't have that feed) but it should be putting out the exact same data as ITCH.", "title": "" }, { "docid": "cc51a6bde4b85c0849c31a210d1ba7a3", "text": "\"In [United States vs. O'Hagan](https://en.wikipedia.org/wiki/United_States_v._O%27Hagan) the Supreme Court established the precedent of interpreting SEC rule 10(b) using the \"\"misappropriation theory\"\". The theory establishes that: > misappropriating confidential information for securities trading purposes, in breach of a duty owed to the source of that information, gives rise to a duty to disclose or abstain. You're correct that from a legal perspective the rules are anything but clear outside of company insiders. However, your own admission is consistent with what anyone in the securities industry knows is true - if you trade on material non-public information, you risk being charged. I think most would conclude that it's unethical irrespective of the letter of the law. It damages the integrity and functioning of markets. Furthermore, if the law was clarified, I think it's highly unlikely it would state \"\"trading on material non-public information is permissible for anyone who is not a company insider\"\". Instead, I would expect it to be consistent with \"\"Trading on material non-public information is illegal. If in doubt, abstain.\"\" And this is exactly what the government officials should be doing - abstaining.\"", "title": "" }, { "docid": "1e090411bf34d3e1a21c664640f3d881", "text": "Graphs are nothing but a representation of data. Every time a trade is made, a point is plotted on the graph. After points are plotted, they are joined in order to represent the data in a graphical format. Think about it this way. 1.) Walmart shuts at 12 AM. 2.)Walmart is selling almonds at $10 a pound. 3.) Walmart says that the price is going to reduce to $9 effective tomorrow. 4.) You are inside the store buying almonds at 11:59 PM. 5.) Till you make your way up to the counter, it is already 12:01 AM, so the store is technically shut. 6.) However, they allow you to purchase the almonds since you were already in there. 7.) You purchase the almonds at $9 since the day has changed. 8.) So you have made a trade and it will reflect as a point on the graph. 9.) When those points are joined, the curves on the graph will be created. 10.) The data source is Walmart's system as it reflects the sale to you. ( In your case the NYSE exchange records this trade made). Buying a stock is just like buying almonds. There has to be a buyer. There has to be a seller. There has to be a price to which both agree. As soon as all these conditions are met, and the trade is made, it is reflected on the graph. The only difference between the graphs from 9 AM-4 PM, and 4 PM-9 AM is the time. The trade has happened regardless and NYSE(Or any other stock exchange) has recorded it! The graph is just made from that data. Cheers.", "title": "" }, { "docid": "b990865408156bb2715fe8bcd64b1ad3", "text": "A practical issue is that insider trading transfers wealth from most investors to the few insiders. If this were permitted, non-insiders would rarely make any money, and they'd stop investing. That would then defeat the purpose of the capital markets which is to attract capital. A moral issue is that managers and operators of a company should act in shareholders' interests. Insider trading directly takes money from other shareholders and transfers it to the insider. It's a nasty conflict of interest (and would allow any CEO of a public company to make ton of money quickly, regardless of their job performance). In short, shareholders and management should succeed or suffer together, so their interests are as aligned as possible and managers have the proper incentives.", "title": "" }, { "docid": "39feb09ec1c2b5cacbad2ac4de0178ef", "text": "In the UK if you come into the possession of the information in a way that isn't available to the general public that's insider trading. It even states this in section 7, and uses the example of if you observe something like a burning factory as a member of the public, that's not insider information as anyone could have seen it. If you attended a meeting or somehow got hold of private information not yet made public, then it would be considered insider information. Its possible the OP got this information through public observation but considering the nature of the information it's highly unlikely", "title": "" }, { "docid": "5d3da25089418411eb6408c048816288", "text": "In the United States, when key people in a company buy or sell shares there are reporting requirements. The definition of key people includes people like the CEO, and large shareholders. There are also rules that can lock out their ability to buy and sell shares during periods where their insider knowledge would give them an advantage. These reporting rules are to level the playing field regarding news that will impact the stock price. These rules are different than the reporting rules that the IRS has to be able to tax capital gains. These are also separate than the registration rules for the shares so that you get all the benefits of owning the stock (dividends, voting at the annual meeting, voting on a merger or acquisition).", "title": "" }, { "docid": "84684ca8001220b80db21a461e7b2e21", "text": "You won't be able to know the trading activity in a timely, actionable method in most cases. The exception is if the investor (individual, fund, holding company, non-profit foundation, etc) is a large shareholder of a specific company and therefore required to file their intentions to buy or sell with the SEC. The threshold for this is usually if they own 5% or greater of the outstanding shares. You can, however, get a sense of the holdings for some of the entities you mention with some sleuthing. Publicly-Traded Holding Companies Since you mention Warren Buffett, Berkshire Hathaway is an example of this. Publicly traded companies (that are traded on a US-based exchange) have to file numerous reports with the SEC. Of these, you should review their Annual Report and monitor all filings on the SEC's website. Here's the link to the Berkshire Hathaway profile. Private Foundations Harvard and Yale have private, non-profit foundations. The first place to look would be at the Form 990 filings each is required to file with the IRS. Two sources for these filings are GuideStar.org and the FoundationCenter.org. Keep in mind that if the private foundation is a large enough shareholder in a specific company, they, too, will be required to file their intentions to buy or sell shares in that company. Private Individuals Unless the individual publicly releases their current holdings, the only insight you may get is what they say publicly or have to disclose — again, if they are a major shareholder.", "title": "" }, { "docid": "90e7844834a97be772f1ace755cdb207", "text": "From your question and how you have framed it, I get you find Agressive Sales tactics disturb the buying process for you. ;) I understand because I also find the whole process of Research / Negotiating / Buying / Owning / Using is all on one continuum, so anything that ruins the process will likely lose the sale or enjoyment of the item, at the end of the day. [Very long answer .... Sorry :) ] The answer to this is to KNOW what you want before you have to deal with the Sales people. A good Sales person likes a customer who knows what they want. I would suggest that you follow my 'Buying Process' (Much you have already done) : Before you Buy: Identify the item you want and the max/min 'realistic' price you would buy at. [Stick to this price else 'Buyers Remorse' may bite later.] Write the questions you have down on paper before you visit the Dealer. Write the answers you want on the same list, if known. Decide which questions are most important and therefore must get the answer you want. These should be the questions you ask first. Mark these on the list. Re-visit points 1-3 are they complete and to your satisfaction ? Would you buy if all the answers & the price are right ? If NO then re-visit point 1-3 else you are not ready to buy now !!! If YES then Organise your visit to the Dealer. [Book appointment etc if needed.] At Dealer: Meet your Sales person and clearly state what you want (the item) and importantly when you intend to buy, if all your questions are answered to your satisfaction. There is no need to discuss price at this point as the 'haggling' is only possible IF the questions are answered to your satisfaction. Do not give information such as your maximum budget or similar requests, as they give the sales person the upper hand to maximise his/her pricing. If asked state that your budget is conditional on the answers you get. As the questions are answered assess the answer and assign +/- to the question on your list. If any of your most critical / important questions are answered in the negative, they are the reasons you have to call it a day and walk out. You can assess whether they are worth ignoring but you will need to factor this into your price and if you have identified your questions correctly there should be little room for debate. Assuming you have got all your questions answered you should know what you are buying and have assessed what is a reasonable price for it, if you still want it as this point. If you have lost interest, say so and let the Sales person go. Don't waste their time. They may make some sort of offer to you BUT don't forget that if you have doubts now they will not go away easily no matter what the 'great' price is. If you want it then continue. Buying your Item: [None of the following is really usefull if you have told the Sales person your Budget, as they will be aiming for the highest end of your budget. You will often find that the best price is very close to your maximum budget !!! :)] Do not forget your realistic price range, this should limit your buying price no matter what tactics are used by the Sales person. Only you know what you are prepared to pay and if an extra 1% or 50% is considered worth it to you, if you have to have the item :) Regardless, you have to have some idea of your limit and be prepared to stick to it. You must be able to walk away if the price is silly and not worth it. Assuming you have not been smitten by your item and funds are NOT unlimited, ask for the price and assess it against your price range. At this point I can only offer pointers as there are no 'magic' rules to get what you want at the lowest price. The only advice I would offer is that you will be lucky to get something at your 1st offer price unless the seller really needs to sell, because of this your 1st offer should be less than your price range lowest band. You will need to assess how much less but be prepared to get a 'No' response. If you get a 'Yes' and your research is good 'Buy It !!!' If you get too enthusiastic a response, question your research & if not sure bail out [No Sale] :) At this point you are likely to be 'Haggling' so you need to be ready for all the 'Must buy Now' tactics. If you have clearly stated your wants and timescales there is no reason to be pulled in by these tactics and they can be ignored until the price has reached the level you are happy with. If the price is not moving where you want than clearly state you cannot 'buy at that price'. If you get a total stop and no movement than you need to assess your 'need' and if priced too high then you should walk out. Remember if you stated that you had a timescale to buy of 1/2/3 weeks you should act like you have 1/2/3 weeks to keep looking. Any eagerness on your part will tell the Sales person that you have lied !!! :) You can always come back and try again, reminding the Sales person that the 'item' is still there and perhaps it is priced too high to sell and make the same offer. !!! (A bit of cheek sometimes works.) If the price is close and you still want it and the Sales person is not moving you need to try walking out while stating that you would love the 'item' if it was priced better, if no improved offer as you go, try an increased offer but again you need to assess how much and remember you can only go up, or walk out and come back another day. If the price is at a level you are happy with then you should have no reason not to buy (if you have followed this process) but this does not mean that you should be forced into buying now if you do not want to. Regardless of any 'Must buy now' tactics if the price is right and you cannot buy now, tell the Sales person when you CAN buy and see if you can get an agreement with this. It is unfair to expect a price to be held for an indeterminate time, so you do need to state when you could buy if not now when a price has been agreed. This is a point where the deal may break down if the Sales person thinks they have a sale and trys to force the Sale now. Once again you have to assess your 'need' and whether buying now is better than walking out. If the deal breaks down there is nothing stopping you from coming back and offering the same price when you can buy. A final option is to agree if a deposit can be left to reserve the item until you can buy. This gives the Sales person some assurance that you will come back and is sometimes NON-Refundable unless you agree otherwise before you pay, so check this detail first. (This tends to be smaller Dealers but generally in the UK the large companies offer refundable deposits as part of their Customer Service, the advantage of using larger Stores/Dealers etc.) Apologies for the epic reply, hope it helps.", "title": "" } ]	fiqa
fb1722503f180f53d579572d02cea800	Withdrawing large sums of money	[ { "docid": "57366ac10ff3e7dadc88ce4f4dcc2671", "text": "This is determined by each banking institution. In general, if making the withdrawal in person, the limit is based on what you have in your account, but many ask for advance notice when withdrawing more than $5000. They may still allow a larger withdrawal without notice, but usually have a policy in place and will tell you over the phone. You should also be aware that the bank is required to report withdrawals totaling $10,000 or more in a day to the treasury department and may require extra paper work (businesses are often exempted or at least have higher amounts). For very large withdrawals, you would definitely have to wait, but you may not be able to get an answer over the phone as to how long unless you actually have $600K on deposit at that bank. They will have some kind of protocol to handle such a request, i.e. teller will talk to a manager, who may have to make a call to a regional or national office and make special arrangements. Most branches don't want to have their regular stash of cash plus an extra $600K lying around. There are insurance and security concerns. The increased potential for theft can put employees and other customers at risk. They may also not feel comfortable unloading bags of money from their vault or armored truck into the back of your car. While this is a very uncommon scenario, it has actually happened before. It took 'weeks' and when funds were available, additional security and police escorts were called in. Edit: You can find summaries of the regulations here and here and more complete info here. In general, the money should be available within 1-8 business days after it is deposited depending on the nature and amount of the deposit, but the regulations are really designed for more ordinary transactions. For a $600K withdrawal, the bank can cite security issues and decline to honor the request in cash. If you ask, your bank should provide their standard policy, which could include language such as this: We require prior notice for large cash withdrawals. We can refuse an order to withdraw funds in cash or to cash an item if we believe that the request is a security risk or possesses a hardship on the Bank. We may require you to accept an Official Check or electronic transfer to receive the funds. If we agree to a large cash withdrawal, you may be required to employ a courier service acceptable to us and at your risk and expense. If a large cash withdrawal is completed at a branch you will be required to sign a cash withdrawal agreement. Refusal to sign the agreement is grounds for us to revoke the cash withdrawal and require an alternate delivery for the funds. You might also find this question interesting.", "title": "" } ]	[ { "docid": "259214949481607d982ee738ff17c7a3", "text": "Yes, those numbers are all that is needed to withdraw funds, or at least set online payment of bills which you don't owe. Donald Knuth also faced this problem, leading him to cease sending checks as payment for finding errors in his writings.", "title": "" }, { "docid": "1c109d97faa0e187e5a59fbfa689dab9", "text": "I recommend talking to your parents. You may be able to convert the account to a joint account that is shared with them, and then they would be able to withdraw the money for you.", "title": "" }, { "docid": "2368a6a6d2c21902782f59fdc6929bff", "text": "It's not your money. What does your wife think of this? You know, the withdrawal is subject to full tax at your marginal rate as well as a 10% penalty. That's quite a price to pay, don't do it.", "title": "" }, { "docid": "524cddb28590d076ce9cdaf36faf147c", "text": "So ... how are you going to have a bank run if you got rid of cash? I suspect big investors will attempt (have already attempted?) to pull their cash, but regular people? Not like running to the ATM will do much good and I don't think they have offshore accounts. Excuse my naïveté, but that's the first thing that came to my mind...", "title": "" }, { "docid": "b3346a1b229db484ce324244ae755a29", "text": "There is no document that I know of that stipulates otherwise. This can also be corroborated by the fact that RESP withdrawals are considered as income in the name of the student. Thus, so long as the student pays tuition and receives a T2202A slip from the educational institution, they should be able to claim tuition, education, and textbook amounts.", "title": "" }, { "docid": "0cdf32009ce7d2b68f9a30325a4cce95", "text": "There's nothing particularly special about a two million dollar cheque. While they aren't commonplace, the bank certainly has experience with them. Many ATMs won't allow a deposit of that size but the bank cashiers will certainly accept them. They will typically get a supervisor to sign off on the deposit and may ask about the source of the money, for fraud prevention reasons. They may be held for longer than a smaller cheque if the bank manager chooses to do so. If there's nothing remotely suspicious (for example, it is a cheque from an insurance company for an expected payout), you should expect it will clear in about a week. On the other hand, if it is a cheque from a bank in another country and the bank manager has any reason to suspect it may not be legitimate, they may hold it for a month or more. Even then, you are not guaranteed the cheque was legitimate. This is used in a common scam.", "title": "" }, { "docid": "3008d82e9888fe8efeffb1adc8fa887d", "text": "As of now you are doing that. When you start earning larger sums of money, you will not withdraw and keep it in your house. You will leave it in the bank and they will earn money on it( By lending it out at a higher interest rate). When you are broke, that same bank will offer you a credit card or some other instrument that will help you survive. They will charge you money on that and make interest of you. When you have too much money and you start wiring money they will charge you a wire transfer fees. There are more than 500 ways in which banks make money off you. If you plan receiving $100 and $250 all your life and withdraw it immediately and don't plan doing anything else all your life, then you will probably not let the bank make any money off you. However, there are a very few people like that and banks barely lose anything accepting those customers.", "title": "" }, { "docid": "c1e5f7c7acf12b8ee23c673cd73e1487", "text": "How do I withdraw a large sum from my bank and give it to a money management firm? Either write a check to the Money Management firm or wire transfer the funds to the account mentioned.", "title": "" }, { "docid": "dcea7783b7351064d9055d548d81d3ef", "text": "I would advise to never cash out retirement funds unless you're actually retired, or in case of an extreme emergency. Not only because of the huge tax bill that you'd incur (as @Rick mentioned - in addition to your top bracket rate - add 10%), but also because you will never be able to recover from the loss. Your current retirement fund is the one that will compound the most. By the time you deposit the same amounts you're thinking of withdrawing now, the compound effect would have grown the original amount further. By the time you could catch up - it would compound further. You will never be able to repair the damage of early withdrawal at this stage. Consider this calculation (lets say you worked for 10 years out of 40 years of your career path, and have $1K to deposit a year, for ease of computation): Essentially, by withdrawing now, you'll reduce your retirement savings by about 50% in thirty years from now. How much is that 6% interest on your student loan? I seriously doubt its worth it.", "title": "" }, { "docid": "299853db8bcf407fd6521d9673dc0cde", "text": "One strategy to consider is a well-diversified index fund of equities. These have historically averaged 7-8% real growth. So withdrawing 3% or 4% yearly under that growth should allow you to withdraw 30+ years with little risk of drawing down all your capital. As a bonus you're savings target would come down from $10 million to $2.5 million to a little under $3.5 million.", "title": "" }, { "docid": "d1adeee13e441c082a60e0b3e7fcad84", "text": "Chase has a limit of $500,000 per day. A banker should be able to help you determine any immediate tax liabilities that will arise as a direct result of the transaction. You may wish to consult with a tax professional about any indirect implications the transfer may have. This transaction will be reported to the government but assuming that you are not involved in any illegitimate activities the likelihood of the US government taking any action on the notice is incredibly low. I have heard of 7 and 14 day holds being placed on out of character transfers but if you are buying property you should work with your bank to help facilitate. Bankers understand the business and can help you avoid any appearances of impropriety that the government flags. Should your account be flagged, I would retain a lawyer immediately. If you feel you have a reason to be concerned, then I would contact a lawyer in the US and Thailand before initiating the transfer. As they say an ounce of prevention is worth a pound of cure.", "title": "" }, { "docid": "2afdb7895ff858324e1611105b470a98", "text": "\"Bad plan. This seems like a recipe for having your money taken away from you by CBP. Let me explain the biases which make it so. US banking is reliable enough for the common citizen, that everyone simply uses banks. To elaborate, Americans who are unbanked either can't produce simple identity paperwork; or they got an account but then got blacklisted for overdrawing it. These are problems of the poor, not millionaires. Outside of determined \"\"off the grid\"\" folks with political reasons to not be in the banking and credit systsm, anyone with money uses the banking system. Who's not a criminal, anyway. We also have strong laws against money laundering: turning cash (of questionable origin) into \"\"sanitized\"\" cash on deposit in a bank. The most obvious trick is deposit $5000/day for 200 days. Nope, that's Structuring: yeah, we have a word for that. A guy with $1 million cash, it is presumed he has no choice: he can't convert it into a bank deposit, as in this problem - note where she says she can't launder it. If it's normal for people in your country to haul around cash, due to a defective banking system, you're not the only one with that problem, and nearby there'll be a country with a good banking system who understands your situation. Deposit it there. Then retain a US lawyer who specializes in this, and follow his advice about moving the money to the US via funds transfer. Even then, you may have some explaining to do; but far less than with cash. (And keep in mind for those politically motivated off-the-financial-grid types, they're a bit crazy but definitely not stupid, live a cash life everyday, and know the law better than anybody. They would definitely consider using banks and funds transfers for the border crossing proper, because of Customs. Then they'll turn it into cash domestically and close the accounts.)\"", "title": "" }, { "docid": "074ea5e57c752ea120f2017f3eceb057", "text": "\"You cant! There is the risk that between the time you get the check and the time you get to the bank that you will be murdered, have a heart attack, stroke, or aneurysm too. And they are probably more likely than the bank going out of business between the time you deposit the money and get access to it. Prior to accepting the check I would do the following: Get a lawyer that specializes in finance and tax law. There are some steps you can take to minimize your tax exposure. There is little you can do about the immediate tax on the winnings but there are things you can do to maximize the return of your money. You will want to do what you can to protect that money for yourself and your family. Also create or revise your will. This is a lot of money and if something happens to you people from your family and \"\"friends\"\" will come out of the woodwork trying to claim your money. Make sure your money goes where you want it to in the event something happens to you. Get a financial planner. This money can either make you or break you. If you plan for success you will succeed. If you trust yourself to make good decisions with out a plan, in a few years you will be broke and wondering what happened to your money. Even at 1% at 20million dollars that is 200k a year in interest... a pretty good income by itself. You do not have to save every penny but you can plan for a nice lifestyle that will last, if you plan and stick to your plan. Do research and know what bank you are going to deposit the money in. Talk to the bank let them know of your plans so they can be ready for it. It is not every day that they get a 20 million dollar deposit. They will need to make plans to handle it. If you are going to spread the money out among several banks they can prepare for that too. When choosing that bank I would look for one where their holdings are significantly more than you are depositing. I would not really go with one of the banks that was rescued. They have already shown that they can not handle large sums of money and assuming they will not screw it up with my money is not something I would be comfortable with. There were some nice sized banks that did not need a bail out. I would choose one of them.\"", "title": "" }, { "docid": "5e43d052df5460eb9c1e6625c9febeee", "text": "Here are your options. While you remain an Australian citizen you cannot withdraw super just because you are residing overseas. You could renounce your citizenship - just make sure you have another one to fall back on.", "title": "" }, { "docid": "ba7f05dd8c12100bd404a29439ed6c72", "text": "Generally it is advisable to mention what country you're asking about, as tax laws differ. To the best of my knowledge, however, this particular issue is handled consistently in every tax jurisdiction I'm familiar with. You invested X, it appreciated and is now worth X + Y. In your example, X = $10,000 and Y = $40,000. Total X + Y = $50,000. When you withdraw an amount, say A (in your example A = $10,000), it is considered a withdrawal of both the earnings and the original capital, in proportion to the total of your account. Taxable portion of the withdrawal is proportional to the earnings. Lets mark it T. In your example, T = $10,000 - $10,000 * $10,000/$50,000 = $8,000. I.e.: 80% of the withdrawal will be attributed to earnings and would be taxable (short term in your case, if you're in the US), and 20% to the original capital. This will keep the proportion of the remained the same - 20% of the remaining amount will be attributed to the original capital (accidentally, it will be $8,000), and the remaining 80% will be attributed to the earnings. The withdrawn amount attributed to the capital ($2,000), and the remaining amount attributed to the capital ($8,000) will equal exactly to the invested amount.", "title": "" } ]	fiqa
b6d1cda39ac89f69af17fd496b1b8c88	Connection between gambling and trading on stock/options/Forex markets	[ { "docid": "4b5c78a311079c14a1d2a98b2be70e62", "text": "For stocks, I would not see these as profiting at the expense of another individual. When you purchase/trade stocks, you are exchanging items of equal market value at the time of the trade. Both parties are getting a fair exchange when the transaction happens. If you buy a house, the seller has not profited at your expense. You have exchanged goods at market prices. If your house plummets in value and you lose $100k, it is not the sellers fault that you made the decision to purchase. The price was fair when you exchanged the goods. Future prices are speculative, so both parties must perform due diligence to make sure the exchange aligns with their interests. Obviously, this is barring any sort of dishonesty or insider information on the part of either buyer or seller.", "title": "" }, { "docid": "52188b18b28dae03cfa834dac2d84b41", "text": "There is economic value added to the marketplace, by having many investors trading stocks. The stock market itself can be thought of as a tool which provides additional 'liquidity' to the marketplace. Liquidity is the ease with which you can convert your assets into cash (for example, how quickly could you sell your car if you needed money to pay a medical bill?). Without a stock market, funds would be very illiquid - an investor would likely need to post advertisements to have other people consider buying his/her shares. Until the match between a buyer and seller is found, the person with the shares can't use the cash they need. On the other side of the transaction, are people who have an appetite for risk. This means that, for various reasons, they are willing to take on more risk than you, if it pays off on average (they are young [and have many years of salary earnings in front of them], or they are rich [can afford to lose money sometimes if it pays off on average]). Consider this like a transaction between your insurance broker - you don't want to pay for a new car if you get in an accident, and you're willing to pay total annual premiums that, on average, will cost more than that same car over time. You don't want the risk, but the insurance company does - that's how they make money. So by participating in any marketplace, you are providing value, in the form of liquidity, and by allowing the market to allocate risk to those willing to take it on.", "title": "" }, { "docid": "033b3dc786aabf615ad1a76442c0e644", "text": "\"There are moral distinctions that can be drawn between gambling and investing in stocks. First and I think most important, in gambling you are trying to get money for nothing. You put $100 down on the roulette wheel and you hope to get $200 back. In investing you are not trying to get something for nothing. You are buying a piece of a hopefully profit-making company. You are giving this company the use of your money, and in exchange you get a share of the profits. That is, you are quite definitely giving something: the use of your money for a period of time. You invest $100 of your money, and you hope to see that grow by maybe $5 or $10 a year typically. You may get a sudden windfall, of course. You may buy a stock for $100 today and tomorrow it jumps to $200. But that's not the normal expectation. Second, gambling is a zero sum game. If I gamble and win $100, then someone else had to lose $100. Investing is not a zero sum game. If I buy $100 worth of stock in a company and that grows to $200, I have in a sense \"\"won\"\" $100. But no one has lost $100 to give me that money. The money is the result of the profit that the company made by selling a valuable product or service to customers. When I go to the grocery store and buy a dozen eggs for $2, some percentage of that goes to the stockholders in the grocery store, say 5 cents. So did I lose 5 cents by buying those eggs? No. To me, a dozen eggs are worth at least $2, or I wouldn't have bought them. I got exactly what I paid for. I didn't lose anything. Carrying that thought further, investing in the stock market puts money into businesses. It enables businesses to get started and to grow and expand. Assuming these are legitimate businesses, they then provide useful products and services to customers. Gambling does not provide useful products and services to anyone -- except to the extent that people enjoy the process of gambling, in which case you could say that it is equivalent to playing a video game or watching a movie. Third -- and these are all really related -- the whole goal of gambling is to take something from another person while giving him nothing in return. Again, if I buy a dozen eggs, I give the store my $2 (or whatever amount) and I get a dozen eggs in exchange. I got something of value and the store got something of value. We both walk away happy. But in gambling, my goal is that I will take your money and give you nothing in return. It is certainly true that buying stocks involves risk, and we sometimes use the word \"\"gamble\"\" to describe any risk. But if it is a sin to take a risk, then almost everything you do in life is a sin. When you cross the street, there is a risk that you will be hit by a car you didn't see. When you drink a glass of water, there is the risk that it is contaminated and will poison you. When you get married, there is a risk that your spouse will divorce you and break your heart. Etc. We are all sinners, we all sin every day, but we don't sin quite THAT much. :-) (BTW I don't think that gambling is a sin. Nothing in the Bible says that gambling is a sin. But I can comprehend the argument for it. I think gambling is foolish and I don't do it. My daughter works for a casino and she has often said how seeing people lose money in the casino regularly reminds her why it is stupid to gamble. Like she once commented on people who stand between two slot machines, feed them both coins and then pull the levers down at the same time, \"\"so that\"\", she said, \"\"they can lose their money twice as fast\"\".)\"", "title": "" }, { "docid": "180d2a7f0af42c2226913663d438e41b", "text": "\"I think that the answer by @jkuz is good. I'd add that the there's a mathematically precise difference: Gambling games are typically \"\"zero-sum\"\" games, which means that every dollar won by one person is lost by another. (If there's a \"\"house\"\" taking a cut then it's worse than zero-sum, but let's ignore that for the moment.) None of the markets that you mentioned are zero-sum because it's possible for both parties in the transaction to \"\"win\"\" since they typically have different objectives. If I buy stock, I typically desire for it to go up to make money, but, if I sell stock, I typically sell it because I want the money to do something else completely. The \"\"something else\"\" might be invest in another instrument if I think it's better or I'm rebalancing risk. It might also be to buy a house, pay for college, or (if I'm in retirement living on my investments) to buy food. If the stock goes up, the buyer won (increased investment) but the seller also won (got the \"\"other thing\"\" that they wanted/needed), which they would not have been able to get had there not been a buyer willing to pay cash for the stock. Of course it's possible that in some cases not everyone wins because there is risk, but risk should not be considered synonymous with gambling because there's varying degrees of risk in everything you do.\"", "title": "" } ]	[ { "docid": "a27a2131386bb326d295d3241415a143", "text": "If I knew a surefire way to make money in FOREX (or any market for that matter) I would not be sharing it with you. If you find an indicator that makes sense to you and you think you can make money, use it. For what it's worth, I think technical analysis is nonsense. If you're just now wading in to the FOREX markets because of the Brexit vote I suggest you set up a play-money account first. The contracts and trades can be complicated, losses can be very large and you can lose big -- quickly. I suspect FOREX brokers have been laughing to the bank the last couple weeks with all the guppies jumping in to play with the sharks.", "title": "" }, { "docid": "e729fd9708142d3b72345705f9ccda9c", "text": "\"This depends strongly on what you mean by \"\"stock trading\"\". It isn't a single game, but a huge number of games grouped under a single name. You can invest in individual stocks. If you're willing to make the (large) effort needed to research the companies and their current position and potentialities, this can yield large returns at high risk, or moderate returns at moderate risk. You need to diversify across multiple stocks, and multiple kinds of stocks (and probably bonds and other investment vehicles as well) to manage that risk. Or you can invest in managed mutual funds, where someone picks and balances the stocks for you. They charge a fee for that service, which has to be subtracted from their stated returns. You need to decide how much you trust them. You will usually need to diversify across multiple funds to get the balance of risk you're looking for, with a few exceptions like Target Date funds. Or you can invest in index funds, which automate the stock-picking process to take a wide view of the market and count on the fact that, over time, the market as a whole moves upward. These may not produce the same returns on paper, but their fees are MUCH lower -- enough so that the actual returns to the investor can be as good as, or better than, managed funds. The same point about diversification remains true, with the same exceptions. Or you can invest in a mixture of these, plus bonds and other investment vehicles, to suit your own level of confidence in your abilities, confidence in the market as a whole, risk tolerance, and so on. Having said all that, there's also a huge difference between \"\"trading\"\" and \"\"investing\"\", at least as I use the terms. Stock trading on a short-term basis is much closer to pure gambling -- unless you do the work to deeply research the stocks in question so you know their value better than other people do, and you're playing against pros. You know the rule about poker: If you look around the table and don't see the sucker, he's sitting in your seat... well, that's true to some degree in short-term trading too. This isn't quite a zero-sum game, but it takes more work to play well than I consider worth the effort. Investing for the long term -- defining a balanced mixture of investments and maintaining that mixture for years, with purchases and sales chosen to keep things balanced -- is a positive sum game, since the market does drift upward over time at a long-term average of about 8%/year. If you're sufficiently diversified (which is one reason I like index funds), you're basically riding that rise. This puts you in the position of betting with the pros rather than against them, which is a lower-risk position. Of course the potential returns are reduced too, but I've found that \"\"market rate of return\"\" has been entirely adequate, though not exciting. Of course there's risk here too, if the market dips for some reason, such as the \"\"great recession\"\" we just went through -- but if you're planning for the long term you can usually ride out such dips, and perhaps even see them as opportunities to buy at a discount. Others can tell you more about the details of each of these, and may disagree with my characterizations ... but that's the approach I've taken, based on advice I trust. I could probably increase my returns if I was willing to invest more time and effort in doing so, but I don't especially like playing games for money, and I'm getting quite enough for my purposes and spending near-zero effort on it, which is exactly what I want.\"", "title": "" }, { "docid": "291ef739389b414110b5d02538f9e616", "text": "\"I think, the top three answers by Joe, Anthony and Bigh are giving you all the detail that you need on a technical sense. Although I would like to add a simple picture that underlines, that you can not really compare day trading to long-term trading and that the addictive and psychologic aspect that you mentioned can not be taken out of consideration. The long term investor is like someone buying a house for investment. You carefully look at all offers on the market. You choose by many factors, price, location, quality, environment, neighborhood and extras. After a long research, you pick your favorites and give them a closer look until you finally choose the object of desire, which will pay off in 10 years and will be a wise investment in your future. Now this sounds like a careful but smart person, who knows what he wants and has enough patience to have his earnings in the future. The short term investor is like someone running into the casino for a game of black-jack, roulette or poker. He is a person that thinks he has found the one and only formula, the philosopher's stone, the money-press and is seeking immense profits in just one night. And if it does not work, he is sure, that this was just bad coincidence and that his \"\"formula\"\" is correct and will work the next night. This person is a pure gambler and running the risk of becoming addicted. He is seeking quick and massive profits and does not give up, even though he knows, that the chances of becoming a millionaire in a casino are quite unrealistic and not better than playing in a lottery. So if you are a gamer, and the profit is less important than the \"\"fun\"\", then short term is the thing for you. If you are not necessarily seeking tons of millions, but just want to keep your risk of loss to a minimum, then long term is your way to go. So it is a question of personality, expectations and priorities. The answer why losses are bigger on high frequency signals is answered elsewhere. But I am convinced in reality it is a question of what you want and therefore very subjective. I have worked for both. I have worked for a portfolio company that has gone through periods of ups and downs, but on the long term has made a very tempting profit, which made me regret, that I did not ask for shares instead of money as payment. These people are very calm and intelligent people. They spend all their time investigating and searching for interesting objects for their portfolio and replace losers with winners. They are working for your money and investors just relax and wait. This has a very serious taste to it and I for my part would always prefer this form of investment. I have worked for an investment broker selling futures. I programmed the account management for their customers and in all those years I have only seen one customer that made the million. But tons of customers that had made huge losses. And this company was very emotional, harsh, unpersonal - employees changing day by day, top sellers coming in corvettes. All the people working there where gamblers, just like their customers. Well, it ended one day, when the police came and confiscated all computers from them, because customers have complained about their huge losses. I am glad, that I worked as a remote developer for them and got paid in money and not in options. So both worlds are so different from each other. The chances for bigger profits are higher on day trading, but so are the chances for bigger losses - so it is pure gambling. If you like gambling, split your investment: half in long term and other half in short term, that is fun and wise in one. But one thing is for sure: in over ten years, I have seen many customers loosing loads of money in options in the future markets or currencies. But I have never seen anyone making a loss in long term portfolio investment. There have been hard years, where the value dropped almost 30%, but that was caught up by the following years, so that the only risk was minimizing the profit.\"", "title": "" }, { "docid": "77f40b3209aec2de9ea6811bdedc2815", "text": "Focusing on options, many people and companies use them to mitigate risk(hedge) When used as a hedge the objective is not to win big, it is to create a more predictable outcome. Option traders win big by consistenly structuring trades with a high probability of success. In this way, they take 100 and turn it into 1000 with 100 small trades with a target profit of $10/trade. Although options are a 'zero sum' game, a general theory among options traders is the stock market only has a 54-56 probability of profit(PoP) - skewed from 50-50 win/loss because the market tends to go up over a long time frame. Using Option trading strategies strategically, you have more control over PoP and you can set yourself up to win whether the security goes up/down/sideways. A quick and dirty measure of PoP is an options' delta. If the delta on a call option is 19, there is roughly a 19% chance your option will be in the money at expiration - or a 19% chance of hitting a home run and multiplyimg your money. If the delta is 68, there is a 68% chance of a profitable trade or getting on base. There are more variables to this equation, but I hope this clearly explains the essence.", "title": "" }, { "docid": "fa09b5650b3e3017d5ce58eea7eb1d52", "text": "I'd say that it cannot be meaningfully calculated or measured because the two are just too different in every way. Poker Stock trading I guess the last point (that someone relying on luck is exploitable in poker but not in stock trading) could be interpreted as stock trading being based more on luck, while the second and third points indicated that poker has more true randomness and is thus based more on luck. Something both have in common is that people who have been losing money are often tempted to take stupid risks which lose them everything.", "title": "" }, { "docid": "c0a22865d3c92a8476bba9a888093840", "text": "No, the stock market and investing in general is not a zero sum game. Some types of trades are zero sum because of the nature of the trade. But someone isn't necessarily losing when you gain in the sale of a stock or other security. I'm not going to type out a technical thesis for your question. But the main failure of the idea that investing is zero sum is the fact the a company does not participate in the transacting of its stock in the secondary market nor does it set the price. This is materially different from the trading of options contracts. Options contracts are the trading of risk, one side of the contract wins and one side of the contract loses. If you want to run down the economic theory that if Jenny bought her shares from Bob someone else is missing out on Jenny's money you're free to do that. But that would mean that literally every transaction in the entire economy is part of a zero sum game (and really misses the definition of zero sum game). Poker is a zero sum game. All players bet in to the game in equal amounts, one player takes all the money. And hell, I've played poker and lost but still sometimes feel that received value in the form of entertainment.", "title": "" }, { "docid": "89a27825da28e95937d83b40b8dd83e0", "text": "\"For some studies on why investors make the decisions they do, check out For a more readable, though less rigorous, look at it, also consider Kahneman's recent book, \"\"Thinking, Fast and Slow\"\", which includes the two companion papers written with Tversky on prospect theory. In certain segments (mostly trading) of the investing industry, it is true that something like 90% of investors lose money. But only in certain narrow segments (and most folks would rightly want traders to be counted as a separate beast than an 'investor'). In most segments, it's not true that most investors lose money, but it still is true that most investors exhibit consistent biases that allow for mispricing. I think that understanding the heuristics and biases approach to economics is critical, both because it helps you understand why there are inefficiencies, and also because it helps you understand that quantitative, principled investing is not voodoo black magic; it's simply applying mathematics for the normative part and experimental observations for the descriptive part to yield a business strategy, much like any other way of making money.\"", "title": "" }, { "docid": "a61c2f9c1328413fcb8445ca829aa462", "text": "I deleted my previous comment. Here's an illustration: Let's say you're betting in a horse race. This horse race allows anyone who's willing to take bets during the race to do so. So you bet on horse A Another guy bets on horse B Your horse (a) runs the race normally. The guy on horse B, however, notices his horse will lose but that C is going to win. So he sends a bunch of his friends to the ticket counter ahead of time. Then, when he wants to be on C he just has a friend bet for him. He can do that while you're stuck at the back of the line. In the market, they can distribute the orders among each other in the same way. The friends are just servers but they let everyone know when the orders are coming in. They don't know before he places the order but once he does they're already in line faster than you can be in line.", "title": "" }, { "docid": "138fc9063c2e29695bc29c3ad98f991c", "text": "Just romped a competition my school had, won $100. I'm not participating in this, but the key is to trade options. I made 244% in 2 months off only 3 trades. Won another competition last semester in my investment analysis class as well", "title": "" }, { "docid": "5688786e1cd8f4bc730141bd83392ef3", "text": "One key piece missing from your theory is the bid/ask spread. If you buy a stock for $10, you usually can't immediately turn around and sell it for $10. You can only sell it for whatever someone is willing to pay for it. So virtually any random investment (stocks, bonds, forex, whatever) immediately loses a small amount of value, and over the long run you will almost certainly lose money if you buy/sell at random.", "title": "" }, { "docid": "6c36699bd826eaa8ece137871f7998d2", "text": "It's not! With gambling, you're placing a bet on some team's performance but you don't own the team, or the field they play on, or the other team, or the ball! Derivatives are just like that! Except with derivatives, the team can bet against themselves, and not tell you that they have!", "title": "" }, { "docid": "bee965f0336fd3381165bf33273aa74d", "text": "\"OneTwoTrade is a binary option seller, and they are officially licensed by the Malta Gaming Authority. They are not in any way licensed or regulated as an investment, because they don't do actual investing. Is your money safe? If you mean will they take your money and run off with it, then no they probably won't just take your deposit and refuse to return any money to you for nothing - that would be a terrible way to make money for the long-term. If you mean \"\"will I lose my money?\"\" - oh yeah, you probably will! Binary options - outside of special sophisticate financial applications - are for people who think day trading has too little risk, or who would prefer online poker with a thin veneer of \"\"it's an investment!\"\" In the words of Forbes, Don't Gamble On Binary Options: If people want to gamble, that’s their choice. But let’s not confuse that with investing. Binary options are a crapshoot, pure and simple. These kinds of businesses run like a casino - there's a built-in house advantage, you are playing odds (which are against you), and the fundamental product is trying to bet on short-term volatility in financial markets. This is often ridiculously short-terms, measured in minutes. It's often called \"\"all or nothing options\"\", because if you bet wrong you lose almost everything - they give you a little bit of the money you bet back (so you will bet again, preferably with more of your own money). If you bet correctly you get a pay-out, just like in craps or roulette. If you are looking to gamble online, this is one method to do it. But this isn't investing, you are as mathematically likely to lose your money and/or become addicted as any other form of money-based gambling, and absolutely treat it the same way you would a casino: decide how much money you are willing to spend on the adventure before you start, and expect you'll likely not get much or any of that money back. However, I will moralize on this point - I really hate being lied to. Casinos, sports betting, and poker all generally have the common decency to call it what it is - a game where you are playing/betting. These sorts of \"\"investment\"\" providers are woefully dishonest: they say it's an exciting financial market, a new type of investment, investors are moving to this to secure their futures, etc. It's utterly deceptive and vile, and it's all about as up-front and honest as penny auction websites. If you are going to gamble, I'd urge you to do it with people who have the decency to to call it gambling and not lie to you and ask for a \"\"minimum investment\"\".\"", "title": "" }, { "docid": "ec8a42d6f8126249c7f6b69830655234", "text": "EDIT: I think it's a fairly straightforward cause & effect. You tax the transactions, it lowers the incentive to do frequent trading. So yes, I do think it would limit it effectively. I'm under no illusion that speculating will end. But I think we need to dial it back a bit so that investment is the primary driver in the market, not gambling. I'm not anti speed, but the markets serve a real purpose: They allow for liquidity & for useful capital allocation. And liquidity is nothing if all the machines are set to sell, sell, sell. This is what caused some of the crashes. Also, we had liquidity prior to all this High Frequency trading. I'm unsure that the added liquidity makes up for the cons of turning an investment engine into a gambling engine. You dont' even have to believe me. There are a few big time investors that say they are out of the market because it is no longer governed by reason.", "title": "" }, { "docid": "488f6f0cd9c496c5400d2bcbdd11f946", "text": "I haven't followed the stock in about 6 years. Back when I followed it, because of the concentration in Ohio, at least back then, Ohio sports teams performance drove the profitablity of the chains. I remember the implied vol of the options spiking, along with MSG, for The Decision because LeBron would drive people to bdubs.", "title": "" }, { "docid": "492d2cdd24f17523d92dad072aa6b818", "text": "\"In addition to JoeTaxpayer's answer there are articles that describe the writing of options as \"\"being the casino\"\". When you write, or sell to open an option, you are selling one of the most desirable things in the world to sell: a depreciating asset. Writing options are not without risk, but they can be a very conservative strategy. Who wins these massive losses? Sometimes run of the mill investors, myself being one of them.\"", "title": "" } ]	fiqa
9094d7d8afc2d2510698324231ac0cc0	The cost of cleaning the house that we rented far exceeds the security deposit. Should we bother?	[ { "docid": "1e912dbff135225ac31d53bff72a6ff8", "text": "\"I am surprised at the amount of work this contract wants done. I'd question if it's even legal given the high costs. I suspect it's only there to remind abusive tenants of responsibilities they already have in law for extraordinary abuse beyond ordinary wear-and-tear: they are already on the hook to repaint if they trash the paint (think: child writing on walls, happens a lot), and already need to fumigate (and a lot more) if they are a filth-type hoarder who brings in a serious infestation (happens a lot). The landlord can already go after these people for additional money beyond the deposit. But that's not you. So don't freak out about those clauses, until you talk to the landlord and see what he's really after. Almost certainly, he really wants a \"\"fit and ready to rent\"\" unit upon your departure, so he doesn't have to take the unit off the market for months fixing it. As long as that's done, there's no reasonable reason for further work -- a decent landlord wouldn't require that. Nor would a court, IMO. The trouble with living in a place for awhile is you become blind to its deficiencies. What's more, it's rather difficult to \"\"size up\"\" a unit as ready when it's still occupied by your stuff. A unit will look rather different when reduced to a bare room, without furniture and whatnot distracting you. Add to it a dose of vanity and it becomes hard to convince yourself of defects others will easily see. So, tread carefully here. If push comes to shove, first stop is whether it's even legal. Cities and states with heavy tenant populations tend to have much more detailed laws, and as a rule, they favor the tenant. Right off the bat, in most states the tenant is not responsible for ordinary wear-and-tear. In my opinion, 6 years of ordinary, exempt wear would justify a repaint, so that shouldn't be on the tenant at all. As for the fumigation, I'm not in Florida so I don't know the deal, maybe there's some special environmental issue there which somehow makes that reasonable, it sure wouldn't fly in CA. Again that assumes you're a reasonable prudent tenant, not a slob or hoarder. As for the pro carpet cleaning, that's par for the course in any of the tough rent control areas I've seen, so that's gotten a pass from the legislators. Though $600 seems awfully high. Other than that, you can argue the terms are \"\"unconscionable\"\" -- too much of a raw deal to even be fair. However, this will depend on the opinion of a judge. Hit or miss. I'm hoping your landlord will be happy to negotiate based on the good condition of the unit (which he may not know; landlords rarely visit tenant units unless they really need to.) You certainly should make the case that you make here; that the work is not really needed and it's prohibitive. Your best defense against unconscionable deals is don't sign them. Remember, you didn't know the guy when you initially signed... the now-objectionable language should have been a big red flag back then, saying this guy is epic evil, run screaming. (even if that turned out not to be true, you should't have hung around to find out.) You may have gotten lucky this time, but don't make that mistake again. Unless one of the above pans out, though... a deal is a deal. You gave your word. The powerful act here is to keep your word. Forgive me for getting ontological, but successful people say it creates success for them. And here's the thing. You have to read your contracts because you can't keep your word if you don't know what word you gave. It's a common mistake: thinking good business is trust, hope, faith, submission or giving your all. No. In business, you take the time to hammer out mutually beneficial (win-win) agreements, and you set them on paper to eliminate confusion, argument and stress in the future as memories fade and conditions change. That conflict resolution is how business partners remain friends, or at least professional colleagues.\"", "title": "" } ]	[ { "docid": "289ffa029d75f9233a18c3ccc3b0671f", "text": "\"I recommend reading What's the catch in investing in real estate for rent? and making a list of expenses. You have a known expense, the rent, and the assumption that it will rise a bit each year. If not each year, eventually the landlord will bump it, and on average, the rent should track inflation. The buy side is the complete unknown, especially to us here. The mortgage and taxes are just the beginning. My ongoing issue in the buy/rent debate is that it's easy to buy \"\"too big\"\" or at least far bigger that what you are renting. One extreme - a couple moves from their one bedroom apartment into their purchased 3BR home with far more space than they ever use. No need to paint the full picture of numbers, the house is a money pit, and they live for the house. Other end - Couple already renting a nice sized home, and they buy a similar one. They rent out the two spare bedrooms for 5 years until they have kids and want their privacy back. They bought smart, for less than market price, and from day one, the mortgage was lower than the rent they paid. By year 5, having sent the extra income to pay down the mortgage, they've paid down half the loan. As the kids come along, they refi to a new 30 yr fixed at 3.5%, and the payment is tiny compared to the rest of their budget. Simply put, the ratio of house price to rent for that same house is not a constant. When the ratio is high, it's time to rent. When it swings very low, it's worth considering a purchase. But the decision is never clear until every detail is known. The time may be perfect, and the day after you close, you lose your job, or in a good scenario, get a raise and are relocated. Just because you bought low yesterday, doesn't mean the market will pay you a good price today, it takes time for out-of-whack pricing to come back to normal. A simple question? Maybe. But we first need a lot of details to help you understand what you are considering.\"", "title": "" }, { "docid": "d2b3ac3e04f16008caaa1ceb136d3ef0", "text": "If you think that your parents' home is in danger, you might want to check what it would take to make sure their house is safe, and what the financial situation actually is. You are paying rent, there are brothers who may or may not be paying rent. We don't have the information, you have. Saving that house might be a worthwhile investment. I assume that if you moved out, either rented or by buying a house, they wouldn't get any rent from you anymore and whatever the situation is, it would be much worse.", "title": "" }, { "docid": "87391b5769bbc4e6cf5227334a5e7922", "text": "Your calculations are good as far as they go, but there are lots of other factors and pros and cons to each decision. Yes, you should certainly compare the monthly rent to what your mortgage payments would be, as you have done. Yes, you should consider how long you might live there. If you do move out, how difficult will it be to sell the house, given market conditions in your area? If you try to rent it, how difficult is it to find a tenant, and what rent could you expect to receive? Speaking of moving out and renting the place: Who will manage the property and do maintenance? Would you still be close enough to do this yourself? Would you be willing and able to spend the time? Or would you have to hire someone? Also, what if the tenant does not pay the rent? How difficult is it to evict someone in your area? Speaking from personal experience, I own a rental property in Ohio, and the law says you can evict someone with 3 days notice. But in practice they don't just leave, so then you have to take them to court. It takes months to get a court date and months longer before the police actually show up to order them out of the house. And you have to pay the lawyer and court fees. In that time they're living in your property rent free. In my case one tenant also totally trashed the place and stole everything that wasn't nailed down -- I had to spend $13,000 on repairs to a house worth a fraction of what you're talking about. Being a landlord is NOT just a matter of sitting back and collecting rent checks: there's a fair amount of work and a lot of risk. What do you have to pay the realtor, and what other closing costs would you have to pay? Where I live, realtors typically charge 6 to 7%. You may also have to pay for an appraisal, title search, and bunch of other little fees. Mortgage interest is deductible on your federal income taxes. Rent is not. If you own and something needs to be repaired, you have to pay for it. If you rent, the landlord has to pay for it. If you own, you can do pretty much what you like with the property -- subject to zoning ordinances and building codes and maybe homeowners association rules, but you should have a pretty good amount of leeway. If you want to install ceiling fans or remodel the kitchen or add a deck, it's up to you. If you're renting, it's up to the landlord to decide what you can do to the property. And if he agrees to let you do some upgrade, when you're done, it belongs to him. With a condo, you are not usually responsible for exterior maintenance, like mowing the lawn and trimming the bushes and washing the outer walls. With a house, you are. You might pay someone to do this, which adds to the cost, or you might do it yourself, which takes time. Insurance on a condo or aparment is much less than insurance on a house. In my area, anyway. You should investigate those costs. If you buy, eventually you own the place and don't have to pay a mortgage any more. If you rent, you continue to pay forever. (Even if you don't live in the same house forever, as long as you don't take a terrible loss when you sell you should then have some money left over to apply to the next house, so you are still building equity.) Some of these pros and cons are easily quantifiable. Others are probabilities, like how likely is it that your water heater will fail?, and how long is it likely to take to find a buyer if you want to sell? And others are pretty subjective.", "title": "" }, { "docid": "7b73465541b505fd29eecafb445ece16", "text": "The money your tenants spent on repairs and maintenance that is otherwise your responsibility is considered rent paid to you (and deductible to the extent you can deduct maintenance expenses, provided you have documentation etc etc). The money your tenants spent on utilities, which is their responsibility anyway, is not considered rent paid to you. Since in your question you seem to be mixing both together, it is hard to accept a claim that the additional $300 spent on utilities and maintenance is enough to bring the rent to the FMV level. Especially since the transaction is between related persons, it may bring additional scrutiny of the IRS.", "title": "" }, { "docid": "79150c526f9587a5527db7e2fe6c664b", "text": "\"I would not classify utilities (including electric) as additional fees. In many cases you interact directly with the utility (not the landlord) and pay for what you use. There are exceptions like when renting a room. The renter's insurance also is not part of the landlord's profit, it is simply there to protect you. In the case of loss, the landlord cannot insure your property. You have to provide your own insurance. Its pretty low costs, typically less than 20 per month. The application fee is typical. The move in fee is something that could be negotiated away and sounds pretty sketchy. You can always \"\"let your fingers do the walking\"\" and find out the fees before you look at the place.\"", "title": "" }, { "docid": "31c68bac31fe0a96599eb89f3e57336b", "text": "\"The New York Times offer a remarkably detailed Buy vs Rent calculator. You enter - From all of this, it advises the break-even rent, when monetarily, it's equal. I'd suggest you keep a few things in mind when using such a tool. Logic, common sense, and a Nobel prize winner named Robert Shiller all indicate that housing will follow inflation over the long term. Short term, even 20 years, the graphs will hint at something else, but the real long term, the cost of housing can't exceed inflation. The other major point I'd add is that I see you wrote \"\"We rent a nice house.\"\" Most often, people are looking to buy what they feel they can't easily rent. Whether it's the yard, room number or sizes, etc. This also leads to the purchase of too big a house. You can find that you can afford the extra bedroom, family room in addition to living room, etc, and then buy a house 50% bigger than what you need or planned on. In my opinion, getting the smallest house you can imagine living in, no bigger than what you live in now, and plan to get on a faster than 30 year repayment. Even with transaction costs, in 10 years, you'll have saved enough to make the bump up to a larger house if you wish.\"", "title": "" }, { "docid": "1f134d8a57ca26dd730ec653e19eee1f", "text": "Disappointing this is just an advertisement. I was hoping for a discussion on paying rent online. The online portal the property manager I rent from uses is horrible. They charge at 5% fee for processing payments online (which increases my rent by $45/mo).", "title": "" }, { "docid": "69919c3b17124e3fddcdcc5c248ac83d", "text": "If the bank will escrow your property tax they may want as much as a full quarter's worth in advance. Closing costs can range from zero to 2% or so of the mortgage. On the $100k house, I'd have $8-10k in a maintenance/repair fund. Much of this will depend on how old the house is and the condition of the systems. Everything powered will fail eventually, the heating/cooling systems, water heater, dishwasher, oven/microwave, fridge, pump if there's well water. All these listed items each have a range of cost depending on size, style, power, etc.", "title": "" }, { "docid": "49a980478d54768a73d86779c42b737e", "text": "\"One reason I have heard (beside to keep you paying rent) is the cost of maintenance and improvements. If you hire someone else to do all the work for you, then it may very well be the case, though it is not as bad as a car. Many factors come into play: If you are lucky, you may end up with a lot that is worth more than the house on it in a few decades' time. Personally, I feel that renting is sometimes better than owning depending on the local market. That said, when you own a home, it is yours. You do have to weigh in such factors as being tied down to a certain location to some extent. However, only the police can barge in -- under certain circumstances -- where as a landlord can come in whenever they feel like, given proper notice or an \"\"emergency.\"\" Not to mention that if someone slams a door so hard that it reverberates through the entire place, you can actually deal with it. The point of this last bit is the question of home ownership vs renting is rather subjective. Objectively, the costs associated with home ownership are the drags that may make it a bad investment. However, it is not like car ownership, which is quite honestly rarely an invesment.\"", "title": "" }, { "docid": "6950d92f340ffdb328d15afac8299aba", "text": "BLUF: Continue renting, and work toward financial independence, you can always buy later if your situation changes. Owning the house you live in can be a poor investment. It is totally dependent on the housing market where you live. Do the math. The rumors may have depressed the market to the point where the houses are cheaper to buy. When you do the estimate, don't forget any homeowners association fees and periodic replacement of the roof, HVAC system and fencing, and money for repairs of plumbing and electrical systems. Calculate all the replacements as cost over the average lifespan of each system. And the repairs as an average yearly cost. Additionally, consider that remodeling will be needful every 20 years or so. There are also intangibles between owning and renting that can tip the scales no matter what the numbers alone say. Ownership comes with significant opportunity and maintenance costs and is by definition not liquid, but provides stability. As long as you make your payments, and the government doesn't use imminent domain, you cannot be forced to move. Renting gives you freedom from paying for maintenance and repairs on the house and the freedom to move with only a lease to break.", "title": "" }, { "docid": "a2b34353f037de897b420fd6ac257afe", "text": "\"Should you negotiate? Yes, what harm can it possibly do? The landlord is unlikely to come back and say \"\"Because you tried to negotiate, I'm putting the rent up by 10% instead.\"\", or to evict a paying tenant merely because they tried to negotiate. Is the proposed rent increase \"\"normal\"\"? Yes. Landlords will generally try to get as high a rent as they can.\"", "title": "" }, { "docid": "3334227abf9c8af22039391d71c17d55", "text": "\"As others have pointed out, you can't just pick a favorable number and rent for that amount. If you want to rent out your house, you must rent it for a value that a renter would agree to. For example there is a house on my street that has been looking for renters for 3 years. They want $2,500 a month. This covers their mortgage, and a little bit more for taxes and repairs. It has never been rented once. Other homes in my neighborhood rent for around $1,000 a month. There is no value to a renter in renting a house that is $1,500 more then a similar house 2 doors down. Now what you can look at is cost mitigation. So I am using data from my area. Houses in my part of Florida must have A/C running in the wet months to keep the moisture from ruining the house. This can easily be $100 a month (usually more). The city requires you to have water service, even when not occupied, though the cost is very small. Same with waste, which is a flat fee: $20 a month. Yard watering is a must during the dry months (if you want to keep grass). Let's say that comes out to $50 a month, year round. Pest control is a must, especially if your house has wooden parts (like floors or a roof). Even modest pest control is $25 a month. Property taxes around $240 a month. Let's say your mortgage is around $1,000 a month. That means to sit empty your house would cost $1,435. Now if you were to rent the house, a lot of those costs could \"\"go away\"\" by becoming the tenants' responsibility. Your cost of the house sitting full would be $1,240. Let's pad that with 10% for repairs and go with $1,364. Now let's assume you can rent for $1,000 a month. Keep in mind all these rates are about right for my area but will change based on size and amenities. Your choices are let the house sit empty for $1,435 a month or fill it and only \"\"lose\"\" $240 a month. Keep in mind that in both cases you will be gaining equity. So what a lot of people do around here is rent out their houses and pay the $240 as an investment. For every $240 they pay, they get $1,000 in equity (well, interest and fees aside, but you get the point). It's not a money maker for them right now, but as they get older two things happen. That $240 a month \"\"payment\"\" pays off their mortgage, so they end up owning the house outright. Then that $240 a month payment turns to extra income. And at some point, their rental can be sold for (let's guess) $400,000. SO they paid $86,400 and got back $400,000. All the while they are building equity in their rental and in the home they are living in. The important take away from this, is that it's not a source of income for the landlord as much as it is an investment. You will likely not be able to rent a house for more then a mortgage + costs + taxes, but it does make a good investment vehicle.\"", "title": "" }, { "docid": "08666a519cef7d9cc65ae83d41f3a360", "text": "It sounds extremely fishy to me. Who has $750 in cash in his pocket and uses it to pay rent?? I would ask the tenant to show a statement from her checking account which shows that she took out that much cash in the days before the 'payment', and if she cannot provide it (or another convincing explanation), I would consider it a lie and request payment.", "title": "" }, { "docid": "c2a5a0971e352bc083b87a6b8757baa0", "text": "A lot of people do this. For example, in my area nice townhouses go for about $400K, so if you have $80,000 you can buy one and rent it. Here are the typical numbers: So you would make $350 per month or $4,200 per year on $80,000 in capital or about 5% profit. What can go wrong: (1) The property does not rent and sits vacant. You must come up with $2100 in mortgage payments, taxes, and insurance every month without fail or default. (2) Unexpected expenses. A new furnaces costs over $5,000. A new roof costs $7,000. A new appliance costs $600 to $2000 depending on how upscale your property is. I just had a toilet fixed for a leaky plunger. It cost me $200. As you can see maintenance expenses can quickly get a lot higher than the $50 shown above... and not only that, if you fix things as cheaply as possible (as most landlords do), not only does that decrease the rentability of the property, but it causes stuff to break sooner. (3) Deadbeats. Some people will rent your property and then not pay you. Now you have a property with no income, you are spending $2100 per month to pay for it, AND you are facing steep attorney fees to get the deadbeats evicted. They can fight you in court for months. (4) Damage, wear and tear. Whenever a tenant turns over there is always a lot of broken or worn stuff that has to be fixed. Holes in the wall need to be patched. Busted locks, broken windows, non-working toilets, stains on the carpet, stuck doors, ripped screens, leaky showers, broken tiles, painting exterior trim, painting walls, painting fences, etc. You can spend thousands every time a tenant changes. Other caveats: Banks are much more strict about loaning to non home owners. You usually have to have reserve income. So, if you have little or no income, or you are stretched already, it will be difficult to get commercial loans. For example, lets say your take-home pay is $7,000 and you have no mortgage at all (you rent), then it is fine, the bank will loan you the money. But lets say you only have $5,000 in take home pay and you have an $1,800 mortgage on your own home. In that case it is very unlikely a bank will allow you to assume a 2nd mortgage on a rental property. The more you try to borrow, the more reserve income the bank will require. This tends to set a limit on how much you can leverage.", "title": "" }, { "docid": "9af55094839c6d10fccdf320dad52f9c", "text": "Another vote for a bigger downpayment, for the reasons Benjamin mentions. Also, from experience, I would save up at least a small pile as a separate house emergency fund because you will find things that are wrong and/or that got bodged by the previous owner and it's probably not going to last past the first few months of home ownership. In my case, the home inspector missed - amongst other things - that the shower on the 2nd floor was leaking both into the adjoining bedroom and the living room below. That added a little unexpected expenditure as you might guess.", "title": "" } ]	fiqa
c35a5a1510dbc75f6e6ae54c9678d8c9	For how long is a draft check valid, and where do the funds sit?	[ { "docid": "108d9a48519cbc0607154a347f41e35b", "text": "\"To answer length validity and security implications of draft checks issued and negotiated within the United States, I am heavily addressing the common erroneous assumptions of where the funds sit while they're \"\"in\"\" a draft check and how to get them out. Tl;Dr The existing answers are incomplete and in some ways dangerously misleading. Jerry can still be potentially defrauded by Tom, and even if the check is legitimately drawn and negotiable, Jerry may still experience delayed access to the funds. The funds sit in an account held by the issuing bank. As long as the bank has sufficient funds, the check does. However, there are significantly more factors that go into whether a check will be returned unpaid (\"\"bounce\"\"). If I hand you $5000 in cash, will you give me $5000 in cash? Probably, and you'd probably be pretty safe. How about I give you a $5000 draft check, will you give me $5000 in cash without doing anything except looking at it to verify the check? I hope not (Cash America sure wouldn't) but people sell expensive goods with the \"\"same as cash\"\" attitude. Remember: The only non-cash form of payment which cannot somehow be held, reversed or returned unpaid in the U.S. without consent of the receiving party is a payment order (a.k.a wire transfer)! The draft check is \"\"as good as cash\"\" in the sense that the money for a draft check is withdrawn from your account before the check is negotiated (deposited). This does NOT mean that a draft check will not bounce, so Jerry is NOT as secure in handing the goods to Tom as if Tom had handed him cash, as it is still a check. Jerry's bank will not receive the funds for Tom's draft check for an average 3 to 5 business days, same as a personal check. Jerry will probably have access to the first $5000 within two business days... provided that he deposits the draft check in person at his bank's branch or in a bank-owned ATM. In the United States, Regulation CC governs funds availability. Regarding official, draft, or tellers checks: \"\"If the customer desires next-day availability of funds from these checks, [your bank] may require use of a special deposit slip.\"\" Mobile deposit availability in the U.S. is NOT regulated in this way and will likely be subject to a longer hold on more, if not all, of the check! Draft checks, don't, as a habit, \"\"bounce\"\" in the colloquial sense of \"\"returned for insufficient funds.\"\" This is because they are prepaid and drawn upon a financial institution's account. Banks are insolvent far less frequently than other businesses or individuals. Draft checks, tellers checks, official checks, bank checks, etc CAN, however, be returned unpaid if one of the following is true: As an aside: an institution is not obligated to honor a stale dated check, but may do so at its discretion. If you have a personal check outstanding for over 6 months, it may still clear and potentially overdraw your account. In this case, contact your bank ASAP to process a reversal. The depositing bank mis-scans the check and the issuing bank refuses the resulting data. I have seen systems mis-read which data field is which, or its contents. Also, there is the possibility the image if the check will be illegible to the issuing bank. The draft check has been cancelled (stop paid). This can happen if: a) The check was fraudulently bought from the issuing bank using Tom's account b) Tom has completed an indemnification agreement that the check was lost or otherwise not used for its intended purpose, without fraud having occurred against Tom c) The draft check is escheated (paid to the state as unclaimed property). This case is a subset of case 1, but will lead to a different return reason stamped on the (image replacement document of) the check. The draft check was never any good in the first place. Because of the perception that draft checks are as good as cash (they're not but are a lot better than personal checks), forgery and attempted fraud is shockingly common. These aren't actually underwritten by a real bank, even if they appear to be. The only money \"\"in\"\" them is what the fraudster can get out of you. Jerry did not properly endorse the check before presenting it for deposit or otherwise negotiating it. In my time in banking, I most commonly saw cases 3 and 4. Unlike most counterfeit cash, case 3 will fool Jerry and Jerry's teller. Tom gets an immediate payout (a car, a wire transfer, a payday loan, etc) and Jerry's bank doesn't know the check isn't valid until they call the alleged issuing bank to verify its negotiability, or in the case of smaller checks into lower-risk accounts, it is simply returned unpaid as fraudulently drawn. To conclude: Call the alleged issuing bank's verification line before handing over the goods, always properly endorse your deposits, and address what happens if one does not receive or collect on prompt payment in your contracts.\"", "title": "" }, { "docid": "804a18fc851121a3975fb36daad078b8", "text": "A bank check is drawn on the bank itself. You gave the bank the funds backing that check at the time you purchased it. You can not get that money back except by returning the check to them. So, yes, effectively that check behaves like cash; the money us already gone from your account, and once you hand it over you can't claim it was forged or otherwise try to cancel the payment.", "title": "" } ]	[ { "docid": "6b6cdae0c954602c83294d03b2296053", "text": "I had a situation like this also. A client deposited an IRA check to his local P.O. prior to collection p/up, thinking this meant it would be postmarked April 15. It may have been picked up, but wasn't postmarked until the next day, and my firm refused to consider it as timely. I do remember discussing it w/my Retirement Services Dept. Maybe they made an exception for me and my client, but maybe not. I don't remember. Good luck.", "title": "" }, { "docid": "e9e8f1ee96ea1cf4023d0c344ae4d35d", "text": "The check clears when the receiving bank successfully pulled the money from the issuing account. However, the receiving bank may hold the money for an additional time before giving it to you. Sometimes this is done for good reasons (to prevent Check kiting) and sometimes this is about the bank having the money interest free for a bit, or just their own processing convenience.", "title": "" }, { "docid": "90f4a09fd47702b34fd698aa96b6fdb0", "text": "\"You can spend the money quite quickly. The problem is that if there is something wrong with the check, the bank will ask you for the money back. If the check is from a trusted source (a trusted friend, a business with good reputation etc.) that's fine. If the money is from an untrusted source, make sure that having to pay back the money doesn't get you into trouble. Since most people are honest, this is fine for a small amount, but if it's more than you can afford to pay back, don't spend it. A simple scam is that people send you checks, \"\"by mistake\"\" the check is for the wrong amount, say $910 instead of $190, and they ask you to send the difference back. So you put $910 into your account, send them $720, and six weeks later your bank asks for their $910 back. If someone pays you too much on a check and asks you to pay them the difference, you know it is a scam.\"", "title": "" }, { "docid": "dbc145e3299f98fd4a55859f02ebf037", "text": "So does a post-dated check have any valid use in a business or personal transaction? Does it provide any financial or legal protections at all? Yes, most definitely. You're writing a future date on the check, not past, to ensure that the check will not be deposited before that day. Keep in mind that this may change from place to place, since not every country has the same rules. In the US, for example, such trick would not work since the check may be presented any time and is not a limited obligation. However, in some other countries banks will not pay a check presented before the date written on it. While in the US the date on the check is the date on which it was (supposedly) written and as such is meaningless for obligation purposes, in many other countries the date on the check is the date on which the payment to be made, thus constitutes the start of the commitment and payment will not be made before that date. For example, in Canada: If you write a post-dated cheque, under the clearing rules of the Canadian Payments Association (CPA), your cheque should not be cashed before the date that is written on it. If the post-dated cheque is cashed early, you can ask your financial institution to put the money back into your account up to the day before the cheque should have been cashed.", "title": "" }, { "docid": "49f9299d2fe5b69530f968de19e39bf3", "text": "\"You withdrew the 'cash' portion, and will pay tax on it. How was the check \"\"another for move remaining to B\"\" issued? Was it payable to you? If so, it's too late, it's your money and the whole account was cashed out. If it was payable to B, you should have had it sent directly to their custodian, are you saying you still have that check? You might need to ask A to reissue the check to you, since you are no longer in the US. I'm not sure if you can roll it to an IRA at this point.\"", "title": "" }, { "docid": "a15dd254bdb1ceda9caf3bd9f6660f26", "text": "If you roll your funds from a 401k to an individual Vanguard account it will be in an IRA. Some people talk about IRA loans, but what is happening is that you are given a check for the value of the IRA and you have 60 days to deposit that full amount in another qualified account before being assessed a distribution penalty. The IRS also has rules to prohibit you from making several back-to-back rollovers to try to float the money for longer than 60 days.", "title": "" }, { "docid": "360fd146cd358cdd6280282e8f8165d2", "text": "If the check was payable to you, you had 60 days to deposit to an IRA. But, it needs to go into the same type of IRA as the 401(k) was. i.e. if the 401(k) was traditional, it goes into a traditional IRA, If 401(k) Roth, it goes into a Roth. The 20% is not the penalty. The penalty is 10% for early withdrawal. The 20% is the tax withholding. If the 401(k) had $1250, and they kept $250 for taxes, you'd want to deposit the full $1250 into the IRA. At tax time, you'll get the $250 credited to your taxes, and either owe less or get a higher refund.", "title": "" }, { "docid": "109ca3b612a0ed712240453010ca9c4f", "text": "This happened to me in the mid 90's. I wanted to withdraw enough cash from my account to buy a new car and they nearly panicked. I took a bank draft instead. I discovered afterward that they can require up to a week's notice for any withdrawl.", "title": "" }, { "docid": "4e67a63703b2ce3423d76eebfd689f7b", "text": "The bottom line is something in your story is not adding up. You had two checks one that is voided, and one that is not. Lets say they are both written against your account for $100. Lets also assume that have exactly $100 in your account. You give the Liquor Store the voided one, they give you $100, but when they attempt to cash the check at their bank they are denied and assessed a $20 fee. You spend the $100 they gave you; however, you still should have $100 in your account as the check was not cashed. You want to make things right with the liquor store. You should be able to withdraw the $100 you still have in the bank and give them that much. While they will still be out the $20 fee, that should make them feel much better about you as a customer. Tell them when you will be paid and that you will give them the $20 on that date. Then do so. The only way this problem is not solvable is that you spent the $100 that was left in the bank. In that case, the Liquor store is correct you stole the money. More accurately you spent money that wasn't yours.", "title": "" }, { "docid": "e6322e2300547799bdd4f0a0aa7076f2", "text": "\"Checks (in the US, anyway) are only good for six months after they have been written. After that. under the US Uniform Commerical Code they are considered \"\"stale checks\"\" and banks need not accept them. My experience is that they generally won't -- but you probably shouldn't count on that, either when figuring out whether to try depositing an old check or figuring out how much cash you need to keep in your checking account to cover recent stale checks. The check you now hold is certainly a statement of intent to pay you and thus is a useful document to supplement other evidence that they still owe you the money -- but since checks can be cancelled and/or a replacement check may have been issued, its value for that purpose may be limited. You can try depositing it and see what happens. If that doesn't work (or you don't want to bother trying it) you can contact the retirement plan, point out that this check went uncashed, and ask them to send you a replacement. If they haven't already done so (you might want to check your own records for that), there shouldn't be any problem with this. (Note: Many business checks have a statement printed on them that they're only good for 90 days or so. If yours does, you can skip trying to cash it; just contact the retirement plan offices.)\"", "title": "" }, { "docid": "97330482e6e670d33a0ce5701967eabd", "text": "\"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.\"", "title": "" }, { "docid": "9bb78deeb91af610c9616f3121904d4e", "text": "\"First, congratulations on the paycheck! :-) On the holds: Is it possible that by allowing your account balance to go negative (into overdraft) that you triggered such treatment of your account? Perhaps the bank is being more cautious with your account since that happened. Just how long did you have their $150 on hold? ;-) Or, perhaps it's not you specifically but the bank is being more cautious due to credit conditions that have been prevalent these last years. Consider: allowing you to cash a check immediately – when it technically hasn't cleared yet – is a form of credit. Maybe it isn't you they don't trust well enough yet, but the company that issued the check? Checks bounce, and not by fault of the depositor. I once had a new account, years ago, and discovered a 5 day hold on deposits. The irony was it was a check drawn on the same bank! I called my banker and asked about it – and suggested I'd take my business back to my old bank. I was in the process of applying for a mortgage with the new bank. Holds were removed. But you may have some trouble with the \"\"I'll walk\"\" technique given the climate and your recent overdraft situation and no leverage – or if you do have some leverage, consider using it. But before you assume anything, I would, as JohnFx suggested, ask your bank about it. Pay your branch a visit in person and talk to the manager. Phone calls to customer service may be less successful. If it's not a big issue and more a minor technical policy one, the bank may remove the holds. If they won't, the manager ought to tell you why, and what you can do to solve it eventually.\"", "title": "" }, { "docid": "990c695c06f83b04293bc55ff1980a6d", "text": "I suspect @SpehroPefhany is correct and that your bank will cash a check from the US Department of the Treasury. Especially since they're the same ones who guarantee the U.S. Dollar. They may hold the funds until the check clears, but I think you'll have good luck going through your bank. Of course, fees and exchange rate are a factor. Consider browsing the IRS and US Treasury Department websites for suggestions/FAQs. I suggest you line up a way to cash it, and make sure there's enough left after fees and exchange rate and postage to get the check that the whole process is worth it, all before you ask it to be shipped to you. If there's no way to do it through your bank, through a money exchange business (those at the airport come to mind) or through your government (postal bank?), and the check is enough that you're willing to go through some trouble, then you should look into assigning power of attorney for this purpose. I don't know if it is possible, but it might be worth looking into. Look for US based banks in your area.", "title": "" }, { "docid": "de3465af8fb591518d665a2084219520", "text": "One's paycheck typically has a YTD (year to date) number that will end on the latest check of the year. I am paid bi-weekly, and my first 2012 check was for work 12/25 - 1/7. So, for my own balance sheet, brokerage statements and stock valuations end 12/31, but my pay ended 12/24. And then a new sheet starts.", "title": "" }, { "docid": "8c0ef6f40ab8b479d6fb041cc7102d7d", "text": "It depends on a couple of things. One is your age -- if you're recently out of college that's totally fine; if you've been a professional for a long time then you may want to go a bit more formal. It also depends on the kind of investment firm and how client-facing the role / firm is. For example, I used to be at a firm where interviewing in shorts and a t-shirt would've been completely acceptable but I wouldn't suggest that at a white-shoe bank.", "title": "" } ]	fiqa
230f99e2a217ab2f2114064baa2ef2a6	Where to start with personal finance?	[ { "docid": "2525b805740b3acf6455665246c8a72e", "text": "\"First thing I'd say is don't start with investing. The foundation of solid finances is cash flow. Making more than you spend, reliably; knowing where your money goes; having a system that works for you to make sure you make more than you spend. Until you have that, your focus may as well be on getting there, because you can't fix much else about your finances until you fix this. A number you want to know is your percentage of income saved, and a good goal for that is about 15%, with 10-12% going to retirement savings and the rest to shorter-term goals and emergency fund and so forth. (Of course the right percentage here depends on your goals and situation, but for most people this is a kind of minimum savings rate to be in good shape.) Focus on your savings rate. This is your profitability, if you view yourself as a business. If it's crappy or negative, your finances will be a mess. Two ways to improve it are to spend less or to improve your earnings power. Doing both is even better. The book Your Money or Your Life by Dominguez and Robin is good for showing how to obsessively focus on cash flow, even though you may not share their zeal for early retirement. A simpler exercise than what they recommend: take 3 months of your checking and credit card statements, go through each expenditure and put them in a spreadsheet column, SUM() that column. Then add up 3 months of after-tax paychecks. Divide both numbers by three and compare. (The 3 months is to average out your spending, which probably varies a lot by month.) After positive cash flow and savings rate, the next thing I'd go through is insurance. Risk management for what you have. This can include checking you have all the important insurance coverages (homeowner's/renter's, auto, potentially umbrella, term life, disability, and of course health insurance, are some highlights); and also adjusting all your policies to be most cost-effective, which usually means raising the deductible if you have a good emergency fund. Often you can raise the deductible on policies you have, and use the savings to add more catastrophe coverage (such as term life if you didn't have it, or boosting the liability protection on your homeowner's, or whatever). Remember, cover catastrophes as cheaply and comprehensively as possible, but don't worry about reimbursement for non-catastrophic expenses. I like this book, Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn, because it covers all the main personal finance topics, not just investing; and because it is smart and simple. All the main stuff to think about is in the one book and the advice is solid and uncomplicated. Investing can truly be dead easy; most people would be fine with this advice: Honestly, I do micro-optimize and undermine my investing, and I'm guessing most people on this forum do. But it's not something I could defend objectively as a good use of time. It probably is necessary to do some reading to feel financially literate and confident in an investment plan, but the reading isn't really because a good plan is complicated, it's more to understand all the complicated things that you don't need to do, since that's how you'll know not to do them. ;-) Especially when salespeople and publications and TV are telling you over and over and over that you need to know a bunch of crap and do a bunch of things. People who have a profitable \"\"business of me\"\" are the ones who end up with a lot of money. Not people who spend a lot of time screwing with investments. (People who get rich investing invest professionally - as their \"\"business of me\"\" - they don't goof around with their 401k after work.) Financial security is all about your savings rate, i.e. your personal profitability. No shortcuts, other than lotteries and rich uncles.\"", "title": "" }, { "docid": "5fac573afe5b5ce258d69594d7a172a9", "text": "My reading list for someone just getting into personal finance would include the following I know it's a bunch but I'm trying to cover a few specific things. Yeah it's a bit of reading, but lets face it, nobody is going to care as much about your money as YOU do, and at the very least this kind of knowledge can help fend off a 'shark attack' by someone trying to sell you something not because it's best for you, but because it earns them a fat commission check. Once you've covered those, you have a good foundation, and oh lord there's so many other good books that you could read to help understand more about money, markets etc.. Personally I'd say hit this list, and just about anything on it, is worth your time to read. I've used publishers websites where I could find them, and Amazon otherwise.", "title": "" }, { "docid": "732b1d87850d18987f69ce516b933752", "text": "\"This Stack Exchange site is a nice place to find answers and ask questions. Good start! Moving away from the recursive answer... Simply distilling personal finance down to \"\"I have money, I'll need money in the future, what do I do\"\", an easily digestible book with how-to, multi-step guidelines is \"\"I Will Teach You To Be Rich\"\". The author talks about setting up the accounts you should have, making sure all your bills are paid automatically, saving on the big things and tips to increase your take home pay. That link goes to a compilation page on the blog with many of the most fundamental articles. However, \"\"The World’s Easiest Guide To Understanding Retirement Accounts\"\" is a particularly key article. While all the information is on the free blog, the book is well organized and concise. The Simple Dollar is a nice blog with frugal living tips, lifestyle assessments, financial thoughts and reader questions. The author also reviews about a book a week. Investing - hoping to get better returns than savings can provide while minimizing risk. This thread is an excellent list of books to learn about investing. I highly recommend \"\"The Bogleheads' Guide to Investing\"\" and \"\"The Only Investment Guide You'll Ever Need\"\". The world of investment vehicles is huge but it doesn't have to be complicated once you ignore all the fads and risky stuff. Index mutual funds are the place to start (and maybe end). Asset allocation and diversification are themes to guide you. The books on that list will teach you.\"", "title": "" }, { "docid": "798575a817d64f67b98a243772f5378a", "text": "First of all, make sure you have all your credit cards paid in full -the compounding interests on those can zero out returns on any of your private investments. Fundamentally, there are 2 major parts of personal finance: optimizing the savings output (see frugal blogs for getting costs down, and entrepreneur sites for upping revenues), and matching investment vehicles to your particular taste of risk/reward. For the later, Fool's 13 steps to invest provides a sound foundation, by explaining the basics of stocks, indexes, long-holding strategy, etc. A full list Financial instruments can be found on Wikipedia; however, you will find most of these to be irrelevant to your goals listed above. For a more detailed guide to long-term strategies on portfolio composition, I'd recommend A Random Walk Down Wall Street: The Time-tested Strategy for Successful Investing. One of the most handy charts can be found in the second half of this book, which basically outlines for a given age a recommended asset allocation for wealth creation. Good luck!", "title": "" }, { "docid": "533488b0b6b3b3b990e071eea3f3658b", "text": "Personal finance is a fairly broad area. Which part might you be starting with? From the very basics, make sure you understand your current cashflow: are you bank balances going up or down? Next, make a budget. There's plenty of information to get started here, and it doesn't require a fancy piece of software. This will make sure you have a deeper understanding of where your money is going, and what is it being saved for. Is it just piling up, or is it allocated for specific purchases (i.e. that new car, house, college tuition, retirement, or even a vacation or a rainy day)? As part of the budgeting/cashflow exercise, make sure you have any outstanding debts covered. Are your credit card balances under control? Do you have other outstanding loans (education, auto, mortgage, other)? Normally, you'd address these in order from highest to lowest interest rate. Your budget should address any immediate mandatory expenses (rent, utilities, food) and long term existing debts. Then comes discretionary spending and savings (especially until you have a decent emergency fund). How much can you afford to spend on discretionary purchases? How much do you want to be able to spend? If the want is greater than the can, what steps can you take to rememdy that? With savings you can have a whole new set of planning to consider. How much do you leave in the bank? Do you keep some amount in a CD ladder? How much goes into retirement savings accounts (401k, Roth vs. Traditional IRA), college savings accounts, or a plain brokerage account? How do you balance your overall portfolio (there is a wealth of information on portfolio management)? What level of risk are you comfortable with? What level of risk should you consider, given your age and goals? How involved do you want to be with your portfolio, or do you want someone else to manage it? Silver Dragon's answer contains some good starting points for portfolio management and investing. Definitely spend some time learning the basics of investing and portfolio management even if you decide to solicit professional expertise; understanding what they're doing can help to determine earlier whether your interests are being treated as a priority.", "title": "" }, { "docid": "b0514be3d4f7c82344d9388b34c62164", "text": "The Money Girl (Quick and Dirty Tips for a richer life) Podcast is a pretty good source for this type of information. Some Recent Topics:", "title": "" }, { "docid": "1cbc480e84ae4fc8dad1b073d8efd72d", "text": "\"I've recommended this book a few times on this site, and I'm going to do it again. Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner Most of the personal finance advice books and blogs I have found focus too much on investing, or are more about \"\"lifestyle\"\" than finances, and left me unimpressed. I like this book because it covers most of the major personal finance topics (budgets, rainy-day fund, insurance, retirement, and non-retirement investment). I have not found another book that covers the topics as concisely as this one. It is no-nonsense, very light reading. Even if you are not a book person, you can finish it in a weekend. It is really geared for the young person starting their career. Not the most current book (pre real-estate boom), but the advice is still sound. Keep in mind that is is starting point, not the ultimate answer to all financial questions.\"", "title": "" } ]	[ { "docid": "b272698e1679609d91d03ae6740f5359", "text": "I started my career over 10 years ago and I work in the financial sector. As a young person from a working class family with no rich uncles, I would prioritize my investments like this: It seems to be pretty popular on here to recommend trading individual stocks, granted you've read a book on it. I would thoroughly recommend against this, for a number of reasons. Odds are you will underestimate the risks you're taking, waste time at your job, stress yourself out, and fail to beat a passive index fund. It's seriously not worth it. Some additional out-of-the box ideas for building wealth: Self-serving bias is pervasive in the financial world so be careful about what others tell you about what they know (including me). Good luck.", "title": "" }, { "docid": "d4ad0c93e416a8ca9c94448e846829a7", "text": "Also, my wealth manager doesn't like to discuss my money with me. To some extent, I understand this because finances are not my forte This is akin to porn surfing all day at your job instead of writing code, fire him ASAP. For now I would stick it in a bank account until you are comfortable and understand the investments you are purchasing. Here are some options to consider: The last one is tricky. You might have to interview several in order to find that one gem. With you being so young it is unlikely any of your friends have a need for such a service. I would concentrate on asking older work colleagues or friends of your parents for recommendations. Ask if they are educated by their adviser. In the end it would really pay for you to educate yourself about finances. No one can quite do as good as a job as you can in this area. You recognize that there was a problem with your current guy, that shows wisdom. If you have an interest in this area, I would recommend attending a Financial Peace University class. All my kids (about your age and older) are required to take it. It will help you navigate debt, mortgages, insurance, and investing and will cost you about $100. If you don't learn enough the first time, and you won't, you can repeat the course as many times as you wish for no additional cost.", "title": "" }, { "docid": "489d1e134de0835ce9a4167d33cb6f26", "text": "Chances are since college is your next likely step I would recommend saving up for it. Start building an emergency fund. Recommended $1,000 minimum. To start building your credit rating (when 18) get a low interest low limit credit. Pay off the balance every month. Starting to build your credit rating now can save you hundreds of thousands when buying a house over the course of paying it off. ie. cheaper interest rate. As for investing, the sooner you can get started the better. Acquire preferred/stocks/bonds/REITs/ETFs/etc that pay you to own them (they pay you dividends monthly/quarterly/etc). Stick with solid stocks that have a history of consistently increasing their dividends over time and that are solid companies. I personally follow the work/advice of Derek Foster. He's not a professional but he retired at 34. His first book (Stop working - Here's how you can) is great and recommend it to anyone who is looking to get started. Also check out Ramit Sethi's blog I Will Teach You to be Rich. He focuses on big wins which save you a lot over the long term. He's also got some great advice for students as well. Best of luck!", "title": "" }, { "docid": "9b69b3a68a1a82649455e15faa0085ff", "text": "You don't say your level of consumer debt. You don't say how much of an emergency fund you have. If you have debt, pay it off before you invest. If you don't have an emergency fund (X months' expenses, pick your own X) get that before investing. If you have neither, get a small emergency fund, and then throw as much as you can to getting rid of debt. Beyond that, look for prudent investments. They're not the same as conservative investments. To know what's prudent, learn about the ones you listed and what determines their prices. Learn how or why they go up or down in value.", "title": "" }, { "docid": "7a20f3ccb8348112ffffc201f808ff68", "text": "\"I think \"\"Rich Dad Poor Dad\"\" is a good read for understanding the basics of personal finance in a non-technical format before actually starting investing.\"", "title": "" }, { "docid": "358304736342d36c627f959472de9729", "text": "Communicate. I would recommend taking a course together on effective communications, and I would also suggest taking a course on budgeting and family financial planning. You need to be able to effectively communicate your financial plans and goals, your financial actions, and learn to both be honest and open with your partner. You also need to be certain that you come to an agreement. The first step is to draft a budget that you both agree to follow. The following is a rough outline that you could use to begin. There are online budgeting tools, and a spreadsheet where you can track planned versus actuals may better inform your decisions. Depending upon your agreed priorities, you may adjust the following percentages, Essentials (<50% of net income) Financial (>20%) Lifestyle (<30%) - this is your discretionary income, where you spend on the things you want Certain expense categories are large and deserve special advice. Try to limit your housing costs to 25% of your income, unless you live in a high-cost/rent area (where you might budget as high as 35%). Limit your expenses for vehicles below 10% of income. And expensive vehicle might be budgeted (partly) from Lifestyle. Limiting your auto payment to 5% of your income may be a wise choice (when possible). Some families spend $200-300/month on cable TV, and $200-300/month on cellphones. These are Lifestyle decisions, and those on constrained budgets might examine the value from those expenses against the benefit. Dining out can be a budget buster, and those on constrained budgets might consider paying less for convenience, and preparing more meals at home. An average family might spend 8-10% of their income on food. Once you have a budget, you want to handle the following steps, Many of the steps are choices based upon your specific priorities.", "title": "" }, { "docid": "69cbc69ac62683bd3f6e8483896dcb81", "text": "\"You can't get started investing. There are preliminary steps that must be taken prior to beginning to invest: Only once these things are complete can you think about investing. Doing so before hand will only likely lose money in the long run. Figure these steps will take about 2.5 years. So you are 2.5 years from investing. Read now: The Total Money Makeover. It is full of inspiring stories of people that were able to turn things around financially. This is good because it is easy to get discouraged and believe all kind of toxic beliefs about money: The little guy can't get ahead, I always will have a car payment, Its too late, etc... They are all false. Part of the book's resources are budgeting forms and hints on budgeting. Read later: John Bogle on Investing and Bogle on Mutual Funds One additional Item: About you calling yourself a \"\"dummy\"\". Building personal wealth is less about knowledge and more about behavior. The reason you don't have a positive net worth is because of how you behaved, not knowledge. Even sticking a small amount in a savings account each paycheck and not spending it would have allowed you to have a positive net worth at this point in your life. Only by changing behavior can you start to build wealth, investing is only a small component.\"", "title": "" }, { "docid": "f47bdeb2d0972bb69521a13551d181af", "text": "\"You don't state where you are, so any answers to this will by necessity be very general in nature. How many bank accounts should I have and what kinds You should have one transaction account and one savings account. You can get by with just a single transaction account, but I really don't recommend that. These are referred to with different names in different jurisdictions, but the basic idea is that you have one account where money is going in and out (the transaction account), and one where money goes in and stays (the savings account). You can then later on, as you discover various needs, build on top of that basic foundation. For example, I have separate accounts for each source of money that comes into my personal finances, which makes things much easier when I sit down to fill out the tax forms up to almost a year and a half later, but also adds a bit of complexity. For me, that simplicity at tax time is worth the additional complexity; for someone just starting out, it might not be. (And of course, it is completely unnecessary if you have only one source of taxable income and no other specific reason to separate income streams.) how much (percentage-wise) of my income should I put into each one? With a single transaction account, your entire income will be going into that account. Having a single account to pay money into will also make life easier for your employer. You will then have to work out a budget that says how much you plan to spend on food, shelter, savings, and so on. how do I portion them out into budgets and savings? If you have no idea where to start, but have an appropriate financial history (as opposed to just now moving into a household of your own), bring out some old account statements and categorize each line item in a way that makes sense to you. Don't be too specific; four or five categories will probably be plenty. These are categories like \"\"living expenses\"\" (rent, electricity, utilities, ...), \"\"food and eating out\"\" (everything you put in your mouth), \"\"savings\"\" (don't forget to subtract what you take out of savings), and so on. This will be your initial budget. If you have no financial history, you are probably quite young and just moving out from living with your parents. Ask them how much might be reasonable in your area to spend on basic food, a place to live, and so on. Use those numbers as a starting point for a budget of your own, but don't take them as absolute truths. Always have a \"\"miscellaneous expenses\"\" or \"\"other\"\" line in your budget. There will always be expenses that you didn't plan for, and/or which don't neatly fall into any other category. Allocate a reasonable sum of money to this category. This should be where you take money from during a normal month when you overshoot in some budget category; your savings should be a last resort, not something you tap into on a regular basis. (If you find yourself needing to tap into your savings on a regular basis, adjust your budget accordingly.) Figure out based on your projected expenses and income how much you can reasonably set aside and not touch. It's impossible for us to say exactly how much this will be. Some people have trouble setting aside 5% of their income on a regular basis without touching it; others easily manage to save over 50% of their income. Don't worry if this turns out a small amount at first. Get in touch with your bank and set up an automatic transfer from your transaction account to the savings account, set to recur each and every time you get paid (you may want to allow a day or two of margin to ensure that the money has arrived in your account before it gets taken out), of the amount you determined that you can save on a regular basis. Then, try to forget that this money ever makes it into your finances. This is often referred to as the \"\"pay yourself first\"\" principle. You won't hit your budget exactly every month. Nobody does. In fact, it's more likely that no month will have you hit the budget exactly. Try to stay under your budgeted expenses, and when you get your next pay, unless you have a large bill coming up soon, transfer whatever remains into your savings account. Spend some time at the end of each month looking back at how well you managed to match your budget, and make any necessary adjustments. If you do this regularly, it won't take very long, and it will greatly increase the value of the budget you have made. Should I use credit cards for spending to reap benefits? Only if you would have made those purchases anyway, and have the money on hand to pay the bill in full when it comes due. Using credit cards to pay for things is a great convenience in many cases. Using credit cards to pay for things that you couldn't pay for using cash instead, is a recipe for financial disaster. People have also mentioned investment accounts, brokerage accounts, etc. This is good to have in mind, but in my opinion, the exact \"\"savings vehicle\"\" (type of place where you put the money) is a lot less important than getting into the habit of saving regularly and not touching that money. That is why I recommend just a savings account: if you miscalculate, forgot a large bill coming up, or for any other (good!) reason need access to the money, it won't be at a time when the investment has dropped 15% in value and you face a large penalty for withdrawing from your retirement savings. Once you have a good understanding of how much you are able to save reliably, you can divert a portion of that into other savings vehicles, including retirement savings. In fact, at that point, you probably should. Also, I suggest making a list of every single bill you pay regularly, its amount, when you paid it last time, and when you expect the next one to be due. Some bills are easy to predict (\"\"$234 rent is due the 1st of every month\"\"), and some are more difficult (\"\"the electricity bill is due on the 15th of the month after I use the electricity, but the amount due varies greatly from month to month\"\"). This isn't to know exactly how much you will have to pay, but to ensure that you aren't surprised by a bill that you didn't expect.\"", "title": "" }, { "docid": "8dbae2056c5926e326a8d52d42980146", "text": "\"What I would do, in this order: Get your taxes in order. Don't worry about fancy tricks to screw the tax man over; you've already admitted that you're literally making more money than you know what to do with, and a lot of that is supported, one way or another, by infrastructure that's supported by tax money. Besides, your first priority is to establish basic security for yourself and your family. Making sure you won't be subjected to stressful audits is an important part of that! Pay off any and all outstanding debts you may have. This establishes a certain baseline standard of living for you: no matter what unexpected tragedies may come up, at least you won't have to deal with them while also keeping the wolves at bay at the same time! Max out a checking account. I believe the FDIC maximum insured value is $250,000. Fill 'er up, get a debit card, and just sit on it. This is a rainy day fund, highly liquid and immediately usable in case you lose your income. Put at least half of it into an IRA or other safe investments. Bonds and reliable dividend-paying stocks are strongly preferred: having money is good but having income is much better, especially in retirement! Quality of life. Splurge a little. (Emphasis on a little!) Look around your life. There are a few things that it would be nice if you just had, but you've never gotten around to getting. Pick up a few of them, but don't go overboard. Spending too much too quickly is a good way to end up with no money and no idea what happened to it. Also, note that this isn't just for you; family members deserve some love too! Charitable giving. If you have more money than you know what to do with, there are plenty of people out there who know exactly what to do--try to go on living and build a basic life for themselves--but have no money with which to do so. Do your research. Scam charities abound, as do more-or-less legitimate ones who actually do help those in need, but also end up sucking up a surprisingly high percentage of donations for \"\"administrative costs\"\". Try and avoid these and send your money where it will actually do some good in the world. Reinvest in yourself. You're running a business. Make sure you have the best tools and training you can afford, now that you can afford more!\"", "title": "" }, { "docid": "da63d6102be076a87a4c0fdbf7642adc", "text": "There are a lot of great suggestions here on how to get and keep your finances in shape. But I have to say, I disagree with some on the starting point. The first step to living frugal is to convince yourself that it is worth it. That it is the way to go and the way you want to manage your finances. As @DrFredEdison and @fennec stated, the reason we frugal people don't spend wildly is because of what we believe. So I would suggest buying a book or video/audio series from someone like Dave Ramsey who will encourage and motivate you to spend wisely and show you practical ways to get started. With that said I do agree with a lot of the practical suggestions that have been given here.", "title": "" }, { "docid": "247d4d9b026456511fe6521a68b0114b", "text": "Can someone recommend a textbook (or other resource) that provides a rigorous introduction to finance for someone with a mathematical background? Ideally, something that provides both a theoretical background for the pricing of assets generally and moves to mores specific instruments with quantitative exercises along the way?", "title": "" }, { "docid": "a6fed25c052bb6f17e2cefe0c453afae", "text": "\"Make a list of all your expenses. I use an Excel spreadsheet but you can do it on the back of a napkin if you prefer. List fixed expenses, like rent, loan payments, insurance, etc. I include giving to church and charity as fixed expenses, but of course that's up to you. List regular but not fixed expenses, like food, heat and electricity, gas, etc. Come up with reasonable average or typical values for these. Keep records for at least a few months so you're not just guessing. (Though remember that some will vary with the season: presumably you spend a lot more on heat in the winter than in the summer, etc.) You should budget to put something into savings and retirement. If you're young and just starting out, it's easy to decide to postpone retirement savings. But the sooner you start, the more the money will add up. Even if you can't put away a lot, try to put away SOMETHING. And if you budget for it, you should just get used to not having this money to play with. Then total all this up and compare to your income. If the total is more than your income, you have a problem! You need to find a way to cut some expenses. I won't go any further with that thought -- that's another subject. Hopefully you have some money left over after paying all the regular expenses. That's what you have to play with for entertainment and other non-essentials. Make a schedule for paying your bills. I get paid twice a month, and so I pay most of my bills when I get a paycheck. I have some bills that I allocate to the first check of the month and some to the second, for others, whatever bills came in since my last check, I pay with the current check. I have it arranged so each check is big enough to pay all the bills that come from that check. If you can't do that, if you'll have a surplus from one check and a shortage from the next, then be sure to put money aside from the surplus check to cover the bills you'll pay at the next pay period. Always pay your bills before you spend money on entertainment. Always have a plan to pay your bills. Don't say, \"\"oh, I'll come up with the money somehow\"\". If you have debt -- student loans, car loans, etc -- have a plan to pay it off. One of the most common traps people fall into is saying, \"\"I really need to get out of debt. And I'm going to start paying off my debt. Next month, because this month I really want to buy this way cool toy.\"\" They put off getting out of debt until they have frittered away huge amounts of money on interest. Or worse, they keep accumulating new debt until they can't even pay the interest.\"", "title": "" }, { "docid": "6435f24f13a0fde33b0d612aa3ee4b3d", "text": "Firstly, make sure annual income exceeds annual expenses. The difference is what you have available for saving. Secondly, you should have tiers of savings. From most to least liquid (and least to most rewarding): The core of personal finance is managing the flow of money between these tiers to balance maximizing return on savings with budget constraints. For example, insurance effectively allows society to move money from savings to stocks and bonds. And a savings account lets the bank loan out a bit of your money to people buying assets like homes. Note that the above set of accounts is just a template from which you should customize. You might want to add in an FSA or HSA, extra loan payments, or taxable brokerage accounts, depending on your cash flow, debt, and tax situation.", "title": "" }, { "docid": "44eb02cae8302ba335d2032af7a43460", "text": "You can only lose your 7%. The idea that a certain security is more volatile than others in your portfolio does not mean that you can lose more than the value of the investment. The one exception is that a short position has unlimited downside, but i dont think there are any straight short mutual funds.", "title": "" }, { "docid": "972477431e58893d9d8e5cb7f9dea618", "text": "\"Most companies are taken over. One can reasonably guess that company X will be taken over for a price P, at some future point in time. Then the company has a value today, that is less than price P, by a large enough margin so that the investor will likely \"\"make out\"\" when the company finally is taken over at some unknown point in time. The exception is a company like Microsoft or Apple that basically grow too large to be taken over. But then they eventually start paying dividends when they become \"\"mature.\"\" Again, the trick, during the non-dividend paying period (e.g. ten or fifteen years ago) is to guess what dividends will be paid in some future time, and price the stock low enough today so that it will be worthwhile for the buyer.\"", "title": "" } ]	fiqa
c29536b0aff6de712a96eb8d3421bed6	Making $100,000 USD per month, no idea what to do with it	[ { "docid": "12886aacfe31a414def8e77d3fa27c33", "text": "\"I know your \"\"pain\"\". But don't worry about investing the money right now -- leave it uninvested in the short term. You have other stuff you need to school up on. Investment will come, and it's not that hard. In the short term, focus on taxes. Do some \"\"mock\"\" run-throughs of your expected end-of-year taxes (use last year's forms if this year's aren't available yet). Must you pay estimated tax periodically throughout the year? The tax authorities charge hefty penalties for \"\"forgetting\"\" to do it or \"\"not knowing you have to\"\". Keep an eye out for any other government gotchas. Do not overlook this! This is the best investment you could possibly make. Max out your government sanctioned retirement funds - in the US we have employer plans like 401K or Keogh, and personal plans like the IRA. This is fairly straightforward. Avoid any \"\"products\"\" the financial advisors want to sell you, like annuities. Also if you have the Roth type IRA, learn the difference between that and a normal one. There are some tricks you can do if you expect to have an \"\"off\"\" year in the future. Charitable giving is worth considering at high income levels. Do not donate directly to charities. Instead, use a Donor Advised Fund. It is a charity of its own, which accepts your tax deductible donation, and holds it. You take the tax deduction that year. Then later, when the spirit moves, tell your DAF to donate to the charity of your choice. This eliminates most of the headaches associated with giving. You don't get on the soft-hearted sucker lists, because you tell the DAF not to disclose your address, phone or email. You don't need the charity's acknowledgement letter for your taxes, since your donation was actually to the DAF. It shuts down scams and non-charities, since the DAF confirms their nonprofit status and sends the check to their official address only. (This also bypasses those evil for-profit \"\"fundraising companies\"\".) It's a lot simpler than they want you to know. So-called \"\"financial advisors\"\" are actually salesmen working on commission. They urge you to invest, because that's what they sell. They sell financial products you can't understand because they are intentionally unduly complex, specifically to confuse you. They are trying to psych you into believing all investments are too complex to understand, so you'll give up and \"\"just trust them\"\". Simple investments exist. They actually perform better since they aren't burdened down with overhead and internal complexity. Follow this rule: If you don't understand a financial product, don't buy it. But seriously, do commit and take the time to learn investment. You are the best friend your money will have - or its worst enemy. The only way to protect your money from inflation or financial salesmen is to understand investment yourself. You can have a successful understanding of how to invest from 1 or 2 books. (Certainly not everything; those ingenious salesmen keep making the financial world more complicated, but you don't need any of that junk.) For instance how do you allocate domestic stocks, foreign stocks, bonds, etc. in an IRA if you're under 40? Well... how do smaller universities invest their endowments? They all want the same thing you do. If you look into it, you'll find they all invest about the same. And that's quite similar to the asset mix Suze Orman recommends for young people's IRAs. See? Not that complicated. Then take the time to learn why. It isn't stupid easy, but it is learnable. For someone in your tier of income, I recommend Suze Orman's books. I know that some people don't like her, but that segues into a big problem you'll run into: People have very strong feelings about money. Intense, irrational emotions. People get it from their parents or they get sucked into the \"\"trust trap\"\" I mentioned with so-called financial advisors. They bet their whole savings on whatever they're doing, and their ego is very involved. When they push you toward their salesman or his variable annuity, they want you to agree they invested well. So you kinda have to keep your head low, not listen too much to friends/family, and do your research for yourself. John Bogle's book on mutual funds is a must-read for picking mutual funds and allocating assets. Certain financial advisors are OK. They are \"\"fee only\"\" advisors. They deal with all their customers on a fee-only basis, and are not connected to a company which sells financial products. They will be happy for you to keep your money in your account at your discount brokerage, and do your own trading on asset types (not brands) they recommend. They don't need your password. Here's what not to do: A good friend strongly recommended his financial advisor. In the interview, I said I wanted a fee-only advisor, and he agreed to charge me $2000 flat rate. Later, I figured out he normally works on commissions, because he was selling me the exact same products he'd sell to a commission (free advice) customer, and they were terrible products of course. I fired him fast.\"", "title": "" }, { "docid": "aee0a5e85294795dadddd5d26a81f36f", "text": "\"If you are making that much, don't waste your time here. Pay a few hundred bucks for a consultation with a fee-only certified financial planner. (Not one of the \"\"free\"\" services, which make their money via commissions on sales and are thus motivated to direct you to whatever gets them the largest commission.) In fact, in your bracket you might want to consider hiring someone to manage your portfolio for you on an ongoing basis. A good one will start by asking what your goals are, over what timeframe, and will help you determine how you feel about risk and volatility. From that information they will be able to suggest a strategic mix of kinds of investments which is balanced for those constraints.\"", "title": "" }, { "docid": "5e5444f4bbe5b36d3ea14dcbce9d3bd6", "text": "If you already have 500k in a Schwab brokerage account, go see your Schwab financial consultant. They will assign you one, no charge, and in my experience they're sharp people. Sure, you can get a second opinion (or even report back here, maybe in chat?), but they will get you started in the right direction. I'd expect them to recommend a lot of index funds, just a bit of bonds or blended funds, all weighted heavily toward equities. If you're young and expect the income stream to continue, you can be fairly aggressive. Ask about the fees the entire way and you'll be fine.", "title": "" }, { "docid": "19db6fb40b0e627a0ddfc56aeb1268a1", "text": "\"I would be more than happy to find a good use for your money. ;-) Well, you have a bunch of money far in excess of your regular expenses. The standard things are usually: If you are very confused, it's probably worth spending some of your windfall to hire professional help. It beats you groping in the dark and possibly doing something stupid. But as you've seen, not all \"\"professionals\"\" are equal, and finding a good one is another can of worms. If you can find a good one, it's probably worth it. Even better would be for you to take the time and thoroughly educate yourself about investment (by reading books), and then make a knowledgeable decision. Being a casual investor (ie. not full time trader) you will likely arrive, like many do, at a portfolio that is mostly a mix of S&P ETFs and high grade (eg. govt and AAA corporate) bonds, with a small part (5% or so) in individual stock and other more complicated securities. A good financial advisor will likely recommend something similar (I've had good luck with the one at my credit union), and can guide you through the details and technicalities of it all. A word of caution: Since you remark about your car and house, be careful about upgrading your lifestyle. Business is good now and you can afford nicer things, but maybe next year it's not so good. What if you are by then too used to the high life to give it up, and end up under mountains of debt? Humans are naturally optimistic, but be wary of this tendency when making assumptions about what you will be able to afford in the future. That said, if you really have no idea, hey, take a nice vacation, get an art tutor for the kids, spend it (well, ideally not all of it) on something you won't regret. Investments are fickle, any asset can crash tomorrow and ruin your day. But often experiences are easier to judge, and less likely to lose value over time.\"", "title": "" }, { "docid": "1d69e88a0a00c09d48002d53a63f696c", "text": "You want CFP or CFA who is also a fiduciary, meaning that by law they have to put your interests ahead of their own. Financial planners who are not fiduciaries can, and often do, recommend investment vehicles that earn them the most commission with little regard of your financial goals. If you already have $500,000 to invest and racking up $100,000 a month you probably qualify for most institutions private client programs. That means that the firm/advisor will look at your financial situation and come up with a custom-tailored investment plan for you which should also include tax planning. I would start with whatever financial institutions you already work with - Schwab, your bank etc. Set up a meeting and see what they have to offer. Make sure you interrogate them about their fees, their licenses/certifications and above all if they are a fiduciary.", "title": "" }, { "docid": "1c226136c6bf8cdfd3f364a99f6e953c", "text": "In my opinion, I would: If the income is from this year, you can tax shelter $59,000 plus somewhere between $50,000 and $300,000 depending on age, in a 401(k) and defined benefit plan. This will take care of the current tax burden. Afterwards, set aside your remaining tax liability in cash. The after-tax money should be split into cash and the rest into assets. The split depends on your level of risk tolerance. Build a core portfolio using highly liquid and non-correlated ETFs (think SPY, TLT, QQQ, ect.). Once these core positions are locked in. Start lowering your basis by systematically selling a 1 standard deviation call in the ETF per 100 units of underlying. This will reduce your upside, extend your breakeven, and often yield steady income. Similarly, you can sell 1 standard deviation iron condors should the VIX be high enough. Point is, you have the money to deploy a professional-type, systematic strategy that is non-correlated, and income generating.", "title": "" }, { "docid": "666ba9b406bf3f33767683b262f53f3e", "text": "You already did the leg work by putting your money in a Schwab account. They have some of the lowest fees on index funds you can buy. I would keep things dead simple. Decide if you want some of it to be an IRA or not, and then plow your funds into a broad stock only index fund such as SCHB, SCHX, or SCHV (you could buy all three, but there would be no need to whatsoever). You will get around 2-2.5 % dividend yield, be diversified, and have extreme low fees. Fees are key to getting good returns in funds. Of course..set tax money aside as well.", "title": "" }, { "docid": "8dbae2056c5926e326a8d52d42980146", "text": "\"What I would do, in this order: Get your taxes in order. Don't worry about fancy tricks to screw the tax man over; you've already admitted that you're literally making more money than you know what to do with, and a lot of that is supported, one way or another, by infrastructure that's supported by tax money. Besides, your first priority is to establish basic security for yourself and your family. Making sure you won't be subjected to stressful audits is an important part of that! Pay off any and all outstanding debts you may have. This establishes a certain baseline standard of living for you: no matter what unexpected tragedies may come up, at least you won't have to deal with them while also keeping the wolves at bay at the same time! Max out a checking account. I believe the FDIC maximum insured value is $250,000. Fill 'er up, get a debit card, and just sit on it. This is a rainy day fund, highly liquid and immediately usable in case you lose your income. Put at least half of it into an IRA or other safe investments. Bonds and reliable dividend-paying stocks are strongly preferred: having money is good but having income is much better, especially in retirement! Quality of life. Splurge a little. (Emphasis on a little!) Look around your life. There are a few things that it would be nice if you just had, but you've never gotten around to getting. Pick up a few of them, but don't go overboard. Spending too much too quickly is a good way to end up with no money and no idea what happened to it. Also, note that this isn't just for you; family members deserve some love too! Charitable giving. If you have more money than you know what to do with, there are plenty of people out there who know exactly what to do--try to go on living and build a basic life for themselves--but have no money with which to do so. Do your research. Scam charities abound, as do more-or-less legitimate ones who actually do help those in need, but also end up sucking up a surprisingly high percentage of donations for \"\"administrative costs\"\". Try and avoid these and send your money where it will actually do some good in the world. Reinvest in yourself. You're running a business. Make sure you have the best tools and training you can afford, now that you can afford more!\"", "title": "" }, { "docid": "3ed949c726920255e6c945d8db1f3e72", "text": "\"Your #1 problem is the Government both in it's form as a taxation outfit and as a 'law and order' outfit. You'd be very surprised at how fast a bank seizes your bank account in response to a court order. Purchase 100 Mexican 50 Peso Gold (1.2 oz/ea). These coins are cheap (lowest cost to get into) and will not be reportable on sale to taxing authorities. That money is out of the banking system and legal system(s). Do not store them in a bank! You need to find a tax strategist, probably a former IRS agent / CPA type. With the rest remaining money... There's an old saying, Don't fight the Fed. As well as \"\"The trend is your friend\"\". So, the Fed wants all savers fully invested right now (near 0 interest rates). When investing, I find that if you do exactly opposite what you think is the smart thing, that's the best thing. Therefore, it follows: 1) Don't fight the Fed 2) Do opposite of smart 3) Do: Fight the Fed (and stay 100% out of the market and in cash) We're looking like Japan so could remain deflationary for decades to come. Cash is king...\"", "title": "" } ]	[ { "docid": "5cdaa52d474132d754fe019be1855f8a", "text": "\"The \"\"hire a pro\"\" is quite correct, if you are truly making this kind of money. That said, I believe in a certain amount of self-education so you don't follow a pro's advice blindly. First, I wrote an article that discussed Marginal Tax Rates, and it's worth understanding. It simply means that as your income rises past certain thresholds, the tax rate also will change a bit. You are on track to be in the top rate, 33%. Next, Solo 401(k). You didn't ask about retirement accounts, but the combined situations of making this sum of money and just setting it aside, leads me to suggest this. Since you are both employer and employee, the Solo 401(k) limit is a combined $66,500. Seems like a lot, but if you are really on track to make $500K this year, that's just over 10% saved. Then, whatever the pro recommends for your status, you'll still have some kind of Social Security obligation, as both employer and employee, so that's another 15% or so for the first $110K. Last, some of the answers seemed to imply that you'll settle in April. Not quite. You are required to pay your tax through the year and if you wait until April to pay the tax along with your return, you will have a very unpleasant tax bill. (I mean it will have penalties for underpayment through the year.) This is to be avoided. I offer this because often a pro will have a specialty and not go outside that focus. It's possible to find the guy that knows everything about setting you up as an LLC or Sole Proprietorship, yet doesn't have the 401(k) conversation. Good luck, please let us know here how the Pro discussion goes for you.\"", "title": "" }, { "docid": "b7b6f25f65afb8ead7869956434ca35d", "text": "Currently my online savings account pays an interest rate of 1.25%. With 100K, I can earn about $104 per month in that account. No risk, no timing, no fuss. So in theory you can make money by small changes in the valuations of stock. However there are often better, risk free options for your money; or, there are much better options for returns with much less risk, but more than that of a bank account.", "title": "" }, { "docid": "0b22e23fac6f27900f195011905db3fa", "text": "\"What could a small guy with $100 do to make himself not poor? The first priority is an emergency fund. One of the largest expenses of poor people are short-term loans for emergencies. Being able to avoid those will likely be more lucrative than an S&P investment. Remember, just like a loan, if you use your emergency fund, you'll need to refill it. Be smart, and pay yourself 10% interest when you do. It's still less than you'd pay for a payday loan, and yet it means that after every emergency you're better prepared for the next event. To get an idea for how much you'd need: you probably own a car. How much would you spend, if you suddenly had to replace it? That should be money you have available. If you think \"\"must\"\" buy a new car, better have that much available. If you can live with a clunker, you're still going to need a few K. Having said that, the next goal after the emergency fund should be savings for the infrequent large purchases. The emergency fund if for the case where your car unexpectedly gets totaled; the saving is for the regular replacement. Again, the point here is to avoid an expensive loan. Paying down a mortgage is not that important. Mortgage loans are cheaper than car loans, and much cheaper than payday loans. Still, it would be nice if your house is paid when you retire. But here chances are that stocks are a better investment than real estate, even if it's the real estate you live in.\"", "title": "" }, { "docid": "d1a1341a13f2f501d6371c61107829c7", "text": "\"I don't understand the OP's desire \"\" I'd love to have a few hundred dollars coming in each month until I really get the hang of things. \"\" When growing your wealth so that it will be large enough in retirement to throw off enough profits to live on ... you must not touch the profits generated along the way. You must reinvest them to earn even more profits. The profits you earn need not show up as 'cash'. Most investments also grow in re-sale value. This growth is called capital gains, and is just-as/more important than cash flows like interest income or dividends. When evaluating investing choices, you think of your returns as a percent of your total savings at any time. So expecting $100/month equals $1,200/year would require a $12,000 investment to earn 10%/yr. From the sounds of it the OP's principal is not near that amount, and an average 10% should not be expected by an investment with reasonable risk. I would conclude that 'There is no free lunch'. You need to continually save and add to your principal. You must invest to expect a reasonable return (less than 10%) and you must reinvest all profits (whether cash or capital gains). Or else start a business - which cannot be compared to passive investing.\"", "title": "" }, { "docid": "0b4d28631a9df3dc4aedc366da571626", "text": "\"This is clearly a scam, and you should stay away from it. Anyone reading this knew that from the title alone - and it seems that you know it too. Don't \"\"test\"\" whether something is a scam by putting your own money in it. That is exactly how these scammers make money, and how you lose it. How their scam works is irrelevant. The simple fact is that there is no way you can safely earn 20% return over the course of a year, let alone in 1 day. You know this is true. Don't bother trying to figure out what makes it true in this case. There is no free lunch. Best case scenario, this is a hyper-risky investment strategy [on the level of putting your money down at a roulette wheel]. Worst case scenario, they simply steal your money. Either way, you won't come out ahead. Although I agree with others that this is likely a Ponzi scheme, that doesn't really matter. What matters is, there is no way they can guarantee those returns. Just go to a casino and throw your money away yourself, if you want that level of risk. For reference, if you invested $100 for a year, earning 20% returns every day, you would have 6 million trillion trillion dollars by the end of the year. that's $6,637,026,647,624,450,000,000,000,000,000. that number doesn't even make sense. It's more money than exists on earth. So why would they need your $100?\"", "title": "" }, { "docid": "50f0f55d05c9ca3afe2902f82d83e655", "text": "You can't have even a hundred dollars without it being invested somewhere. If it's cash, you're invested in some nation state's currency. If that currency is USD, you have lost about 6% so far this year. But what if you were in the stock market? It's been doing pretty well, no? Thing is, American stocks are priced in American dollars. You have to put those variables together to see what a stock has really been doing.", "title": "" }, { "docid": "020e7b03bd2546714cf636928de96efc", "text": "Most people when asked what would they do with $X dollars say: Pay debt (their own / loved ones) Buy a nice house Buy a nice car Travel 460 million is plenty to do all those things. With the rest I'd start a bond ladder and try to live off the interest", "title": "" }, { "docid": "c299930bb1943ea6460fcb344aecc6e6", "text": "How can I use $4000 to make $250 per month for the rest of my life? This means the investment should generate close to 6.25% return per month or around 75% per year. There is no investment that gives this kind of return. The long term return of stock market is around 15-22% depending on the year range and country.", "title": "" }, { "docid": "c6dba7fc748b0af0e57a483470ae31a5", "text": "\"It's hard to know what to tell you without knowing income, age, marital status, etc., so I'll give some general comments. ETFs come in all varieties. Some have more volatility than others. It all depends on what types of assets are in the fund. Right now it's tough to outpace inflation in an investment that's \"\"safe\"\" (CDs for example). Online savings accounts pay 1% or less now. Invest only in what you understand, and only after everything else is taken care of (debt, living expenses, college costs, etc.) A bank account is just fine. You're investing in US Dollars. Accumulating cash isn't a bad thing to do.\"", "title": "" }, { "docid": "f0a717cb3d03349eff74c42a58816337", "text": "The standard advice is that stocks are all over the place, and bonds are stable. Not necessarily true. Magazines have to write for the lowest common denominator reader, so sometimes the advice given is fortune-cookie like. And like mbhunter pointed out, the advertisers influence the advice. When you read about the wonders of Index funds, and see a full page ad for Vanguard or the Nasdaq SPDR fund, you need to consider the motivation behind the advice. If I were you, I would take advantage of current market conditions and take some profits. Put as much as 20% in cash. If you're going to buy bonds, look for US Government or Municipal security bond funds for about 10% of your portfolio. You're not at an age where investment income matters, you're just looking for some safety, so look for bond funds or ETFs with low durations. Low duration protects your principal value against rate swings. The Vanguard GNMA fund is a good example. $100k is a great pot of money for building wealth, but it's a job that requires you to be active, informed and engaged. Plan on spending 4-8 hours a week researching your investments and looking for new opportunities. If you can't spend that time, think about getting a professional, fee-based advisor. Always keep cash so that you can take advantage of opportunities without creating a taxable event or make a rash decision to sell something because you're excited about a new opportunity.", "title": "" }, { "docid": "391d43d1cf4f10b5872dc46e5f2045f0", "text": "Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.", "title": "" }, { "docid": "992d568e9fb89ec12d5ec9d42554e089", "text": "What is your investing goal? And what do you mean by investing? Do you necessarily mean investing in the stock market or are you just looking to grow your money? Also, will you be able to add to that amount on a regular basis going forward? If you are just looking for a way to get $100 into the stock market, your best option may be DRIP investing. (DRIP stands for Dividend Re-Investment Plan.) The idea is that you buy shares in a company (typically directly from the company) and then the money from the dividends are automatically used to buy additional fractional shares. Most DRIP plans also allow you to invest additional on a monthly basis (even fractional shares). The advantages of this approach for you is that many DRIP plans have small upfront requirements. I just looked up Coca-cola's and they have a $500 minimum, but they will reduce the requirement to $50 if you continue investing $50/month. The fees for DRIP plans also generally fairly small which is going to be important to you as if you take a traditional broker approach too large a percentage of your money will be going to commissions. Other stock DRIP plans may have lower monthly requirements, but don't make your decision on which stock to buy based on who has the lowest minimum: you only want a stock that is going to grow in value. They primary disadvantages of this approach is that you will be investing in a only a single stock (I don't believe that can get started with a mutual fund or ETF with $100), you will be fairly committed to that stock, and you will be taking a long term investing approach. The Motley Fool investing website also has some information on DRIP plans : http://www.fool.com/DRIPPort/HowToInvestDRIPs.htm . It's a fairly old article, but I imagine that many of the links still work and the principles still apply If you are looking for a more medium term or balanced investment, I would advise just opening an online savings account. If you can grow that to $500 or $1,000 you will have more options available to you. Even though savings accounts don't pay significant interest right now, they can still help you grow your money by helping you segregate your money and make regular deposits into savings.", "title": "" }, { "docid": "eff5d5616a66d62ac0f3092c35d49274", "text": "\"He wants to send me money, as a gift. Do you know this friend? It could easily be a scam. What I don't know is that how much money can he send and what are the taxes that would be applicable in this case? There is no limit; you have to pay taxes as per your tax brackets. This will be added as \"\"income from other sources\"\". I'll probably be using that money to invest in stock market. If the idea is you will make profits from stock market and pay this back, you need to follow the Foreign Exchange Management Act. There are restrictions on transfer of funds outside of India.\"", "title": "" }, { "docid": "675c817fff9effaeeb84d00b60cd4995", "text": "\"This may sound very \"\"tongue in cheek\"\", but the best thing you can invest in is to raise your income in order to increase your retirement savings. How much are you able to contribute to retirement now? I think you would be lucky to do $150/month and most months probably less than that. However, if you were making like 60k/year, and allowed a little lifestyle bloat, you could probably easy put away 20k/year. Once you are able to do that the savings you can manage now will be quickly eclipsed. Often times when people consider \"\"having their money work for them\"\" they often neglect to factor risk. Prior to investing one should have a proper emergency fund in place. That is 6 months or so of living expenses in a nice safe savings account. Those earn about 1.25% these days, which is pretty meager, but it does earn something. Once the emergency fund is in place, one can invest with impunity. Without it, you will have to liquidate investments if economic calamity strikes you. This could be done at a loss furthering the harm done by the calamity. Increase your income and create an emergency fund. Do those things first.\"", "title": "" }, { "docid": "50cf006c613b501efd048b5b2c44065e", "text": "\"Victor addressed the card issue with an excellent answer, I'd like to take a stab at the budget and income side. Your question clearly stated \"\"I am left with no extra money\"\" each month. Whenever I read such an assertion, I ask the person, \"\"but surely, X% of people in your country get by on a salary that's 95% of yours.\"\" In other words, there's the juggling of the debt itself, which as Victor's math shows, is one piece of the puzzle. The next piece is to sift through your budget and find $100/mo you spend that could be better spent reducing your debt. Turn down the temperature in the winter, up in the summer, etc. Take lunch to work. No Lattes. Really look at the budget and do something. On the income side. There are countless ways to earn a bit of extra money. I knew a blogger who started a site called \"\"Deliver away Debt.\"\" He told a story of delivering pizza every Friday and Saturday night. The guy had a great day job, in high tech, but it didn't lend itself to overtime, and he had the time available those two evenings to make money to kill off the debt he and his wife had. Our minimum wage is currently just over $7, but I happened to see a sign in a pizza shop window offering this exact position. $10/hr plus gas money. They wanted about 8 hours a weekend and said in general, tips pushed the rate to well over $15/hr. (They assumed I was asking for the job, and I said I was asking for a friend). This is just one idea. Next, and last. I knew a gal with a three bedroom small house. Tight budget. I suggested she find a roommate. She got so many responses, she took in two people, and the rents paid her mortgage bill in full. Out of debt in just over a year, instead of 4+. And in her case, no extra hours at all. There are sites with literally 100's of ideas. It takes one to match your time, interest, and skill. When you are at $0 extra, even finding $250/mo will change your life.\"", "title": "" } ]	fiqa
d8e2a4cd113779f84017b2f1318af55a	Hiring a teenager as a household employee	[ { "docid": "3050769ddb0d2dc1ca67b52a9e6185d3", "text": "First you need to ensure that you are not violating any Federal child labor laws. I would look at this: U.S. Dept of Labor, Wage & Hour Div., Standards for 14- and 15-Year Olds in Nonagricultural Employment. These were the items that pertained to Federal Law, for 14 year olds: 14 is the minimum age for employment in specified occupations outside of school hours for limited periods of time each day and each week. Fourteen- and 15-Year-Olds May Not Be Employed: There is a section on minimum allowed wage payment to young workers, and also a list of allowed types of work for 14 and 15 year old's. The type of household helper tasks described definitely fell within what was allowed for child labor. The same page details what sort of forms need to be filled out. I think this is something that is done quite commonly. Here are specifics in New York State for minimum wage for minors and for employing 14 year olds.", "title": "" }, { "docid": "8a9c0077daed80612c8241b232366478", "text": "Here is what I was able to find: Yes, but there are special instructions for minors: Working hours: New York State labor laws are slightly more strict than the federal: https://www.labor.state.ny.us/workerprotection/laborstandards/workprot/nyvsfed.shtm Minimum wage: The Dept of Labor's Youth & Labor page states: Occupations such as babysitting are not subject to the minimum wage law. No supporting documentation is given. Another page describes the Youth Minimum Wage Program: A minimum wage of not less than $4.25 may be paid to employees under the age of 20 for their first 90 consecutive calendar days However, I can't find any such exception in New York State minimum wage law. According to Publication 926, Household Employer's Tax Guide: Federal income tax withholding No, I am not required to withhold federal income taxes from a household employee. If we both want them to be withheld, a W-4 should be submitted to me. State income tax withholding No, according to NYS Pub 27: Withholding income tax (federal or New York State) from wages paid to household employees is voluntary on your part and your employee Social security and medicare No, I am not required to withhold FICA taxes because when calculated wages, I should not include: An employee who is under the age of 18 at any time during the year. Exception: Count these wages if providing household services is the employee's principal occupation. If the employee is a student, providing household services is not considered to be his or her principal occupation. Unemployment insurance No, I don't think I have to pay federal unemployment tax. I think the exception for FICA applies to FUTA. For New York (according to Household Employers Guide for Unemployment Insurance), there is an exception for paying state unemployment insurance: Daytime students who attend elementary or high school (However, you must pay UI taxes on wages you pay these students if you are liable under FUTA.) I can't find any specific requirements, but aside from numbers of hours times rate of pay, you might want to consider the information required by the Wage Theft Prevention Act: Also, consider this requirements from the NY Minimum Wage Act Every employer shall keep true and accurate records of hours worked by each employee covered by an hourly minimum wage rate, the wages paid to all employees, and such other information as the commissioner deems material and necessary, and shall, on demand, furnish to the commissioner or his duly authorized representative a sworn statement of the same.", "title": "" } ]	[ { "docid": "5864aada4d3d22e846643eae10ba47fd", "text": "An education. A new car. Houses are made bigger so that's not really fair. An article on here previously mentioned someone paying for a dependable car and a small apartment, along with school tuition working part time as a dishwasher. Tuition at my closest state school (in state cost) is just under $9k per year. If you could only work 20 hours per week, amortized the school loan, payed $250 a month for an apartment with a roommate, $100 a month for utilities, $150 a month for groceries (all very difficult to achive and be healthy), you would have to make $15.35 an hour after taxes to do it without debt. This is assuming you don't have a car.", "title": "" }, { "docid": "9a43caccb4e26c98f5a98bd0ff63cf78", "text": "Until they're old enough to be legally responsible for their own credit, the only thing you can really do is show them by example how to manage money and credit in your own finances. Teach them budgeting, immerse them in understanding how credit and financing work, and teach them smart ways to make their money work for them. When they're teenagers, you could potentially approach small banks or credit unions about ways to perhaps co-sign loans for them and let them make payments to learn good habits for managing their responsibilities, but that's not always easy either. It won't do anything for their credit, but having the responsibility of coming in to make payments might instill good habits and help their self-esteem at the same time. You have great intentions, but as has been pointed out here already, from a legal standpoint there's not much you can do. All you can do is prepare them for the day when they are on their own and can enter into credit agreements. Kids going to college get into real trouble with credit because cards are handed out like candy to them by the banks, so teaching them money management skills is invaluable and something you can do now.", "title": "" }, { "docid": "9c9b09427bf59ac4ea866460fe930c7e", "text": "Very grey area. You can't pay them to run errands, mow the lawn, etc. I'd suggest that you would have to have self employment income (i.e. your own business) for you to justify the deduction. And then the work itself needs to be applicable to the business. I've commented here and elsewhere that I jumped on this when my daughter at age 12 started to have income from babysitting. I told her that in exchange for her taking the time to keep a notebook, listing the family paying her, the date, and amount paid, I'd make a deposit to a Roth IRA for her. I've approaches taxes each year in a way that would be audit-compliant, i.e. a paper trail that covers any and all deductions, donations, etc. In the real world, the IRS isn't likely to audit someone for that Roth deposit, as there's little for them to recover.", "title": "" }, { "docid": "8d5576aaeb2e53cae59db6dbc7a6bf75", "text": "I received an allowance growing up. There were stipulations on what I had to do with it that helped instill the values my parents wanted - in their case they were hoping to teach me to give money to my church, so I had a mandatory amount that I had to give when I received the allowance. To this day I still give money to the church, so I guess it stuck. The allowance was tied to my doing some basic chores around the house - but loosely. It wasn't a reward for doing those chores, but it would be taken away if I didn't do them. Before I was of a legal working age I could do larger unusual tasks around the house for more money. The relationship between chores and some form of allowance is, I think, tricky. I don't think kids should be taught that the only reason to work is to earn money. They won't earn money for keeping their future homes clean or by volunteering at the local food bank, but these are both good things to do. At the same time it is good to teach that work has a reward and that lack of work means lack of a reward. My parents set up a savings account for me quite early. Largely what went in there was birthday cash from relatives (a great thing to talk to any family members who might give your kids gifts about) and the income from my once-yearly sale of baked goods at a craft fair. These were bigger amounts of money that I could take pride in depositing, and keeping them in a bank helped prevent me from spending them willy-nilly. I also got a credit card at the age of 16 (only allowed in some states in the US, not sure about internationally). My parents oversaw my spending habits with it and made sure I always paid in full and on time. The money I spent was tied to my summer work in high school and college. I thought it was extremely valuable to learn how to manage a credit card before college when the card companies often seem to prey on young customers.", "title": "" }, { "docid": "78c3c281bc43a0ee800cf0ed3fa83b0c", "text": "Perhaps a technicality, but minors do not have the legal capacity to bind a contract. Making a purchase from a store is a contract. I'm not a lawyer and there may be case law to the contrary or that creates exceptions, but my understanding is that purchases made by a minor may be void if later challenged. JohnFx's answer is true from a practical sense. But if you get turned away at a store, understand that they're probably just being careful to avoid headaches later.", "title": "" }, { "docid": "cbee39fe51d936f9a80135afb15f1f3c", "text": "\"So, you only want people who are \"\"perfectly prepared\"\" to fit into your unique job opening... Oh, and you want them to have a very specific set of \"\"Pre-Approved Stamps\"\"; and for them to have been trained through their \"\"apprentice/journeyman\"\" years by someone else. And, of course, you would like to hire these \"\"perfect candidates\"\" at entry-level wages. Good luck with that. (Even if you do manage to GET such an employee, I can predict that you will generally NOT be keeping them long.)\"", "title": "" }, { "docid": "9f3741441e2ffe131f5a60b552372369", "text": "Years ago I hired someone part time (not virtual however) to help me with all sorts of things. Yes it helps free up some time. However particularly with finances, it does take a leap of faith. If you have high value accounts that this person will be dealing with you can always get them bonded. Getting an individual with a clean credit history and no criminal background bonded usually costs < $600 a year (depending on $ risk exposure). I would start out small with tasks that do not directly put that person in control of your money. In my case I didn't have an official business, I worked a normal 9-5 job, but I owned several rental units, and an interest in a bar. My assistant also had a normal 9-5 job and worked 5-10 hours a week for me on various things. Small stuff at first like managing my calendar, reminding me when bills were due, shipping packages, even calling to set up a hair cut. At some point she moved to contacting tenants, meeting with contractors, showing apartments, etc... I paid her a fixed about each week plus expenses. I would pay her extra if I needed her more (say showing an apartment on a Saturday, or meeting a plumber). She would handled all sorts of stuff for me, and I gave her the flexibility when needed to fit things in with her schedule. After about a month I did get her a credit card for expenses. Obviously a virtual assistant would not be able to do some of these things but I think you get the point. Eventually when the trust had been built up I put her on most of my accounts and gave her some fiduciary responsibilities as well. I'm not sure that this level of trust would be possible to get to with a virtual assistant. However, with a virtual assistant you might be able to avoid one really big danger of hiring an assistant.... You see, several years later when I sold off my apartment buildings I no longer needed an assistant, so I married her. Now one good thing about that is I don't have to pay her now. ;)", "title": "" }, { "docid": "52b7a589ad50a64772be94580a1852e0", "text": "I am quite sure you can set up an office in your basement for a lot less than $15,000. Don't build any walls, install any flooring, or upgrade the ceiling. Just install more lights and plugs. Set up your desks, bookshelves and what not in whatever corner is furthest from noises like the laundry room or the furnace. The kids and the nanny get the main floor - just let the whole living room be a giant playroom, for example. This gives you the separation you need to work at home, but you can hear if something really needs your attention. When the kids go off to school, you can refinish the basement into a playroom for kids who don't always need supervision, using the money you are no longer spending on the nanny to install carpeting, real walls, a drop ceiling and so on. Your office stuff can move up to the main floor or to a spare room upstairs if you had one but it wasn't usable during the baby years when upstairs generally has to be quiet. As the kids get older the basement can get tailored to what preteens and teens like. This is essentially what we did, and our square footages and child counts match yours almost precisely. We did eventually convert our garage to carpeted and finished space, and it spent time as an office with staff coming in each day, then some time as a teen playroom (think video games and loud music) after the business rented office space outside the house, but if you don't intend to hire staff for your business you don't need to do this part. We did the majority of the basement wiring ourselves and got an electrician to hook it into the panel and check our work. The budget would probably be less than 10% of the guess from your real estate agent.", "title": "" }, { "docid": "0c02ace15a857aa5c1630b2d08e16c9c", "text": "It is subjective of course, but when I hire people I'd rather see a shit job for two months than nothing at all. Not that I'm planning to give the prospective employee shit work, just that they're not lazy.", "title": "" }, { "docid": "085e66370274aa1b61b09d21ff717302", "text": "\"Completely linear? We don't do that. Our daughter has a fixed allowance, and we expect a certain amount of help around the house as being part of the family. We don't make any explicit ties between the two, and we don't seem to have any problems. We bought an eBay lot of Polly Pockets and divided them up into $5 bags. (This is a better deal that what we could get in the store new.) Her allowance isn't enough that she can \"\"buy\"\" one every week. After sensing her frustration we gave her the opportunity to earn some more money by doing extra work. It happened to be cleaning up after our dogs in the back yard, a chore we had neglected for quite a while. She stuck with the job, and truly earned that money. (She'll be six in January.) What's more, it was a good deal for me. It needed to be done, and I didn't really want to do it. :) So, for now this seems like a fair balance. It prevents her from getting the idea that she won't work unless she gets paid, but she also knows that working harder does have its rewards. We still have time to teach her the idea of working smarter. (This isn't a formal study. It's just my experience.)\"", "title": "" }, { "docid": "f4eff5e6614dc83d68b72536cda0819a", "text": "\"I mean, best of luck for this company, but there are empirical reasons why many companies do not strongly favor very old employees. From a business perspective, it doesn't make sense to hire someone unless they are the best for their job. Anything else is not really \"\"business\"\" and is more on the charity/socialism side of things.\"", "title": "" }, { "docid": "c4ed680239a1ff1eacc16c0128ef87c6", "text": "Math time. 24 means 2 years out of college, or 6 years out of highschool, the latter being much more plausible given the poster's content quality. $100k / 6 = $16.7k/year 16.7k / 52 weeks = $321/week $321 / (11/hr * (1 - 15% taxes)) = 34 hours per week. So he worked 34 hours per week, without fail, for 6 years, with NO expenses of any kind whatsoever. OR, much more likely, he managed to save only $10k, not $100k in 6 years.", "title": "" }, { "docid": "09ad0789816e39700206c57d234f361a", "text": "so you have any LEGAL experience to back that up? Yeah I do get there are exceptions to the rule, like minister, however the christian plumber.. i think you are full of it. There is no need, or relgious basis you can use on why you had to hire only religious plumbers. WIth a priest it is obvious. OF COURSE You can discriminate when the person you are hiring cant do the job. An atheist minister couldnt do the job. An athiest plumber can. A Guy with no arms cant toss pizza dough. You can not hire him and say it is due to his handicap. I need someone to throw pizza dough. You have to prove they cant do the job you need them for in order to LEGALLY discriminate.", "title": "" }, { "docid": "1375166c5213858868807989272e7134", "text": "I'm sore but the MAJORITY OF AMERICANS don't want to wash dishes as a career choice. My goodness even if you are the son or daughter of a well of family they don't actually expect their kiddo to work hard. This is HARD work we are taking about, laboring in sun, hot dishwashing, waking up at 4am to clean rooms. I have just never seen a well off family do work like this. It's really for poor Americans but let me tell a single mom can't survive on season work, temporary, no benefits all hours. It just isn't work for any American who wants to be successful. But no worries all hear jobs will go to AI in the future anyway!!! Then there will a crap ton more out of work👌", "title": "" }, { "docid": "59d589d10cc8188fd72df234da857fcf", "text": "That's not a valid counterpoint. It doesn't rub you the right way because it would require you to take responsibility for your own future and do the work yourself. It doesn't rub you the right way because it would mean that you couldn't blame anyone else if you weren't able to retire when you wanted to.", "title": "" } ]	fiqa
ea3e4b063ff06690d636e7a8f35c52c9	How can I escalate a credit dispute when the bureau “confirms” the item?	[ { "docid": "66b35acf56e4b858179a6a2252a75163", "text": "\"I was I a similar position as you, and sometimes credit bureaus might be difficult to deal with, especially when high amounts of money are involved. To make the long story short, someone opened a store credit card under my name and made a charge of around 3k. After reporting this to the bureaus, they did not want to remove the account from my credit report citing that the claim was \"\"frivolous\"\". After filing a police report, the police officer gave me the phone number for the fraud department of this store credit card, and after they investigated, they removed the account from my credit. I would suggest to do the following: Communicating with Creditors and Debt Collectors You have the right to: Stop creditors and debt collectors from reporting fraudulent accounts. After you give them a copy of a valid identity theft report, they may not report fraudulent accounts to the credit reporting companies. Get copies of documents related to the theft of your identity, like transaction records or applications for new accounts. Write to the company that has the documents, and include a copy of your identity theft report. You also can tell the company to give the documents to a specific law enforcement agency. Stop a debt collector from contacting you. In most cases, debt collectors must stop contacting you after you send them a letter telling them to stop. Get written information from a debt collector about a debt, including the name of the creditor and the amount you supposedly owe. If a debt collector contacts you about a debt, request this information in writing. I know that you said that the main problem was that your credit account was combined with another. But there might be a chance that identity theft was involved. If this is the case, and you can prove it, then you might have access to more tools to help you. For example, you can file a report with the FTC, and along with a police report, this can be a powerful tool in stopping these charges. Feel free to go to the identitytheft.gov website for more information.\"", "title": "" } ]	[ { "docid": "85d7d61feca0b602611f1e99f4aa8a53", "text": "\"This does not directly address the question, but how the Bank views your behaviour is not the same as a credit reporting bureau. If you do not \"\"go deep\"\" on your card at all, you may be deemed not to be exercising the facility, indeed they may ask you to reduce your credit limit. This is not the same as \"\"missing a payment\"\". At the same time, do not just make the minimum payment. Ideally you should clear it within 3 months. Think of it as a very short term line of credit. Not clearing the balance within three months (or turning it over) demonstrates a cash flow problem, as does clearing it from another card. Some banks call this \"\"kite flying\"\" after similar behaviour in older days with cheque accounts. If you use the credit and show you can pay it off, you should never need to ask for a credit increase, it will be offered. The Bureau will be informed of these offers. Also, depending upon how much the bank trusts you, the Bureau may see a \"\"monthly\"\" periodic credit review, which is good if you have no delinquencies. Amex does this as a rule.\"", "title": "" }, { "docid": "f2ae18b2ef3ae9d1111258c6199420f3", "text": "\"To answer the heart of your question, it would be illegal for any credit bureau or creditor to somehow \"\"penalize\"\" you just for trying to make sure that what's being reported about you is accurate. That's why the Fair Credit Reporting Act exists -- that's where the rights (and mechanisms) come from for letting you learn about and request accurate reporting of your credit history. Every creditor is responsible for reporting its own data to the bureaus, using the format provided by those bureaus for doing so. A creditor may not provide all of the information that can be reported, and it may not report information in as timely a manner as it could or should (e.g., payments made may not show up for weeks or even months after they were made, etc.). The bottom line is that the credit bureaus are not arbiters of the data they report. They simply report. They don't draw conclusions, they don't make decisions on what data to report. If a creditor provides data that is within the parameters of what the bureaus ask to be provided, then the bureaus report precisely that -- nothing more, nothing less. If there is an inaccuracy or mistake on your report, it is the fault (and responsibility) of the creditor, and it is therefore up to the creditor to correct it once it has been brought to their attention. Federal laws spell out the process that the bureau has to comply with when you file a dispute, and there are strict standards requiring the creditor to promptly verify valid information or remove anything which is not correct. The credit bureaus are simply automated clearinghouses for the information provided by the creditors who choose to subscribe to each bureau's system. A creditor can choose which (or none) of the bureaus they wish to report to, which is why some accounts show on one bureau's report on you but not another's. What I caution is, just because a credit bureaus reports on your credit doesn't mean they have anything to do with the accuracy or detail of what is being reported. That's up to the creditors.\"", "title": "" }, { "docid": "48cdabe6eae8887e98d4099750ae647b", "text": "I don't think the verbal confirmation from the branch manager is worth anything, unless you got it in writing it basically never happened. That said, what did you sign exactly? An application? I'd think they would be well within their rights to deny that, no matter what the branch manager said. If you actually signed a binding contract between you and the bank, things would be different but the fact that 'approval' was mentioned suggests that all you and the bank signed was an application and the bank manager made some unreasonable promises he or she doesn't want to be reminded of now. If the complaints department can't get off their collective backsides, a firm but polite letter to the CEO's office might help, or it might end up in the round filing cabinet. But it's worth a try. Other than that, if you are unhappy enough to go through the pain, you can try to remortgage with another bank and end the business relationship with your current bank.", "title": "" }, { "docid": "7d643ed047c1d902947122689b38d25b", "text": "\"Banks have a financial, and regulational duty called \"\"Know your customer\"\", established to avoid a number of historical problems occurring again, such as money laundering, terrorism financing, fraud, etc. Thanks to the scale, and scope of the problem (millions of customers, billions of transactions a day), the way they're handling this usually involves fuzzy logics matching, looking for irregular patterns, problem escalation, and other warning signs. When exceeding some pre-set limit, these signal clues are then filtered, and passed on for human inspection. Needless to say, these algorithms are not perfect, although, thanks to financial pressure, they are improving. In order to understand why your trading account has been suspended, it's useful to look at the incentives: false positives -suspending your trade, and assuming you guilty until proven otherwise- could cost them merely your LTV (lifetime value of customer -how much your business brings in as profit); while false negatives -not catching you while engaging in activities listed above- might cost them multi-month investigations, penalties, and court. Ultimately, this isn't against you. I've been with the bank for 15 years and the money in the accounts has been very slowly accumulated via direct-deposit paychecks over that time. From this I gather the most likely explanation, is that you've hit somekind of account threshold, that the average credit-happy customers usually do not exceed, which triggered a routine checkup. How do you deal with it? Practice puppetry! There is only one way to survive angry customers emotionally: you have to realize that they’re not angry at you; they’re angry at your business, and you just happen to be a convenient representative of that business. And since they’re treating you like a puppet, an iconic stand-in for the real business, you need to treat yourself as a puppet, too. Pretend you’re a puppeteer. The customer is yelling at the puppet. They’re not yelling at you. They’re angry with the puppet. Your job is to figure out, “gosh, what can I make the puppet say that will make this person a happy customer?” In an investigation case, go with boredom: The puppet doesn't care, have no feelings, and is eternally patient. Figure out what are the most likely words that will have the matter \"\"mentally resolved\"\" from the investigator's point of view, tell them what they have to hear, and you'll have case closed in no time. Hope this helps.\"", "title": "" }, { "docid": "7c5c80b89c7a12c454f67efe2fd2f61a", "text": "\"Typically, the CC company itself won't follow the customer very far upon a default (though it certainly can act as its own debt collector, or hire an agency for a fee to do the collection). What most often happens: Once they do that, assuming they win the lawsuit, they can do the following: They cannot \"\"force\"\" you into bankruptcy, but they might make it so you have no better options (if bankruptcy is less painful than the above, which it often is). They certainly can (and will) report to the credit bureaus, of course. For more information, Nolo has a decent help site on this subject. Different jurisdictions have slightly different rules, so look up yours. Here is an example (this is from Massachusetts). Not every debt is sued for, of course; particularly, pay attention to the statute of limitations in your state. (In mine, it's seven years, for example.) And it's probably worth contacting someone locally (a legitimate non-profit debt relief agency, or your state's help agency if they have one) to find local rules and regulations.\"", "title": "" }, { "docid": "2d658ec44180f29805ca51c8ea691f81", "text": "If the bad credit items are accurate, disputing the accuracy of the items seems at best, unethical. If the bad credit items are inaccurate, the resolution process provided by each of the 3 credit bureaus, while time consuming, seems the way to go.", "title": "" }, { "docid": "4d6937810c10c24969fcd83f1852c5c1", "text": "No credit bureau wants incorrect data, for obvious reasons, but it happens. That's one reason why they let you get access to your credit score, to check it the data is correct and make the 'product' (data about you) better. Nope, that's not why you can get free access to your credit report. The Fair Credit Reporting Act (FCRA) is why. FCRA requires any credit reporting agency to provide you a free report upon request every 12 months. Prior to this law, credit agencies made you pay to see your report including if you wanted it to dispute errors. They only care about the dollars they get from having this data. FCRA removed one of their revenue streams. If free locking moves forward, that will remove another. So expect them to fight it.", "title": "" }, { "docid": "0088551e56693f9713c06610f68b44f1", "text": "You can't make your bank do a charge back. This function is to assist with straight up fraud, not a customer service mistake. (Think spoofed or stolen card or if a vendor intentionally acted fraudulently.) While you may believe what they did is fraud, your bank will require that you provide the vendor with the opportunity to rectify the situation themselves. Trying to call back and giving up after a long hold time won't meet their standards. If banks started letting anyone unhappy with a vendor start doing charge backs, they would be doing nothing else all day. The issues you're describing has not reached the threshold for the bank to authorize a charge back. Comcast has local and regional offices, and you could go in person to speak with someone. Maybe there isn't one near you. There are non-peak hours which wait times will be less. You'll just have to grin and bear it if you truly want the money back. Then, take your business elsewhere and post bad reviews online. Always keep in mind that when you eventually speak with someone, they will not be the person that messed up, and you should be overly nice and polite to them. I promise it will yield far better results than being surly and demanding. Another way to get Comcast's attention would be to file a complaint with the BBB. It might take longer, but I've had this work with big companies, usually with good results. Again, be nice to whomever contacts you. In reference to your recent duplicate question: Mastercard won't be able to help at all. They play no part in the transaction at all.", "title": "" }, { "docid": "df3445c4c5220e2ca5bb66345da094b1", "text": "This does sound a bit implausible, even if it is true it is pretty grossly irresponsible and you probably shouldn't just let it slide... However there is no real benefit in wading in with accusations, I suspect that the most likely scenario is that your tenet simply didn't have the money and was looking for a way to delay payment. This may well not be particularly malicious towards you, they may just be unable to pay and need a bit of room to maneuver. In this case the wise thing is to challenge them but without forcing them to admit that they might have lied, perhaps by suggesting that they might have been mistaken about dropping off the money but it's no big deal and negotiate a resolution. In these situations where it is one persons word against another giving them the opportunity to save face often pays off. Equally you want to make it absolutely clear that putting a wad of cash in your mailbox is not an acceptable way to pay.", "title": "" }, { "docid": "e073c71ae7a33cf89cf9a3a58ca8da94", "text": "This is more of a legal question than a monetary one. You can try to negotiate with the debt owner as Pete B. suggests. Alternatively, you can ignore them and see what happens. They might sue you for the 400 plus costs, or maybe not. That is a pretty small amount for a lawyer to show up in a court of law. If you go to court, you can win by testifying that you returned the box and the charge is invalid. If you testify in court that you did not return the box, then you will lose. Sometimes a debt collector will just file a credit complaint against you and you would have to go to court to get that complaint removed from your record with the credit agency. The loan owner has no idea whether you returned the box at all. All they have is a debt security which simply says who owes the money and how much it is. In a court room they have zero evidence against you (unless you said something to them and they wrote it down or recorded it).", "title": "" }, { "docid": "265f8df05a743358d9819a3cef8fc89b", "text": "I would go speak to the bank manager. With Wells, you have to make sure it is the bank manager and not a service manager or something you are talking to (I learned that a few months ago). Tell her/him exactly what happened in detail and that you want the credit card closed and the credit inquiry removed from your credit report. Further, say that once all of that is done, you will decide whether to continue banking with them and whether any legal action is appropriate. If they give you any kind of push back, I'd get advice from a lawyer. The truth is they did open an account against your expressed wishes and it required them to check your credit so it does constitute fraud unless they can produce a signed document saying you agreed to the card. Edit: I just saw that this happened about a year ago. It may have been easier if you had done something at the time and may be more difficult if you've used the card in the meantime.", "title": "" }, { "docid": "6758ac85a2d327ad8e3e4586e379f735", "text": "In order: 1.) Speak to car dealership, demand refund. If that doesn't work, 2.) Contact the local authorities. If that doesn't work, 3.) Get in touch with a lawyer. If that doesn't work, (or if it's too expensive), 4.) Get in touch with local media, and have them run a story.", "title": "" }, { "docid": "cf48406e0cb79263a44382dd3c5badb0", "text": "All three credit bureaus allow you to file a dispute online. Some allow you to upload documentation at the same time, others will ask you to mail it to them. Send them the letter you got from your bank, they will then return to the collection company. For $300.00 most likely they will not pursue it any further and the credit bureaus will delete the entry from your file. If the collection company want to make a case out of it they will have to view to cost of trying to get a Court Judgment against the value of the amount they are claiming. Almost certainly they will view at not cost effective and your credit rating will return to where it was prior to the negative impact", "title": "" }, { "docid": "8f4879752fac50097965f48da3b171f2", "text": "Once a debt has gone to a debt collector, you have to work with the debt collector to settle your debt. Essentially, the department store sold your debt to the debt collector so they don't have to deal with it anymore. You have rights when contacted by debt collectors. You can negotiate a deal so that the amount you actually pay is lower than what you owe. It is illegal for them to quote you for a higher amount than what you actually owe! Also, they can't threaten you or pretend to be a credit bureau. Your best bet is to work with them and negotiate a better payment. Don't give up. Collectors often times purchase the debt for a very low amount, so even if you pay less than what you actually owe, the collector will still make a profit. https://www.credit.com/debt/collections-crash-course/", "title": "" }, { "docid": "69c0b762b3bcc88cf243d2bc0f4f0195", "text": "What I would prefer is top open a new category charges under dispute and park the amount there. It can be made as an account as well in place of a income or expenses category. This way your account will reconcile and also you will be able to track the disputes.", "title": "" } ]	fiqa
ba5d9eb32333497ec3bc4b2f6adb2c79	Choosing the “right” NAPFA advisor, and whether fees are fair, etc.?	[ { "docid": "54db13a53d574da9ddcc67071d469716", "text": "Some sample prices for straightforward pay-for-hours-or-deliverables planners: I think I've seen some similar rates elsewhere, too. I'd feel like you might get something perfunctory and boilerplate for too much less than $1000 - how could the person afford to spend much time? - and I'd feel like lots more than $1000 for just a standard straightforward plan might be a ripoff. Basically you're paying $1000 for a day or two of work, you don't want just a couple hours of work, but you don't need a week of work either. Anyway, extracting the general guideline (since prices may vary regionally or over time), you could figure it takes a day or two to do a decent job on a basic complete financial plan without a lot of complexities in it. From there you can decide what's fair, adding or subtracting time if you need less than a complete plan or have complex issues. This is assuming you're paying for time and deliverables, which is not a given. The biggest factor in how much you pay is probably how they charge; a couple of the most common models, (There are other models but these are the ones I've seen most.) The difference between these two models is a lot of money over time. Hourly is going to be much cheaper, because it's a one-time cost instead of ongoing, and unrelated to what you have in assets. However, you won't get investment management, which can be valuable if you aren't the kind to stick to an investment plan or you want someone else to completely take care of it for you. The investment-management planners have the potential to make a lot more money (and are more likely to be in it for the money). Hourly planners don't really have as good a business from a business owner's perspective, but they are cheaper from a customer perspective, as long as you're happy to DIY a bit. One thing I like about hourly planners is that I don't really feel investments are the main place planners can add value, so it makes me nervous to have the compensation based on that. Insurance, estate planning, taxes, etc. are where it's harder for a layperson to know all the ins and outs and DIY. From what I've seen, the cheapest planners are the ones that you can get free or discounted from companies like USAA or Vanguard if you have an account with them. However, they will only recommend products from the company in question, so that's a downside, and you probably won't get to meet them in person. This question may be useful too: What exactly can a financial advisor do for me, and is it worth the money?", "title": "" }, { "docid": "12b806671cb1b52fd455e729cbb9e107", "text": "The nature of this question (finding a financial adviser) can make it a conundrum. Those who have little financial experience are often in the greatest need of a financial adviser and at the same time are the least qualified to select one. I'm not putting you or anyone in particular in this category. And of course it's a sliding scale: In general the more capable you are of running your own finances the more prepared you are to answer this question. With that said, I would recommend backing up half a step. Consider advisers other than strictly fee-only advisers. Perhaps you have already considered this decision. But perhaps others reading this have not. My (Ameriprise) adviser charges a monthly (~$50) fee, but also gets percentage-based portions of certain investments. Based on a $150/hr rate that amounts to four hours per year. Does he spend four hours per year on my account? Well so far he does (~2 yrs). But that is determined primarily by how much interaction I choose to have with him. (I suppose I could spend more time asking him questions and less time on this forum. :P) I have never fully understood the gravitation towards fee-based advisers on principle. I guess the theory is they are not making biased decisions about your investments because they don't have as much of a stake in how well your investments to do. I don't necessarily see that as an advantage. It seems they would have less of an incentive to ensure the growth of your investments. Although if you're nearing retirement then growth isn't your biggest concern. Perhaps a fee-based adviser makes more sense in that scenario. Whatever pay structure your adviser uses, it would seem to make sense to consider a successful adviser with a good client base. This implies that the adviser knows what he/she is doing. (But it could also just be a sign that they are good at marketing themselves.) If your adviser has a good base of wealthy clients then choosing a strictly-fee based adviser would mitigate the risk of your adviser having less incentive to consider your portfolio vs that of more wealthy clients. To more directly answer your question I suggest asking several of your adviser candidates for advice on choosing an adviser. I suspect you will get some good advice as well as good insight on the integrity and honesty of the adviser.", "title": "" }, { "docid": "02652a2907593af155500446726db5b3", "text": "Usually your best bet for this sort of thing is to look for referrals from people you trust. If you have a lawyer or other trusted advisor, ask them.", "title": "" } ]	[ { "docid": "e151f96ccd054770a6a4f945657f69ae", "text": "Well, what I would do would be to read every journalist's article on the subject, every academic paper, and the appropriate chapters from the CFA curriculum. I'd write down everyone's name (authors and those mentioned) and then email call them for advice. I'd try to find out who those players are, what their specific philosophies are, and then find someone i thought was really smart, had an investment philosophy that I agreed with, wasn't a dick, and then I would call them. By the way, Warren Buffett went to Columbia to learn specifically under Ben Graham. Prior to graduation, Buffett said he'd like to work at Graham Newman for free, such was the value of the education. Benjamin Graham told him (Warren), he wasn't worth that much. You or I literally have nothing to offer these guys that they can't get somewhere else (smarts, hard work, etc) for better. I'd be humble, attentive, and humble (did I say that already). There's an intellectual honesty that comes with admitting you don't know anything (but are willing to learn) that is very much important. That's what I would do. Did any of that help?", "title": "" }, { "docid": "9d53eb6e97cd4e36144f3f6406937ca0", "text": "Thanks for the huge insight. I am still a student doing an intern and this was given as my first task, more of trying to give the IA another perspective looking at these funds rather than picking. I was not given the investors preference in terms of return and risk tolerances so it was really open-ended. However, thanks so much for the quick response. At least now I have a better idea of what I am going to deliver or at least try to show to the IA.", "title": "" }, { "docid": "998308ee3ff8f396abe59c9e60451502", "text": "In addition to a fee-only advisor, brought up by dg99, you could consider asking your questions on message boards such as Bogleheads.org. I have found the advice amazing, obviously conflict-free, and free.", "title": "" }, { "docid": "d7701032534ea45756ab7256d60fb80c", "text": "If liquidity and cost are your primary objectives, Vanguard is indeed a good bet. They are the walmart of finance and the absolute best at minimizing fees and other expenses. Your main portfolio holding should be VTI, the total stock market fund. Highly liquid and has the lowest fees out there at 0.05%. You can augment this with a world-minus-US fund if you want. No need to buy sector or specific geography funds when you can get the whole market for less. Add some bond funds and alternative investments (but not too much) if you want to be fully diversified.", "title": "" }, { "docid": "dd9f84c3f528cd71c73bf4a5f52ceaa7", "text": "I've addressed some of the problems with the new fiduciary rule in other threads, but basically no one is arguing that advisors shouldn't be fiduciaries. Of course they should, and the vast majority do. What this rule effectively does is simply alter the way that advisors are compensated on retirement assets such as 401(k)'s, by forcing them to hold these assets in RIA accounts. This is not necessarily in the best interest of the client. (Yes I am aware of the Best Interest Contract Exemption, or BICE.) Perhaps more importantly, these types of regulations should be handled by one of the already existing regulator bodies, the SEC or FINRA. To bring in the DOL as a third regulatory body is a bit redundant to say the least. I think a far easier solution (in concept, at least) is that any FINRA registered advisor (which is basically all advisors aside from pure insurance agents) should be held to the Fiduciary standard and not simply the Suitability standard", "title": "" }, { "docid": "9d67e11a7c3b69dc6f4b90c0aaaa9054", "text": "I don't know what you mean by 'major'. Do you mean the fund company is a Fidelity or Vanguard, or that the fund is broad, as in an s&P fund? The problem starts with a question of what your goals are. If you already know the recommended mix for your age/risk, as you stated, you should consider minimizing the expenses, and staying DIY. I am further along, and with 12 year's income saved, a 1% hit would be 12% of a year's pay, I'd be working 1-1/2 months to pay the planner? In effect, you are betting that a planner will beat whatever metric you consider valid by at least that 1% fee, else you can just do it yourself and be that far ahead of the game. I've accepted the fact that I won't beat the average (as measured by the S&P) over time, but I'll beat the average investor. By staying in low cost funds (my 401(k) S&P fund charges .05% annual expense) I'll be ahead of the investors paying planner fees, and mutual fund fees on top of that. You don't need to be a CFP to manage your money, but it would help you understand the absurdity of the system.", "title": "" }, { "docid": "77509b644e1d0e4ad5a936133c0a9d39", "text": "Yes, maybe for themselves, but for you that depends on quite a number of things. But not all advisors are scum, but accept the fact that you are their cash cow and you are there for their takings. Some advisors are true to their professions and advise ethically, trying to get the best for their clients. So search for a good advisor rather than a cheap one. And regarding the mortgage you are talking about, the mortgage provider and the mortgage taker don't deal directly, but use their solicitors. Every party wants the least of legal hassles for their transactions and get the best legal help. The financial advisor maybe both rolled into one or he has legal practitioners in his firm who would do the legal job after he takes care of the financial matters. Seems a cost effective workshop.", "title": "" }, { "docid": "88bb43b977aa1af15ce7a4b0fd2dbc66", "text": "Zero. Zero is reasonable. That's what Schwab offers with a low minimum to open the IRA. The fact is, you'll have expenses for the investments, whether a commission on stock purchase or ongoing expense of a fund or ETF. But, in my opinion, .25% is criminal. An S&P fund or ETF will have a sub-.10% expense. To spend .25% before any other fees are added is just wrong.", "title": "" }, { "docid": "e4802676fb212fb31deb76ed41c3b534", "text": "I can't speak about the UK, but here in the US, 1% is on the cheap side for professional management. For example Fidelity will watch your portfolio for that very amount. I doubt you could claim that they took advantage of her for charging that kind of fee. Given that this is grandma's money, no consultation with the family is necessary. Perhaps she did have dementia at the time of investment, but she was not diagnosed at the time. If a short time has past between the investment and the diagnosis, I would contact the investment company with the facts. I would ask (very nicely) that they refund the fee, however, I doubt they under obligation to do so. While I do encourage you to seek legal council, there does not seem to be much of substance to your claim. The fees are very ordinary or even cheap, and no diagnosis precluded decision making at the time of investment.", "title": "" }, { "docid": "95c4373999574da309599b1f5a8a1c45", "text": "\"No, I do not. The advice is to take advice :-) but it is not required. Several \"\"low cost\"\" SIPPs allow an \"\"Execution Only\"\" transfer from some pensions (generally not occupational or defined benefits schemes [where transfers are generally a bad idea anyway] but FAVCs such as mine are ok). Best Invest is one such, and the fees are indeed relatively low. As far as anyone knows, the government's plans for changes to rules on using pension funds would still apply even once I've transferred my pension pot and begun to withdraw funds (provided I don't commit myself to an annuity or other irrevocable investment). I am not a financial adviser, nor employed or otherwise connected with Best Invest, and I'm not endorsing their SIPP schemes, just giving them as an example of what can be done. [Added after I carried out my plan] I found the process very straightforward; I needed to apply for a pension fund with my new provider and fill in a transfer form, which set up the scheme and transferred the funds with no expense required. Once the money arrived in my pension account I filled in another form to take the lump sum and set up regular withdrawals from the fund. I had my lump sum within a couple of months of initiating the transfer. I'm very happy I did not take independent advice because it would have been very poor value for money. During my researches I was approached eagerly by one firm promising to get me my money quick and claiming to be an independent financial advisor. Luckily I mistrusted the service they offered.\"", "title": "" }, { "docid": "b7b878e6400b862413de573f3e40ce21", "text": "If you don't know how to evaluate funds and are looking for someone to help you make good investment decisions, then you want a financial advisor. My suggestion is to look for one that 1) doesn't try to sell you insurance first (since insurance is an expense, not an investment), 2) can explain to you the the relationship between risk and return (and what mix is right for you) and 3) recommends funds that have good demonstrated returns after fees have been removed. If you plan to pick your own funds and just want a transaction broker, go with one of the free/cheap online discount brokers. Many let you invest in hundreds of different funds, so look for brokers with the cheapest fees.", "title": "" }, { "docid": "c8eb242062af3deb1b43b4460f7fe2ce", "text": "As these all seem to be US Equity, just getting one broad based US Equity index might offer similar diversification at lower cost. Over 5 years, 20 basis points in fees will only make about 1% difference. However, for longer periods (retirement saving), it is worth it to aim for the lowest fees. For further diversification, you might want to consider other asset classes, such as foreign equity, fixed income, etc.", "title": "" }, { "docid": "ed961bc386f62746a9c09a3a9344c4f0", "text": "Frankly, the article is mostly right, but I disagree with his specific recommendation. Why use one of these software services at all? Put your money into a retirement (or other) account and invest it in index funds. Beating index funds over the long run is pretty difficult, and if anyone's going to do it, it won't be someone that treats it like a hobby, regardless of whether you pick stocks yourself or let some software do it for you. I personally think the big value-add from investment advisers only comes in the form of tax and regulation advice. Knowing what kind of tax-exempt accounts exist and what the rules for them are is useful, and often non-trivial to fully grasp and plan for. Also, the investment advisers I've talked to seemed to be pretty knowledgeable about that sort of thing, whereas their understanding of investment concepts like risk/reward tradeoffs, statistics, and portfolio optimization is generally weak.", "title": "" }, { "docid": "9ccbe48d6f0a1c3b352c34d3a5ebb5fb", "text": "Are there particular, established businesses that provide these services? Yes! There are many fee-based financial advisors that provide such services. These might help: http://www.ricedelman.com/galleries/default-file/how-to-choose-financial-advisor.pdf http://www.ricedelman.com/cs/education/article?articleId=990#.Us7cyPRDt1Y", "title": "" }, { "docid": "9875dd957dc481403a4c717d088558de", "text": "I'd advise you to look for an advisor who is a NAPFA-Registered Financial Advisor. If you visit the National Association of Personal Financial Advisors (NAPFA) website (http://www.napfa.org) and understand why they are different, I think you'll agree that the NAPFA-Registered Financial Advisor is the highest standard of excellence you will find in a financial planner.", "title": "" } ]	fiqa
0f35c75ac70f7652b97f95457628f061	How do amortization schedules work and when are they used?	[ { "docid": "adec58e5102508233bfc4c6560c3bb52", "text": "An amortization schedule is often used to produce identical payments for the term (repayment period) of a loan, resulting in the principal being paid off and the debt retired at the end of the loan. This is in contrast to an interest only, or balloon loan. These loans require little or no payment against the balance of the loan, requiring the loan to be paid indefinitely if there is no term, or requiring the loan to be entirely paid off from cash or a new loan at the end of the term. A basic amortization formula can be derived from the compound interest formula: This formula comes from the Wikipedia article on amortization. The basics of the formula are the periodic payment amount, A (your monthly payment), can be determined by the principal loan, P, the rate, r, and the number of payments, n. Lenders lend money to make a profit on the interest. They'd like to get back all the money they lent out. Amortization schedules are popular because the fixed low payments make it easier for borrowers to pay the loan off eventually. They also tend to be very profitable for lenders, especially at the start of the term, because they make a lot of profit on interest, just like the start of your mortgage. The principal of a mortgage has more meaning than the principal of a revolving debt credit card. The mortgage principal is fixed at the start, and represents the value of the collateral property that is your home. You could consider the amount of principal paid to be the percentage of your home that you actually own (as part of your net worth calculation). A credit card has a new balance each month depending on how much you charge and how much you pay off. Principal has less meaning in this case, because there is no collateral to compare against, and the balance will change monthly. In this case, the meaning of the amortization schedule on your credit card is how long it will take you to pay off the balance if you stop charging and pay at the proscribed payment level over the term described. Given the high interest rate on credit cards, you may end up paying twice as much for goods in the long run if you follow your lenders schedule. Amortizing loans are common for consumer loans, unless a borrower is seeking out the lowest possible monthly payment. Lenders recognize that people will eventually die, and want to be paid off before that happens. Balloon and interest only bonds and loans are more commonly issued by businesses and governments who are (hopefully) investing in capital improvements that will pay off in the long run. Thousands of people and businesses have gone bankrupt in this financial crisis because their interest only loans reached term, and no one was willing to lend them money anymore to replace their existing loan.", "title": "" }, { "docid": "0a5c999f6f2d116c516acbe766c1eaae", "text": "Amortization is the process by which your loan balance decreases over time. For both mortgages and credit card balances, your interest charges are based on what you owe. The calculation of the balance is a little different, but it still is based on what you owe. You're observing correctly that most of the first payments on a mortgage are interest. This stands to reason since an amortization schedule (for a fixed-rate mortgage) is constructed on the assumption that you're making your payments equally over the course of the mortgage. Since you owe more at the beginning, you accrue more interest, and a larger fraction of your payment is interest. Near the end, you owe little, and most of your payment, therefore, is principal.", "title": "" }, { "docid": "33566963de30c4b510e893fd513777f9", "text": "Both Credit Card and Mortgage work on same principle. The interest is calculated on the remaining balance. As the balance reduces the interest reduces. The Mortgage schedule is calculated with the assumption that you would be paying a certain amount over a period of years. However if you pay more, then the balance becomes less, and hence the subsequent interest also reduces. This means you would pay the loan faster and also pay less then originaly forecasted. The other type of loan, typically personal loans / auto loans in older days worked on fixed schedule. This means that you need to pay principal + Pre Determined interest. This is then broken into equal monthly installment. However in such a schedule, even if you pay a lumpsum amount in between, the total amount you need to pay remains same. Only the tenor reduces.", "title": "" }, { "docid": "b3415a1c53a9d79df08c7fa642104a2f", "text": "Simply put, for a mortgage, interest is charged only on the balance as well. Think of it this way - on a $100K 6% loan, on day one, 1/2% is $500, and the payment is just under $600, so barely $100 goes to principal. But the last payment of $600 is nearly all principal. By the way, you are welcome to make extra principal payments along with the payment due each month. An extra $244 in this example, paid each and every month, will drop the term to just 15 years. Think about that, 40% higher payment, all attacking the principal, and you cut the term by 1/2 the time.", "title": "" } ]	[ { "docid": "7e2ae1fcb74c88fc96b0b69032761916", "text": "How does compounding of annual interest work? answers this question. It's not simple compound interest. It's a time value of money calculation similar to mortgage calculations. Only the cash flow is the other way, a 'deposit' instead of 'payment'. When using a finance calculator such as the TI-BA35 (Note, it's no longer manufactured, but you can find secondhand. It was the first electronic device I ever loved. Seriously) you enter PV (present value) FV (future value) Int (the interest rate) nPer (number of periods) PMT (payment). For a mortgage, there's a PV, but FV = $0. For you, it's reversed. PMT on this model is a positive number, for you it's negative, the amount you deposit. You also need to account for the fact that a mortgage is paid on day 31, but you start deposits on Day 1. See the other answer (I linked at start) for the equations.", "title": "" }, { "docid": "ff4d4bc62843ecc3a7e577f770f4cfb4", "text": "Many people, especially with lower income/skill/education, have poor money management skills to the point where they will not be able to ration their money for a full month. If the payment schedule is reduced to weekly or bi-weekly it becomes easier for such people to make non-discretionary payments.", "title": "" }, { "docid": "0a69573b10bc69c804febd5912f716dc", "text": "\"There is no formula that can be applied to most variations of the problem you pose. The reason is that there is no simple, fixed relationship between the two time periods involved: the time interval for successive payments, and the time period for successive interest compounding. Suppose you have daily compounding and you want to make weekly payments (A case that can be handled). Say the quoted rate is 4.2% per year, compounded daily Then the rate per day is 4.2/365, or 0.0115068 % So, in one week, a debt would grow through seven compoundings. A debt of $1 would grow to 1 * (1+.000225068)^7, or 1.000805754 So, the equivalent interest rate for weekly compounding is 0.0805754% Now you have weekly compounding, and weekly payments, so the standard annuity formulas apply. The problem lies in that number \"\"7\"\", the number of days in a week. But if you were trying to handle daily / monthly, or weekly / quarterly, what value would you use? In such cases, the most practical method is to convert any compounding rate to a daily compounding rate, and use a spreadsheet to handle the irregularly spaced payments.\"", "title": "" }, { "docid": "55c6a70dc07cee2d9521fb386f8a4a85", "text": "\"they apply it to my next payment That's what my bank did with my auto loan. I got so far ahead that once I was able to skip a payment and use the money I would have sent the bank that month for something else. Still, though, I kept on paying extra, and eventually it was paid off faster than \"\"normal\"\". EDIT: what does your loan agreement say is supposed to happen to extra payments?\"", "title": "" }, { "docid": "0aa076ab8960aa77009c1706bff7e023", "text": "I think they're compounding the interest daily. That means you have to look at the number of days between payments to judge how much the interest charge is. From February 3 to March 2 is 28 days (2012 was a leap year). From March 2 to April 3 is 32 days. That's an increase of about 14% in number of days between payments, which accounts reasonably well to the ~$18 difference in interest charge. Daily compounding also explains the minor fluctuations in the other interest charges. I think if you compute interest/day for each month, you'll find that it is, indeed, decreasing over time.", "title": "" }, { "docid": "54100a57d47534dc11922682d2510962", "text": "In the prior PMI discussions here, it's been stated that the bank is not obligated to remove PMI until the mortgage's natural amortization puts the debt at 78% LTV. So, paying in advance like this will not automatically remove the PMI. Nor will a lump sum payment be certain to move the next payment ahead a year. If it's entered as a principal prepayment, the next month's payment is still due. In the world of coupon books, if you sent in a year's payments, you'd not benefit from the interest saved, in one year you'd owe what the amortization table tells you. There's no free lunch when it comes to mortgages or finance in general. This is why we usually caution that one should not be cash poor the day after buying a house. Best to save 30%, put down 20%, and have a cushion after the closing.", "title": "" }, { "docid": "d1eee4f33571648fb95733b26e6f5736", "text": "\"Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \"\"relations\"\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \"\"VWAP +\"\" trades you are eligible for their corporate well-being programs and other \"\"sponsorship\"\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\"", "title": "" }, { "docid": "07fdc7b5970696df79b88b33158237ba", "text": "\"I recently requested an off-schedule escrow analysis. We refinanced a house in August and the servicer got confused about when the home owner's insurance was due (in October). They refunded the \"\"insurance\"\" money to us in September. That combined with the fact that the insurance amount was different than what they expected, made me request the escrow analysis. That way I can decide whether to pay up the escrow account now or do it over the next year. The servicer agent just said that the monthly payment amounts might change again in January when they do the usual analysis. If you like to set up automatic payments, that would be a downside. I haven't done that yet, so not a problem for me.\"", "title": "" }, { "docid": "855bbd660fa58a9434d0eaa33570e747", "text": "When I called Navient about this exact question last year they told me that my loan is a term length loan; so if I were to make extra payments on one of my dozen loans then my total monthly payment would be adjusted (go down) in order to make sure that my loans would still be paid off in x months. It is very important to note however that Navient has at least 4 loan payment types that I know of so I can make no assurances that yours will work the same way. The only way to get an absolute answer to this is going to be to Call Navient and ask them.", "title": "" }, { "docid": "2f8f990af90faba58a954153cb31db3a", "text": "\"There are some loan types where your minimum payment may be less than the interest due in the current period; this is not true of credit cards in the US. Separately, if you have a minimum payment amount due of less than the interest due in the period, the net interest amount would just become principal anyway so differentiating it isn't meaningful. With credit cards in the US, the general minimum calculation is 1% of the principal outstanding plus all interest accrued in the period plus any fees. Any overpayment is applied to the principal outstanding, because this is a revolving line of credit and unpaid interest or fees appear as a charge just like your coffee and also begin to accrue interest. The issue arises if you have multiple interest rates. Maybe you did a balance transfer at a discounted interest rate; does that balance get credited before the balance carried at the standard rate? You'll have to call your lender. While there is a regulation in place requiring payment to credit the highest rate balance first the banks still have latitude on how the payment is literally applied; explained below. When there IS an amortization schedule, the issue is not \"\"principal or interest\"\" the issue is principle, or the next payment on the amortization schedule. If the monthly payment on your car loan is $200, but you send $250, the bank will use the additional $50 to credit the next payment due. When you get your statement next month (it's usually monthly) it will indicate an amount due of $150. When you've prepaid more than an entire payment, the next payment is just farther in to the future. You need to talk to your lender about \"\"unscheduled\"\" principal payments because the process will vary by lender and by specific loan. Call your lender. You are a customer, you have a contract, they will explain this stuff to you. There is no harm that can possibly come from learning the nuances of your agreement with them. Regarding the nuance to the payment regulation: A federal credit card reform law enacted in May 2009 requires that credit card companies must apply your entire payment, minus the required minimum payment amount, to the highest interest rate balance on your card. Some credit card issuers are aggressive here and apply the non-interest portion of the minimum payment to the lowest interest rate first. You'll need to call your bank and ask them.\"", "title": "" }, { "docid": "36030ca6e5aee86487df2458ca0ce83e", "text": "Why won't anyone just answer the original question? The question was not about opportunity cost or flexibility or family expenses. There are no right answers to any of those things and they all depend on individual circumstances. I believe the answer to the question of whether paying off a 30-year mortgage in 15 years would cost the same amount as a 15-year mortgage of the same interest rate is yes but ONLY if you pay it off on the exact same schedule as your supposed 15-year. In reality, the answer is NO for two reasons: the amortization schedule; and the fact that the 30-year will always have a higher interest rate than the 15-year. The way mortgages are amortized, the interest is paid first, essentially. For most people the majority of the monthly payment is interest for the first half of the loan's life. This is good for most people because, in reality, most mortgages only last a couple years after which people refinance or move and for those first couple years the majority of one's housing costs (interest) are tax deductible. It is arguable whether perpetuating this for one's entire life is wise... but that's the reality of most mortgages. So, unless you pay off your 30-year on the exact same amortization schedule of your theoretical 15-year, you will pay more in interest. A common strategy people pursue is paying an extra monthly payment (or more) each year. By the time you get around to chipping away at your principal in that way, you will already have paid a lot more interest than you would have on a 15-year. And, really, if you can afford to substantially pay down principal in the first year or two of your mortgage, you probably should've borrowed less money to begin with. In theory, IF the rates were the same (they're not) and IF you paid the 30 off every month in the EXACT same way as you would've paid a 15 (you won't) you will pay the same amount in the end. You have to decide if the flexibility is worth more to you than the cost savings. For example: a 300k mortgage at 3.5% will have a monthly payment of ~$2150 for a 15-year and ~$1350 for a 30-year, both will start with ~$875/month of that being in interest (gradually declining with time). What I think most people undervalue is the freedom and peace of mind that comes with a paid off or nearly paid off home... and 15 years is a lot more tangible than 30, plus a lot cheaper over all. If you can afford a 15-year mortgage without putting too much stress on your budget, it is definitely the better option for financial security. And be careful of the index fund opportunity cost advice. On average it may be a good idea when you look at the very long run, historically, but a lot of people get less than average returns depending on when they buy and what the market does in the short run. There is no certainty around what returns you will get from the stock market, but if you have a 30-year mortgage there is a lot of certainty around what you will owe every month for the next 30-years. Different mixes of investments make sense for different people, and most people would be wise to get some exposure to the stock market for its returns and liquidity. However, if someone's goal is borrowing more money for their house in order to invest more money in the stock market for their retirement, they would actually be better served in achieving security and independence 15 years sooner.", "title": "" }, { "docid": "6a5c235f65fc1356e1a56bb1815957f7", "text": "\"a link to this article grabbed my Interest as I was browsing the site for something totally unrelated to finance. Your question is not silly - I'm not a financial expert, but I've been in your situation several times with Carmax Auto Finance (CAF) in particular. A lot of people probably thought you don't understand how financing works - but your Car Loan set up is EXACTLY how CAF Financing works, which I've used several times. Just some background info to anyone else reading this - unlike most other Simple Interest Car Financing, with CAF, they calculate per-diem based on your principal balance, and recalculate it every time you make a payment, regardless of when your actual due date was. But here's what makes CAF financing particularly fair - when you do make a payment, your per-diem since your last payment accrued X dollars, and that's your interest portion that is subtracted first from your payment (and obviously per-diem goes down faster the more you pay in a payment), and then EVerything else, including Any extra payments you make - goes to Principal. You do not have to specify that the extra payment(S) are principal only. If your payment amount per month is $500 and you give them 11 payments of $500 - the first $500 will have a small portion go to interest accrued since the last payment - depending on the per-diem that was recalculated, and then EVERYTHING ELSE goes to principal and STILL PUSHES YOUR NEXT DUE DATE (I prefer to break up extra payments as precisely the amount due per month, so that my intention is clear - pay the extra as a payment for the next month, and the one after that, etc, and keep pushing my next due date). That last point of pushing your next due date is the key - not all car financing companies do that. A lot of them will let you pay to principal yes, but you're still due next month. With CAF, you can have your cake, and eat it too. I worked for them in College - I know their financing system in and out, and I've always financed with them for that very reason. So, back to the question - should you keep the loan alive, albeit for a small amount. My unprofessional answer is yes! Car loans are very powerful in your credit report because they are installment accounts (same as Mortgages, and other accounts that you pay down to 0 and the loan is closed). Credit cards, are revolving accounts, and don't offer as much bang for your money - unless you are savvy in manipulating your card balances - take it up one month, take it down to 0 the next month, etc. I play those games a lot - but I always find mortgage and auto loans make the best impact. I do exactly what you do myself - I pay off the car down to about $500 (I actually make several small payments each equal to the agreed upon Monthly payment because their system automatically treats that as a payment for the next month due, and the one after that, etc - on top of paying it all to principal as I mentioned). DO NOT leave a dollar, as another reader mentioned - they have a \"\"good will\"\" threshold, I can't remember how much - probably $50, for which they will consider the account paid off, and close it out. So, if your concern is throwing away free money but you still want the account alive, your \"\"sweet spot\"\" where you can be sure the loan is not closed, is probably around $100. BUT....something else important to consider if you decide to go with that strategy of keeping the account alive (which I recommend). In my case, CAF will adjust down your next payment due, if it's less than the principal left. SO, let's say your regular payment is $400 and you only leave a $100, your next payment due is $100 (and it will go up a few cents each month because of the small per-diem), and that is exactly what CAF will report to the credit bureaus as your monthly obligation - which sucks because now your awesome car payment history looks like you've only been paying $100 every month - so, leave something close to one month's payment (yes, the interest accrued will be higher - but I'm not a penny-pincher when the reward is worth it - if you left $400 for 1.5 years at 10% APR - that equates to about $50 interest for that entire time - well worth it in my books. Sorry for rambling a lot, I suck myself into these debates all the time :)\"", "title": "" }, { "docid": "69ac5ff91f14b449464ffc5a50c2545a", "text": "\"Is there more on where Dalio gets his definitions for the short-term debt cycle (5-8 years or so) and \"\"deleveraging\"\" and the long-term debt cycle (75-100 years)? (or his evidence that separates the two)? At one point 18:10, he says the difference is that in a deleveraging, interest rates hit 0 and can no longer go lower, but I don't know if that works as a definition per se. There are other things that central banks do when interest rates hit 0, like buy up assets (which he does mention and include in the \"\"print money\"\" category of things that can be done during a deleveraging). And one of the deleveragings he cites, England in the 1950s, according to Wikipedia was due to difficulty in transitioning out from war production, and according to [this excel file](http://www.bankofengland.co.uk/statistics/Documents/rates/baserate.xls) from the Bank of England on historical rates, it doesn't say interest rates went to 0 at that time (unless Dalio is referring to another point in history when he cites 1950s England). 20:30 His definition of a depression is when debt restructuring or defaults happen. Interesting. What I learned was that there isn't really a hard and fast definition for recessions and depressions (e.g. a recession is two quarters of negative growth in a row and a depression is just a reeeaallly bad/long recession). And I don't think I recall encountering in the past an attempt to define what a \"\"deleveraging\"\" event of an economy is. 24:30 Is debt reduction and redistribution of wealth deflationary? I think it depends on how much the debt reduction or redistribution hurts the spending of the lender or wealthy versus how much it helps the spending of the borrower or the poor. Both are actually similarly \"\"giving some from the haves to the have nots,\"\" and especially redistribution of wealth is similar to fiscal spending, which is mentioned 25:30 as a valid inflationary way to try to help the economy. 26:00 Are deflationary methods (say, austerity) needed to balance out the inflationary methods (central bank buying assets and fiscal spending)? Aren't central bank (interest rates, quantitative easing) and the government (fiscal policy) still the main things that move inflation or deflation? I would think that debt reduction and redistribution of wealth are good when needed, but I wouldn't think you would do those things mainly for their (supposed, see above for my doubts) deflationary effects. Still, a very interesting video and one of the best presented videos on a difficult subject.\"", "title": "" }, { "docid": "5841080e5f9aba6ff7e24e94ad1e718b", "text": "\"This sounds like an accounting nightmare to be 100% precise. With each payment you're going to have to track: If you can account for those, then the fair thing to do is for one person to stop paying after they have paid the amount of principal they had at the beginning of the process, or possibly after they have paid an amount equivalent to the total principal and accrued interest they would have paid if they paid their loans individually. The problem is, one of you is likely going to pay more interest than you would have under the individual plan. In the example you gave, if your brother pays off any of your loans, he is going to be paying more in interest than if he paid on his 5% loans. If you pay the highest rate loans first, whoever has the lower total balance is going to pay more interest since they'll be paying on the higher rates until they've paid their \"\"fair share\"\". I don't see a clean way for you to divvy up the interest savings appropriately unless you trueup at the very end of the process. Math aside, these types of agreements can be dangerous to relationships. What if one of you decides that they don't want to participate anymore? What if one of you gets all of their loans paid off much earlier - they get the joy of being debt free while the other still has all of the debt left? What if they then don't feel obligates to pay the other's remaining debt? Are you both equally committed to cutting lifestyle in order to attack these debts? In my opinion, the complexity and risk to the relationship don't justify the interest savings.\"", "title": "" }, { "docid": "b3acc09fce33e69930d2bf14ced64bb7", "text": "If I recall correctly, the pay schedule is such that you initially pay mostly interest. As James Roth suggests, look at the terms of the loan, specifically the payment schedule. It should detail how much is being applied to interest and how much to the actual balance.", "title": "" } ]	fiqa
ab3c233ff2a00b4dcb3ac2c66b635e2e	Are bonds really a recession proof investment?	[ { "docid": "64c0b0145f00311c55adb823be67edff", "text": "No, they are not recession proof. Assume several companies, that issued bonds in the fund, go bankrupt. Those bonds could be worthless, they could miss principle payments, or they could be restructured. All would mean a decline in value. When the economy shrinks (which is what a recession is) how does the Fed respond? By lowering interest rates. This makes current bonds more valuable as presumably they were issued at a higher rate, thus the recession proof prejudice. However, there is nothing to stop a company (in good financial shape) from issuing more bonds to pay the par value on high-interest bonds, thus refinancing their debt. Sort of like how the bank feels when one refinances the mortgage for a lower rate. The thing that troubles me the most is that rates have been low for a long time. What happens if we have a recession now? How does the Fed fix it? I am not sure exactly what the fallout would be, but it could be significant. If you are troubled, you should look for sectors that would be hurt and helped by a Trump-induced recession. Move money away from those that will be hurt. Typically aggressive growth companies are hurt (during recessions), so you may want to move money away from them. Typically established blue chip companies fare okay in a recession so you may want to move money toward them. Move some money to cash, and perhaps some towards bonds. All that being said, I'd keep some money in things like aggressive growth in case you are wrong.", "title": "" }, { "docid": "1856f12fa004f6ee1b1d9889a4827b0d", "text": "Bonds by themselves aren't recession proof. No investment is, and when a major crash (c.f. 2008) occurs, all investments will be to some extent at risk. However, bonds add a level of diversification to your investment portfolio that can make it much more stable even during downturns. Bonds do not move identically to the stock market, and so many times investing in bonds will be more profitable when the stock market is slumping. Investing some of your investment funds in bonds is safer, because that diversification allows you to have some earnings from that portion of your investment when the market is going down. It also allows you to do something called rebalancing. This is when you have target allocation proportions for your portfolio; say 60% stock 40% bond. Then, periodically look at your actual portfolio proportions. Say the market is way up - then your actual proportions might be 70% stock 30% bond. You sell 10 percentage points of stocks, and buy 10 percentage points of bonds. This over time will be a successful strategy, because it tends to buy low and sell high. In addition to the value of diversification, some bonds will tend to be more stable (but earn less), in particular blue chip corporate bonds and government bonds from stable countries. If you're willing to only earn a few percent annually on a portion of your portfolio, that part will likely not fall much during downturns - and in fact may grow as money flees to safer investments - which in turn is good for you. If you're particularly worried about your portfolio's value in the short term, such as if you're looking at retiring soon, a decent proportion should be in this kind of safer bond to ensure it doesn't lose too much value. But of course this will slow your earnings, so if you're still far from retirement, you're better off leaving things in growth stocks and accepting the risk; odds are no matter who's in charge, there will be another crash or two of some size before you retire if you're in your 30s now. But when it's not crashing, the market earns you a pretty good return, and so it's worth the risk.", "title": "" }, { "docid": "c1abc18736c5ab5314bf49da7f5ab4ea", "text": "Without providing direct investment advice, I can tell you that bond most assuredly are not recession-proof. All investments have risk, and each recession will impact asset-classes slightly differently. Before getting started, BONDS are LOANS. You are loaning money. Don't ever think of them as anything but that. Bonds/Loans have two chief risks: default risk and inflation risk. Default risk is the most obvious risk. This is when the person to whom you are loaning, does not pay back. In a recession, this can easily happen if the debtor is a company, and the company goes bankrupt in the recessionary environment. Inflation risk is a more subtle risk, and occurs when the (fixed) interest rate on your loan yields less than the inflation rate. This causes the 'real' value of your investment to depreciate over time. The second risk is most pronounced when the bonds that you own are government bonds, and the recession causes the government to be unable to pay back its debts. In these circumstances, the government may print more money to pay back its creditors, generating inflation.", "title": "" }, { "docid": "c5f637de23473422719e110e6896e210", "text": "You're mixing up two different concepts: low-risk and recession-proof. I'll assume I don't need to explain risk: there is always risk, regardless what form you keep your assets in. With bonds, the interest rate is supposed to reflect the risk. If a company offers bonds with too low an interest rate for the risk level, few people will buy them. While if a company offers bonds with too high an interest rate for the level of risk, they are gypping themselves. So a bond is a slightly more transparent investment from a risk assessment perspective, but that doesn't mean the risk is necessarily low: if you buy a bond with a 20% effective annual yield, that means there is quite a high risk that the underlying company will fold (unless inflation is in the double-digit range as well, in which case a 20% yield is not that much). Whereas with a stock, no parameter directly tells you anything about the risk. Recession-proof is not the same thing as low-risk. Recession-proof refers to investing in (or holding debt for) industries that perform better in a recession. http://www.investopedia.com/articles/stocks/08/industries-thrive-on-recession.asp.", "title": "" }, { "docid": "0d2a34b7c6b54f5691f7195098b23dde", "text": "\"That depends on how you're investing in them. Trading bonds is (arguably) riskier than trading stocks (because it has a lot of the same risks associated with stocks plus interest rate and inflation risk). That's true whether it's a recession or not. Holding bonds to maturity may or may not be recession-proof (or, perhaps more accurately, \"\"low risk\"\" as argued by @DepressedDaniel), depending on what kind of bonds they are. If you own bonds in stable governments (e.g. U.S. or German bonds or bonds in certain states or municipalities) or highly stable corporations, there's a very low risk of default even in a recession. (You didn't see companies like Microsoft, Google, or Apple going under during the 2008 crash). That's absolutely not the case for all kinds of bonds, though, especially if you're concerned about systemic risk. Just because a bond looks risk-free doesn't mean that it actually is - look how many AAA-rated securities went under during the 2008 recession. And many companies (CIT, Lehman Brothers) went bankrupt outright. To assess your exposure to risk, you have to look at a lot of factors, such as the credit-worthiness of the business, how \"\"recession-proof\"\" their product is, what kind of security or insurance you're being offered, etc. You can't even assume that bond insurance is an absolute guarantee against systemic risk - that's what got AIG into trouble, in fact. They were writing Credit Default Swaps (CDS), which are analogous to insurance on loans - basically, the seller of the CDS \"\"insures\"\" the debt (promises some kind of payment if a particular borrower defaults). When the entire credit market seized up, people naturally started asking AIG to make good on their agreement and compensate them for the loans that went bad; unfortunately, AIG didn't have the money and couldn't borrow it themselves (hence the government bailout). To address the whole issue of a company going bankrupt: it's not necessarily the case that your bonds would be completely worthless (so I disagree with the people who implied that this would be the case). They'd probably be worth a lot less than you paid for them originally, though (possibly as bad as pennies on the dollar depending on how much under water the company was). Also, depending on how long it takes to work out a deal that everyone could agree to, my understanding is that it could take a long time before you see any of your money. I think it's also possible that you'll get some of the money as equity (rather than cash) - in fact, that's how the U.S. government ended up owning a lot of Chrysler (they were Chrysler's largest lender when they went bankrupt, so the government ended up getting a lot of equity in the business as part of the settlement). Incidentally, there is a market for securities in bankrupt companies for people that don't have time to wait for the bankruptcy settlement. Naturally, people who buy securities that are in that much trouble generally expect a steep discount. To summarize:\"", "title": "" }, { "docid": "ee9df2baa01931a2cecc8427e6ca0189", "text": "During the hyperinflation of the Wiermer republic, corporate stocks and convertible bonds were thought second only to the species (gold, silver etc) as the only secure currencies. As Milton Friedman proved, inflation is caused solely by the monetary token supply increasing faster than productivity. In the past, days of species of currency, it was caused by governments debasing the currency e.g. streatching the same amount of silver in 50 coins to 100 coins. Sudden increases in the supply of precious metals can also trigger it. The various gold rushes in 19th century and later, improvements in extraction methods caused bouts of inflation. Most famously, the huge amounts of silver the Spanish extracted from the New World mines, devastated the European economy with high inflation. Governments use inflation as a form of stealth flat tax. Money functions as an Abstract Universal Trade Good and it obeys all the rules of supply and demand. If the supply of money goes up suddenly, then its value drops in relation to real goods and service. But that drop in value doesn't occur instantly, the increased quality of tokens has to percolate through the market before the value changes. So, the first institution to spend the infalted/debased currency can get the full current value from trade. The second gets slightly less, the third even less and so on. In 2008, the Federal reserve began printing money and loaning at 0% to insolvent backs who then used that money to buy T-Bill. This had the duel effect of giving the banks an (arbitrary) A1 rated asset for their fractional reserve while the Federal government got full pre-inflation value of the money paid for the T-bills. As the government spent that money, the number of tokens increased fast than the economy. In times of inflation, the value of money per unit drops as its supply increases and increases The best hedges against inflation are real assets e.g. land, equipment, stocks (ownership of real assets) and convertible bonds which are convertible to stock. It's important to remember that money is, of itself, worthless. It's just a technology that abstracts and smilies trading which at the base, is still a barter system. During inflation the barter value of money plunges owing to increased supply. But the direct barter value between any two real assets remain the same because their supplies have not changed. The value of stocks and convertible bonds is maintained by the economic activity of the company whose ownership they represent. Dividends, stock prices and bond equity, as measured in the inflated currency continue to rise in sync with inflation. Thus they preserve the original value of the money paid for them. Not sure why you expect more inflation. The only institution that can create inflation in the US is the Federal Reserve which Trump has no direct control off. Deregulation of banks won't cause inflation in and of itself as the private banks cannot alter the money supply. If banks fail, owing to deregulation, unlikely I think given the dismal nearly century long record of regulation to date, then the Federal Reserve might fix the problem with another inflation tax, but otherwise not.", "title": "" }, { "docid": "312d9c813916aa05b71e3fdeac51bd57", "text": "\"Yes. Bonds perform very well in a recession. In fact the safer the bond, the better it would do in a recession. Think of markets having four seasons: High growth and low inflation - \"\"growing economy\"\" High growth and high inflation - \"\"overheating economy\"\" Low growth and high inflation - \"\"stagflation\"\" Low growth and low inflation - \"\"recession\"\" Bonds are the best investment in a recession. qplum's flagship strategy had a very high allocation to bonds in the financial crisis. That's why in backtest it shows much better returns.\"", "title": "" } ]	[ { "docid": "c23b53bc04bcc29051aefdb3fdc28649", "text": "Avoiding fees would not be the primary reason to buy bonds yourself. No, the reason to buy bonds yourself in a retirement account is that you can hold them to maturity. Bond funds can and do lose value if interest rates rise (and gain it if interest rates fall). Of course the same happens with the bond that you hold, but you can hang on to it until maturity and get the face value out of it. That said, it would take some effort to put together a decent bond portfolio, especially if you were going to buy anything rated lower than the absolute best. I think it'd be fun to do, but I'm weird that way.", "title": "" }, { "docid": "f5f224b6fc38f1c0aa1c127dc0e0c132", "text": "If I invest X each month, where does X go - an existing (low yield) bond, or a new bond (at the current interest rate)? This has to be viewed in a larger context. If the fund has outflows greater than or equal to inflows then chances are there isn't any buying being done with your money as that cash is going to those selling their shares in the fund. If though inflows are greater than outflows, there may be some new purchases or not. Don't forget that the new purchase could be an existing bond as the fund has to maintain the duration of being a short-term, intermediate-term or long-term bond fund though there are some exceptions like convertibles or high yield where duration isn't likely a factor. Does that just depend on what the fund manager is doing at the time (buying/selling)? No, it depends on the shares being created or redeemed as well as the manager's discretion. If I put Y into a fund, and leave it there for 50 years, where does Y go when all of the bonds at the time I made the purchase mature? You're missing that the fund may buy and sell bonds at various times as for example a long-term bond fund may not have issues nearing maturity because of what part of the yield curve it is to mimic. Does Y just get reinvested in new bonds at the interest rate at that time? Y gets mixed with the other money in the fund that may increase or decrease in value over time. This is part of the risk in a bond fund where NAV can fluctuate versus a money market mutual fund where the NAV is somewhat fixed at $1/share.", "title": "" }, { "docid": "2333012e5a07165525b601550088a93f", "text": "There will always be another recession ahead. Accept that. Depending on your strategy, it could make sense to forge ahead. During a recession it may just take longer to recognize gains. Not always; there's plenty of ways to make money during a recession, and not all of them involve short positions. Now, if you're 75, living off of an investment account, perhaps you should move things to something less volatile.", "title": "" }, { "docid": "fe87a107006a1c915292432f35ec1d5c", "text": "Virtually zero risk of default; safety; diversification; guaranteed fixed income albeit very low; portfolio diversifier so it reduces total volatility; plus yields might drop even lower thus increasing the price of the bond. Very unlikely given how obscenely low yields already are but still possible. I thought nobody would ever buy a 10yr @ 3% and now look, rates are almost half as much and those 3% bonds are worth a lot more now on the secondary market. Timing the bond market is really hard.", "title": "" }, { "docid": "0fefdf265d68165b40eb78ff66a2bdd9", "text": "\"Historically, most economists considered a sustained negative interest rate impossible for just the reason you describe: an investor could outperform a bond with a negative interest rate by simply hoarding cash. For background, see Wikipedia. Experimentation by central banks in the wake of the 2007 financial crisis, however, demonstrates that slightly negative interest rates are possible. First of all, note that the \"\"zero lower bound\"\" on interest rates has everything to do with the existence of cash as an alternative. It's a lower bound on the nominal interest rate, rather than the real interest rate—that is, on the rate before adjusting for inflation. In most situations, the real interest rate is more economically meaningful, as it's the real interest rate that measures the market's preference for \"\"stuff now\"\" as opposed to \"\"stuff later.\"\" There's nothing in principle or in practice to stop a negative real interest rate: there are always some people who want stuff now and some people who want stuff later; a negative real interest rate just means that people who want stuff later are more dominant in the market. As I stated earlier, what creates the \"\"zero lower bound\"\" is the existence of cash as an alternative to bonds. Even though that lower bound applies, it's not strict: hoarding cash in large quantities can be difficult and expensive, especially when central banks are doing their best to prevent you from doing it. Consequently, investors who strongly prefer \"\"stuff later\"\" to \"\"stuff now\"\" are willing to pay a slightly negative nominal interest rate on bonds in order to avoid those costs. If it were significantly negative, however, you're right that no sane investor would buy such a bond.\"", "title": "" }, { "docid": "732d7e94a01d2d9f4a5574b742e151da", "text": "Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during.", "title": "" }, { "docid": "fa789c2d09c37555757096b57dbc6b56", "text": "\"The answer depends on what is your portfolio's objective. If you are operating a multi-asset class portfolio (i.e. your portfolio has both bonds and stocks) and are targeting absolute returns, then yes, comparing a stock's beta (or correlation) to a bond benchmark makes sense. What you do with this stock's \"\"bond beta\"\" information further depends on what kind of return profile you want your multi-asset class portfolio to have. If you want stocks that appreciate in price when bond prices decline, then of course you want to buy \"\"negative bond beta\"\" stocks. If you are operating a purely relative equity portfolio (i.e. you are benchmarked to the stock market), then comparing the \"\"bond beta\"\" is of little use to you. Hope this helps.\"", "title": "" }, { "docid": "80d84c637b2391c22cd0374fda950391", "text": "\"Investment strategies abound. Bonds can be part of useful passive investment strategy but more active investors may develop a good number of reasons why buying and selling bonds on the short term. A few examples: Also, note that there is no guarantee in bonds as you imply by likening it to a \"\"guaranteed stock dividend\"\". Bond issuers can default, causing bond investors to lose part of all of their original investment. As such, if one believes the bond issuer may suffer financial distress, it would be ideal to sell-off the investment.\"", "title": "" }, { "docid": "b346ac30ad1dc6e6710e573670fca002", "text": "Gundlach shared a chart that showed how investors in European “junk” bonds are willing to accept the same no-default return as they are for U.S. Treasury bonds. In other words, the yield on European “junk” bonds is about the same—between 2 percent and 3 percent—as the yield on U.S. Treasuries, even though the risk profile of the two could not be more different. Sounds like a strong indicator to me. How might this play out in the US?", "title": "" }, { "docid": "25642445db62867fabedea609cea9f71", "text": "Long-term bonds -- any bonds, really -- can be risky for two main reasons: return on principal, or return of principal. The former is a problem if interest rates are low (which they are now in the US) because existing bonds will fall in price if interest rates rise. The second is a problem if the lender defaults: IOU nothing. No investment is riskless. Short-term bonds command a lower interest rate than long-term bonds (usually) because of their quicker maturity, but short-term bonds carry risk just like long-term bonds (though the interest rate risk is lower, sometimes quite a bit lower, than for long-term bonds).", "title": "" }, { "docid": "4512c7e8fb9485106a8c13bb9e9efe9a", "text": "(1) People have been predicting recessions as long as we can remember. That's a no-brainer. Participation trophy for being the next schmuck to do so. (2) It's still a given. Many are saying the bailouts that took place in response to the Great Recession didn't allow for a proper correction. That may be what worsens the effects of the next asset bubble burst.", "title": "" }, { "docid": "580b87fa9582f0ad27639ac85955d59a", "text": "\"Looking at the list of bonds you listed, many of them are long dated. In short, in a rate rising environment (it's not like rates can go much lower in the foreseeable future), these bond prices will drop in general in addition to any company specific events occurred to these names, so be prepared for some paper losses. Just because a bond is rated highly by credit agencies like S&P or Moody's does not automatically mean their prices do not fluctuate. Yes, there is always a demand for highly rated bonds from pension funds, mutual funds, etc. because of their investment mandates. But I would suggest looking beyond credit ratings and yield, and look further into whether these bonds are secured/unsecured and if secured, by what. Keep in mind in recent financial crisis, prices of those CDOs/CLOs ended up plunging even though they were given AAA ratings by rating agencies because some were backed by housing properties that were over-valued and loans made to borrowers having difficulties to make repayments. Hence, these type of \"\"bonds\"\" have greater default risks and traded at huge discounts. Most of them are also callable, so you may not enjoy the seemingly high yield till their maturity date. Like others mentioned, buying bonds outright is usually a big ticket item. I would also suggest reviewing your cash liquidity and opportunity cost as oppose to investing in other asset classes and instruments.\"", "title": "" }, { "docid": "9f23f29ee7298a4b0713f216a85b8eb2", "text": "Can anyone suggest all type of investments in India which are recession proof? There are no such investments. Quite a few think bullions like Gold tend to go up during recession, which is true to an extent; however there are enough articles that show it is not necessarily true. There are no fool proof investments. The only fool proof way is to mitigate risks. Have a diversified portfolio that has Debt [Fixed Deposits, Bonds] and equity [Stocks], Bullion [Gold], etc. And stay invested for long as the effects tend to cancel out in the long run.", "title": "" }, { "docid": "41ffb7be0749b4171352551b6bcd46bc", "text": "\"There was a time when government policy was actually pretty damn smart. There were a range of \"\"automatic stabilizers\"\" that kicked in when there was a recession and they had a fast and large impact. It wasn't until Reagan that we started to chip away at those as well as go into a perpetual debt stimulus posture. These two actions helped to prime the system for an inevitable \"\"large\"\" shock. Even now, after one of the longest expansions in history we're STILL running a substantial deficit. And as such the appetite to expand it when the next recession hits will be diminished (as it was during the great recession when we really needed 3 trillion in stimulus spending and got less than 1).\"", "title": "" }, { "docid": "1cf9c7613a8b1d0fd44de8be4f8b61b0", "text": "Keep in mind there are a couple of points to ponder here: Rates are really low. With rates being so low, unless there is deflation, it is pretty easy to see even moderate inflation of 1-2% being enough to eat the yield completely which would be why the returns are negative. Inflation is still relatively contained. With inflation low, there is no reason for the central banks to raise rates which would give new bonds a better rate. Thus, this changes in CPI are still in the range where central banks want to be stimulative with their policy which means rates are low which if lower than inflation rates would give a negative real return which would be seen as a way to trigger more spending since putting the money into treasury debt will lose money to inflation in terms of purchasing power. A good question to ponder is has this happened before in the history of the world and what could we learn from that point in time. The idea for investors would be to find alternative holdings for their cash and bonds if they want to beat inflation though there are some inflation-indexed bonds that aren't likely appearing in the chart that could also be something to add to the picture here.", "title": "" } ]	fiqa
1080d92fa7ce0410b9fac89b8dff2b82	What happens after a counterparty defaults on a derivative trade?	[ { "docid": "61330233f725180287780bf559b9d38d", "text": "\"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.\"", "title": "" } ]	[ { "docid": "2c787ebe97dcd3f72a43d21d3b845451", "text": "It will affect Greeks as any bankruptcy affects the bankrupt. They already started reducing their welfare policies and government hand-outs. Default would mean that the government isn't able to meet its obligations. It's not only the external obligations, it's also the internal obligations - pensions, social security benefits, healthcare, public services, military (and the Greeks are in constant confrontation with the neighboring Turkey, with several armed conflicts throughout the years) - all that will get hit. Yes, they will get affected much more, definitely.", "title": "" }, { "docid": "ac77f8c7aa0bad42c502a881f02849db", "text": "If the government defaults on its debt, the holders of the debt get hung out to dry. You'll personally still owe just what you owed before, but the risk profile for the lender just shot up through the roof if the debt they hold is government-backed.", "title": "" }, { "docid": "1fd9eff2faeeb0d51d749525ca2d2c11", "text": "What typically happens to brokerage accounts during similar situations? This depends on country, time and situation. Nothing is predictable in such situations. In Greece during the said period the stock exchanges were closed for 5 weeks. There was no trading. Edits: Every situation is different and it would be unfair to compare one against another or use it to predict something else. Right now in India due to demonitization, cash withdrawal is limited. One can trade in stocks, unlimited bank transfers, transfer money out of India ...etc. Everything same except for cash withdrawal. In 1990, the ASEAN countries survived a financial collapse, everything was allowed except moving money out of country.", "title": "" }, { "docid": "5a9627f82260bb39df76ebc5d187e383", "text": "according to the Options Industry council ( http://www.optionseducation.org/tools/faq/splits_mergers_spinoffs_bankruptcies.html ) put options the shares (and therefore the options) may continue trading OTC but if the shares completely stop trading then: if the courts cancel the shares, whereby common shareholders receive nothing, calls will become worthless and an investor who exercises a put would receive 100 times the strike price and deliver nothing. The reason for this is that it is not the company whose shares you have the option on that you have a contract with but the counterparty who wrote the option. If the counterparty goes bankrupt then you may not get paid out (depending on assets available at liquidation - this is counterparty risk) but, unless the two are the same, if the company whose shares you have a put option on declares bankruptcy then you will get paid", "title": "" }, { "docid": "1a9db2964fd13c301a774e420d6f0e87", "text": "Exactly, the only reason for the US to default is if Congress voluntarily does so. I don't think they are self destructive enough to do it tho, it's okay if it happens with the Dems in power, but the current Congress wouldn't want to have that on their backs. Hopefully at least.", "title": "" }, { "docid": "362edb20d7add179442507d6e995c2da", "text": "Most national banks are required by the regulations of their host countries to hold significant reserves in the form of government debt. A default would likely wipe out their capital and your common stock would become worthless. The common stock only has positive value today because of the option value based on the possibility the host country will evade a default.", "title": "" }, { "docid": "dc730f98db6f12a5b86cfb47010b49ff", "text": "\"Lol, wtf kind of question is this? First off, there is no single \"\"derivatives market\"\". There's listed derivatives (ETD's) and OTC. Then you can break each of those broad markets down into forwards, futures, options (includes all exotics such as binaries, single barriers, double barriers, one touches, double no touches, knock ins, knock outs, reverse knock ins, reverse knock outs, window barriers, etc), and swaps (including swaptions). All of these are product specific (FX, FI, Credit, Equities, Commodities, etc).... so its more appropriate to look at derivatives with respect to the market they are in rather than all derivatives across all markets. Now to your question... your question makes absolutely no sense. Are you wondering what the daily volume is? Notional outstanding? Total exposure?\"", "title": "" }, { "docid": "bca014b926dcdb6cd2bdd8d72311a85d", "text": "There are two basic kinds of derivatives - forward contracts and options. A forward is an agreement between two parties for one party to buy/sell some asset to the other at a price that they agree upon today at some date in the future. An option is an agreement that gives one party the right, but not the obligation, to buy/sell the asset at some date in the future. Most derivatives that exist are a combination of these two things. For instance, a futures contract is a standardized forward contract that is traded on an exchange, and a swap is a portfolio (or chain) of forward contracts linked together. American/Bermudan options are just options that allow you to exercise on more than one day.", "title": "" }, { "docid": "353d65b75f8959bb74ae5e2ffac63567", "text": "Good comparable. Interest Rate Swap very often also come at a charge i.e. the hedging counterparty typically charges you a 'credit' and 'execution' charge ontop of what you pay them (fixed rate). This means that the Mafia-like Bully is going to keep some money in his own pocket for dealing with the 'variable' bully and overall he will take a bit of a profit from this deal.", "title": "" }, { "docid": "36347183e3c2c8963ed56ec4fa8468dc", "text": "If the share is listed on a stock exchange that creates liquidity and orderly sales with specialist market makers, such as the NYSE, there will always be a counterparty to trade with, though they will let the price rise or fall to meet other open interest. On other exchanges, or in closely held or private equity scenarios, this is not necessarily the case (NASDAQ has market maker firms that maintain the bid-ask spread and can do the same thing with their own inventory as the specialists, but are not required to by the brokerage rules as the NYSE brokers are). The NYSE has listing requirements of at least 1.1 million shares, so there will not be a case with only 100 shares on this exchange.", "title": "" }, { "docid": "22b2aebd3992603ea02a85a66c152fc0", "text": "\"And the absolutely brilliant punchline: who do these regulators and leaders\"\" think will be the purchasers of said debt? Why other systemically important, TBTF banks of course! Which means that, in the by now quite familiar \"\"daisy-chaining\"\" of counterparties and collateral, once one bank fails, its exposure via collateral, repo and certainly, funding of other bank balance sheets, everything will promptly freeze as risk reprices, a la Lehman bonds.\"\"\"", "title": "" }, { "docid": "b346ac30ad1dc6e6710e573670fca002", "text": "Gundlach shared a chart that showed how investors in European “junk” bonds are willing to accept the same no-default return as they are for U.S. Treasury bonds. In other words, the yield on European “junk” bonds is about the same—between 2 percent and 3 percent—as the yield on U.S. Treasuries, even though the risk profile of the two could not be more different. Sounds like a strong indicator to me. How might this play out in the US?", "title": "" }, { "docid": "65f454d2bf24279f90f4b93333efb81c", "text": "If your counterparty sent money to a correspondent account at another bank, then it is completely up to the other bank what to do with the money. If the wire transfer completed, then the account is not closed. If I were your business partner, I would immediately contact the bank to which the transfer was made and explain the situation and hopefully they will transfer the money back. Whenever a wire transfer is made, the recipients name, address, and account number are included. If that name, address and account do not belong to you, then you have a problem because you have no legal right to the money in a court of law. For this reason, you should be avoid any situation where you are wiring money to anyone except the intended recipient.", "title": "" }, { "docid": "e77ef3115bd77fdf857b08c3fa02d8e7", "text": "Do you know what a derivative is? Did you know it is possible to own derivatives of assets that you do not own? Did you know there are derivatives of derivatives? Did you know that the derivatives market is many times larger than all the money on earth? At some point modern markets became so many steps removed from the basic principles of business that they no longer make any sense. Most trades today are done by supercomputers with high speed connections running incredibly complex algorithms invented by the most brilliant mathematicians money can buy. All of whom are studying what each other are doing and trying to manipulate each others algorithms in such a way as to make money faster and harder than the other guy. It is way beyond what any human can comprehend let alone regulate. Teams of the smartest people on earth can kind of grasp a tiny sliver of what is going on.", "title": "" }, { "docid": "d84fb3cd29329ee911573bbeaa40ac20", "text": "\"I will say in advance this is not a great answer, but I had a similar experience when I owned a CIT bond that defaulted. I ended up getting stock plus 5 newly issued bonds as a replacement for my defaulted bond. My broker had no clue on cost basis and didn't even try for the new securities, I called the \"\"hotline\"\" setup about CIT default and they knew nothing, and finally I read all the paperwork around the restructuring but it was less than transparent. So in the end I ended up claiming everything as a wash, no gain/no loss - which probably screwed me in the end as I believe I ended up down. It was a very small position for me and was not worth the headache :(\"", "title": "" } ]	fiqa
15006ff86018d203c932326caf42d665	What is the meaning of public stock price data from before the official first day of trading? [duplicate]	[ { "docid": "3297e004a36457593c6d869c77ebc8c6", "text": "For the case of spinoffs it reflects the market as activities as the specific steps that have to be followed take place. For example the spinoff of Leidos from SAIC in 2013. (I picked this one becasue I knew some of the details) On September 9, 2013, the Board of Directors of SAIC, Inc.(Ticker Symbol (NYSE):SAI) approved the following: The separation of its technical, engineering and enterprise information technology services business through the distribution of shares of SAIC Gemini, Inc. to stockholders. Each stockholder of record of SAIC, Inc. as of September 19, 2013 (Record Date) will receive one (1) share of SAIC Gemini, Inc. common stock for every seven (7) shares of SAIC, Inc. common stock held by such stockholder as of the Record Date. This distribution will be effective after market close on September 27, 2013 (Distribution Date). After the Distribution Date, SAIC Gemini, Inc. will be renamed Science Applications International Corporation (New SAIC). A one (1) for four (4) reverse stock split of the SAIC, Inc. common stock effective as of Distribution Date. After the Distribution Date, SAIC, Inc. will be renamed Leidos Holdings, Inc. (Leidos). Q 11: What are the different trading markets that may occur between Record Date and Distribution Date? A: Beginning two days prior to the Record Date of September 19, 2013 through the Distribution Date on September 27, 2013, there may be three different trading markets available with respect to SAIC, Inc. and the separation. Stock Ticker – SAI (Regular Way Trading with Due Bills): Shares of SAI common stock that trade on the regular-way market will trade with an entitlement to shares of the New SAIC common stock distributed on the Distribution Date. Purchasers in this market are purchasing both the shares of Leidos and New SAIC common stock. Form of Stock Ticker –SAIC (When Issued Trading): Shares of New SAIC common stock may be traded on a “when-issued” basis. These transactions are made conditionally because the security has been authorized, but not yet issued. Purchasers in this market are only purchasing the shares of New SAIC common stock distributed on the Distribution Date. Form of Stock Ticker – LDOS (Ex-Distribution Trading): Shares that trade on the ex-distribution market will trade without an entitlement to shares of New SAIC common stock distributed on the Distribution Date. Purchasers in this market are only purchasing the shares of Leidos common stock. So the stock price for New SAIC starts a few days before the record date of 19 September 2013, while LDOS (new name for the old SAIC) goes back much earlier. But the company didn't split until after the close of business on 27 September 2013. http://investors.saic.com/sites/saic.investorhq.businesswire.com/files/doc_library/file/GeneralStockholder-QuestionsandAnswers.pdf", "title": "" } ]	[ { "docid": "9f383c5e1ec00c30abf2cc576ebce551", "text": "Who's to say it wasn't priced into the markets, at least to some degree? Without any information on the behaviour of holders pre-expiry, no one can know if they've been shorting the stock in advance of selling on expiry day. And with the float being such a small proportion of the total issuance, there's always the risk of sudden fluctuations picking up big momentum - which could easily explain the 7% drop on expiry day. Add into all this uncertainty, the usual risks of shorting (e.g. limited upside, unlimited downside), and the observed phenomena aren't by any means killer blows of the Efficient Market Hypothesis. That's not to say that such evidence doesn't necessarily exist - just that this isn't it.", "title": "" }, { "docid": "42e6c151f76413441c383a8aaf9f510f", "text": "Your order may or may not be executed. The price of stock can open anywhere. Often yesterday's close is a good indication of today's open, but with a big event overnight, the open may be somewhere quite different. You'll have to wait and see like the rest of us. Also, even if it doesn't execute at the open, the price could vary during the day and it might execute later.", "title": "" }, { "docid": "1089e6bf48d8e525ba8d50f75a91228b", "text": "\"I'm not sure the term actually has a clear meaning. We can think of \"\"what does this mean\"\" in two ways: its broad semantic/metaphorical meaning, and its mechanical \"\"what actual variables in the market represent this quantity\"\". Net buying/selling have a clear meaning in the former sense by analogy to the basic concept of supply and demand in equilibrium markets. It's not as clear what their meaning should be in the latter sense. Roughly, as the top comment notes, you could say that a price decrease is because of net selling at the previous price level, while a price rise is driven by net buying at the previous price level. But in terms of actual market mechanics, the only way prices move is by matching of a buyer and a seller, so every market transaction inherently represents an instantaneous balance across the bid/ask spread. So then we could think about the notion of orders. Actual transactions only occur in balance, but there is a whole book of standing orders at various prices. So maybe we could use some measure of the volume at various price levels in each of the bid/ask books to decide some notion of net buying/selling. But again, actual transactions occur only when matched across the spread. If a significant order volume is added on one side or the other, but at a price far away from the bid/offer - far enough that an actual trade at that price is unlikely to occur - should that be included in the notion of net buying/selling? Presumably there is some price distance from the bid/offer where the orders don't matter for net buying/selling. I'm sure you'd find a lot of buyers for BRK.A at $1, but that's completely irrelevant to the notion of net buying/selling in BRK.A. Maybe the closest thing I can think of in terms of actual market mechanics is the comparative total volumes during the period that would still have been executed if forced to execute at the end of period price. Assuming that traders' valuations are fixed through the period in question, and trading occurs on the basis of fundamentals (which I know isn't a good assumption in practice, but the impact of price history upon future price is too complex for this analysis), we have two cases. If price falls, we can assume all buyers who executed above the last price in the period would have happily bought at the last price (saving money), while all sellers who executed below the last price in the period would also be happy to sell for more. The former will be larger than the latter. If the price rises, the reverse is true.\"", "title": "" }, { "docid": "fa2aae462316eb64f23cb448a361783e", "text": "I found the answer. It was the Stock Ticker that I was looking for. So, if I understand correctly the price at certain moment is the price of the latest sale and can be used to get a global picture of what certain stock is worth at that certain instant.", "title": "" }, { "docid": "58f6bb045444db95b8688c58cdade806", "text": "The Level 2 data is simply showing the depth of the market. If I am trading shares with my broker I have the option of viewing only the top 10 bid/ask prices in the depth or all of the data (which sometimes can be a very long list). With another broker I get the top ten bid and ask prices and how many orders are available for each price level, or I have the option of listing each order separately for each price level (in order of when the order was placed). I get the same kind of data if trading options. I do not know about futures because I don't trade them. Simply this data may be important to a trader because it may give an indication of whether there are more buyers or sellers in the market, which in turn may (but not always) give an indication of which way the market may be moving. As an example the price depth below shows WBC before market open with sellers outweighing the buyers in both numbers and volume. This gives an indication that prices may drop when the market opens. Of course there could be some good news coming out prior to market open or just after, causing a flood of buyers into the market and sellers to cancel their orders. This would change everything around with more buyers than sellers and indicate that prices may now be going up. The market depth is an important aspect to look at before putting an order in, as it can give an indication of which way the market is moving, especially in a very liquid security or market.", "title": "" }, { "docid": "4ad78c252c10c6b6a1ea91d8e2332a20", "text": "\"A company whose stock is available for sale to the public is called a publicly-held or publicly-traded company. A public company's stock is sold on a stock exchange, and anyone with money can buy shares through a stock broker. This contrasts with a privately-held company, in which the shares are not traded on a stock exchange. In order to invest in a private company, you would need to talk directly to the current owners of the company. Finding out if a company is public or private is fairly easy. One way to check this is to look at the Wikipedia page for the company. For example, if you take a look at the Apple page, on the right sidebar you'll see \"\"Type: Public\"\", followed by the stock exchange ticker symbol \"\"AAPL\"\". Compare this to the page for Mars, Inc.; on that page, you'll see \"\"Type: Private\"\", and no stock ticker symbol listed. Another way to tell: If you can find a quote for a share price on a financial site (such as Google Finance or Yahoo Finance), you can buy the stock. You won't find a stock price for Mars, Inc. anywhere, because the stock is not publicly traded.\"", "title": "" }, { "docid": "b0450d67e8cbf88413d3c97a3f56ac2f", "text": "You need a source of delisted historical data. Such data is typically only available from paid sources. According to my records 20 Feb 2006 was not a trading day - it was Preisdent's Day and the US exchanges were closed. The prior trading date to this was 17 Feb 2006 where the stock had the following data: Open: 14.40 High 14.46 Low 14.16 Close 14.32 Volume 1339800 (consolidated volume) Source: Symbol NVE-201312 within Premium Data US delisted stocks historical data set available from http://www.premiumdata.net/products/premiumdata/ushistorical.php Disclosure: I am a co-owner of Norgate / Premium Data.", "title": "" }, { "docid": "e2745d7a797d99a0b61f8636ccaacd94", "text": "One of the fundamental of technical analysis suggests that holding a security overnight represents a huge commitment. Therefore it would follow that traders would tend to close their positions prior to market close and open them when it opens.", "title": "" }, { "docid": "4ce3a0dcaa87d08cb1d282d8675023fa", "text": "It is known as the range or the price spread of the stock. You can read more about it here http://www.investopedia.com/terms/r/range.asp", "title": "" }, { "docid": "20c519ac894f3d5169e5b4f96ba93eb3", "text": "The information on GOOG or other sites is the average price of the stock and is indicative of the price at with the stock would be available. The actual trades happen at different values throught the day ... So the prices are good for most purposes and if you need the exact prices, you can thne decided to log into you trading terminal and get the actual quotes This is similar to FX quotes or any other such quotes and give you a general sense", "title": "" }, { "docid": "370bf01afd80672f58b7757144ca2871", "text": "There are several reasons why this may happen and I will update as I get more information from you. Volumes on that stock look low (supposing that they are either in a factor between 1s and 1000s) so it could well be that there was no volume on that day. If no trades occur then open, high and low are meaningless as they are statistics based on trades that occur that day and no trades occur. Remember that there has to be volume to get a price. The stock may have been frozen by either the exchange or the company for the day. This could be for various reasons including to prevent some illegal activity. In that case no trades were made because the market for that stock was closed. Another possibility is that all trades that day were cancelled by the exchange. The exchange may cancel all trades if there is unusual, potentially fraudulent or other illegal activity on the stock. In this case the last price for that day existed but was rolled back by the exchange and never occurred. This is a rare situation. Although I can't find any holidays on that date it is possible that this is how your data provider marks market holidays. It would be valid to ignore the data in that case as being from a non-market day. I cannot tell if this is possible without knowing exchange information. There is a possibility that some data providers don't receive data for a day or that it gets corrupted. It may be worth checking another source to ensure the integrity of the data that you are receiving. Whichever reason is true, the data provider has made the close equal to the previous day's close as no price movements occurred. Strictly the closing price is the price of the last trade made for that day and so should be null (and open, high and low should be null too and not 0 otherwise the price change on day is very large!). Therefore, to keep integrity, you have a few choices:", "title": "" }, { "docid": "e6e2c4144b03eee8275d2caeee234a0b", "text": "\"Company values (and thus stock prices) rely on a much larger time frame than \"\"a weekend\"\". First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks). They look at performance over quarters and years to determine the \"\"value\"\" of a company. They also look forward, not backwards to determine value. Prior performance only gives a hint of what future performance may be. If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits.\"", "title": "" }, { "docid": "afab503ca68534f325de3e443e8290a1", "text": "If I understand you correctly, you are noticing that a stock's price can change drastically when the time changes from pre-market trading hours to open market hours. This could occur because a much smaller pool of investors make trades during pre-market and after-market hours. When the regular market opens there is a large influx of trades, causing the prices to jump.", "title": "" }, { "docid": "e656547f1bc1d937b6442ccc45a63ab2", "text": "When a stock is going to become public there's a level of analysis required to figure out the range of IPO price that makes sense. For a company that's somewhat mature, and has a sector to compare it to, you can come up with a range that would be pretty close. For the recent linkedin, it's tougher to price a somewhat unique company, running at a loss, in a market rich with cash looking for the next great deal. If one gives this any thought, an opening price that's so far above the IPO price represents a failure of the underwriters to price it correctly. It means the original owners just sold theirvshares for far less than the market thought they were worth on day one. The day of IPO the stock opens similar to how any stock would open at 9:30, there are bids and asks and a price at which supply (the ask) and demand (bid) balance. For this IPO, it would appear that there were enough buyers to push the price to twice the anticipated open and it's maintained that level since. It's possible to have a different system in which a Dutch auction is used to make the shares public, in theory this can work, it's just not used commonly.", "title": "" }, { "docid": "f217eacb25ecd0ee9e3a987e2d5131f1", "text": "That's the point. They're crooks who only want to do an IPO at the moment they start filing publicly. If you did an IPO after financials are already public, then you'd be forced to sell at a fair price. Doing it before an actual earnings report (which is more accurate than an S-1) allows them to exploit speculation and get a better price.", "title": "" } ]	fiqa
617cd31e8aecb9173e2407ebc9d21294	What if 40% of the remaining 60% Loan To Value (ratio) is not paid, or the borrower wants to take only 60% of the loan?	[ { "docid": "a7956867f4f1264f1897fec1b3d7f90f", "text": "\"The loan-to-value ratio (LTV Ratio) is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. It sounds like your lender has a 60% requirement. Remember the home is the collateral for the loan. If you stop making payments, they can take the house back from you. That number is less than 100% to accommodate changing market prices, the cost of foreclosure, repairing and reselling the home. They may be a safety factor built in depending on the home's location. If you want to buy a $1.8 million dollar home you will have to come up with 40% down payment. That down payment is what reduces the risk for the lender. So no, there is no way to cheat that. Think about the transaction from the view of the lender. Note: in some areas, you can still get a loan if you don't have the required down payment. You just have to pay a monthly mortgage insurance. It's expensive but that works for many home buyers. A separate insurance company offers a policy that helps protect the lender when there isn't enough deposit paid. Update: Er, no. Keep it simple. The bank will only loan you money if it has collateral for the loan. They've built in a hefty safety margin to protect them in case you quit paying them your monthly payments. If you want to spend the money on something else, that would work as long as you provide collateral to protect the lender. You mention borrowing money for some other purpose then buying a home. That would be fine, but you will have to come up with some collateral that protect the lender. If you wanted to buy a new business, the bank would first ask for an appraisal of the value of the assets of the business. That could be applied to the collateral safety net for the lender. If you wanted to buy a business that had little appraisal value, then the bank would require more collateral from you in other forms. Say you wanted to borrow the money for an expensive operation or cosmetic surgery. In that case there is no collateral value in the operation. You can't sell anything from the surgery to anybody to recover costs. The money is spent and gone. Before the bank would loan you any money for such a surgery, they would require you to provide upfront collateral. (in this case if you were to borrow $60,000 for surgery, the bank would require $100,000 worth of collateral to protect their interest in the loan.) You borrow money, then you pay it back at a regular interval at an agreed upon rate and schedule. Same thing for borrowing money for the stock market or a winning horse at the horse race. A lender will require a hard asset as collateral before making you a loan... Yes I know you have a good tip on a winning horse,and you are bound to double your money, but that's not the way it works from a lender's point of view. It sounds like you are trying to game the system by playing on words. I will say quit using the \"\"40% to 60%\"\" phrase. That is just confusing. The bank's loan to value is reported as a single number (in this case 60%) For every $6000 you want to borrow, you have to provide an asset worth $10,000 as a safety guarantee for the loan. If you want to borrow money for the purchase of a home, you will need to meet that 60% safety requirement. If you want to borrow $1,000,000 cash for something besides a home, then you will have to provide something with a retail value of $1,666,667 as equity. I think the best way for you to answer your own question is for you to pretend to be the banker, then examine the proposal from the banker's viewpoint. Will the banker alway have enough collateral for whatever it is you are asking to borrow? If you don't yet have that equity, and you need a loan for something besides a home, you can always save your money until you do have enough equity. Comment One. I thought that most lenders had a 75% or 80% loan to value ratio. The 60% number seems pretty low. That could indicate you may be a high risk borrower, or possibly that lender is not the best for you. Have you tried other lenders? It's definitely worth shopping around for different lenders. Comment Two. I will say, it almost sounds like you aren't being entirely honest with us here. No way someone with a monthly income who can afford a $1.8 Million home would be asking questions like this. I get that English probably isn't your first language, but still. The other thing is: If you are truly buying a $1.8 Million dollar home your real estate agent would be helping you find a lender that will work with you. They would be HIGHLY motivated to see this sale happen. All of your questions could be answered in ten minutes with a visit to your local bank (or any bank for that matter.) When you add up the costs and taxes and insurance on a 30 fixed loan, you'd have a monthly mortgage payment of nearly $10,500 a month or more. Can you really afford that on your monthly income?\"", "title": "" }, { "docid": "2496a1379b1d804b89bcf3e6c0b4205c", "text": "Sorry, I don't think a bounty is the issue here. You seem to understand LTV means the bank you are talking to will lend you 60% of the value of the home you wish to purchase. You can't take the dollars calculated and simply buy a smaller house. To keep the numbers simple, you can get a $600K mortgage on a $1M house. That's it. You can get a $540K mortgage on a $900K house, etc. Now, 60% LTV is pretty low. It might be what I'd expect for rental property or for someone with bad or very young credit history. The question and path you're on need to change. You should understand that the 'normal' LTV is 80%, and for extra cost, in the form of PMI (Private Mortgage Insurance) you can even go higher. As an agent, I just sold a home to a buyer who paid 3% down. The way you originally asked the question has a simple answer. You can't do what you're asking.", "title": "" }, { "docid": "b381fce7dd29bb532e1caeb0c23caf36", "text": "\"Let me summarize your question for you: \"\"I do not have the down payment that the lender requires for a mortgage. How can I still acquire the mortgage?\"\" Short answer: Find another lender or find more cash. Don't overly complicate the scenario. The correct answer is that the lender is free to do what they want. They deem it too risky to lend you $1.1M against this $1.8M property, unless they have $700k up front. You want their money, so you must accept their terms. If other lenders have the same outlook, consider that you cannot afford this house. Find a cheaper house.\"", "title": "" }, { "docid": "3861087c248e59a31cf6b40248e0cf0f", "text": "I wanted to know that what if the remaining 40% of 60% in a LTV (Loan to Value ratio ) for buying a home is not paid but the borrower only wants to get 60% of the total amount of home loan that is being provided by lending company. Generally, A lending company {say Bank] will not part with their funds unless you first pay your portion of the funds. This is essentially to safeguard their interest. Let's say they pay the 60% [either to you or to the seller]; The title is still with Seller as full payment is not made. Now if you default, the Bank has no recourse against the seller [who still owns the title] and you are not paying. Some Banks may allow a schedule where the 60/40 may be applied to every payment made. This would be case to case basis. The deal could be done with only paying 20% in the beginning to the buyer and then I have to pay EMI's of $7451. The lending company is offering you 1.1 million assuming that you are paying 700K and the title will be yours. This would safeguard the Banks interest. Now if you default, the Bank can take possession of the house and recover the funds, a distress sale may be mean the house goes for less than 1.8 M; say for 1.4 million. The Bank would take back the 1.1 million plus interest and other closing costs. So if you can close the deal by paying only 20%, Bank would ask you to close this first and then lend you any money. This way if you are not able to pay the balance as per the deal agreement, you would be in loss and not the Bank.", "title": "" }, { "docid": "4c341364afeab9a693ed255b3f300d17", "text": "\"This is the meat of your potato question. The rephrasing of the question to a lending/real estate executive such as myself, I'd ask, what's the scenario? \"\"I would say you're looking for an Owner Occupied, Super Jumbo Loan with 20% Down or $360K down on the purchase price, $1.8 mil purchase price, Loan Amount is ~$1.45 mil. Fico is strong (assumption). If this is your scenario, please see image. Yellow is important, more debt increases your backend-DTI which is not good for the deal. As long as it's less than 35%, you're okay. Can someone do this loan, the short answer is yes. It's smart that you want to keep more cash on hand. Which is understandable, if the price of the property declines, you've lost your shirt and your down payment, then it will take close to 10 years to recover your down. Consider that you are buying at a peak in real estate prices. Prices can't go up more than they are now. Consider that properties peaked in 2006, cooled in 2007, and crashed in 2008. Properties declined for more than 25-45% in 2008; regardless of your reasons of not wanting to come to the full 40% down, it's a bit smarter to hold on to cash for other investments purposes. Just incase a recession does hit. In the end, if you do the deal-You'll pay more in points, a higher rate compared to the 40% down scenario, the origination fee would increase slightly but you'll keep your money on hand to invest elsewhere, perhaps some units that can help with the cashflow of your home. I've highlighted in yellow what the most important factors that will be affected on a lower down payment. If your debt is low or zero, and income is as high as the scenario, with a fico score of at least 680, you can do the deal all day long. These deals are not uncommon in today's market. Rate will vary. Don't pay attention to the rate, the rate will fluctuate based on many variables, but it's a high figure to give you an idea on total cost and monthly payment for qualification purposes, also to look at the DTI requirement for cash/debt. See Image below:\"", "title": "" } ]	[ { "docid": "b00664509225c84581a27c5b2e32bc68", "text": "One reason to not do that is if you consider that one of the loans is at risk of being called in early. e.g. You have a line of credit which is close to its limit, and the bank decides to reduce that limit, forcing you to quickly come up with the money to pay it down below the new limit, which can really throw a wrench into your plans.", "title": "" }, { "docid": "a3721fd666e6ea8920304e2b973bef1c", "text": "\"The part that I find confusing is the loan/stock hybridization. Why would the investor be entitled to a 30% share if he's also expecting to be getting paid back in full? This is the part that's making me scratch my head. I can understand giving equity and buying out later. I can understand giving equity with no expectation of loan repayment. I can understand loan repayment without equity. I can even understand collateralizing the loan with equity. I can not understand how \"\"zeroing out\"\" the loan still leaves him with a claim on 30% of the equity. Would this be more of a good will gesture as a way to thank the investor for taking a chance? Please forgive any naivety in my questions.\"", "title": "" }, { "docid": "c5b6570980cee300b2970bed11b976d2", "text": "It's definitely NOT a good idea to pay off one of the smaller loans in your case - a $4k payment split across all the loans would be better than repaying the 5% / $4k loan completely, as it's the most beneficial of your loans and thus is last priority for repayment. A payment that splits across all the loans equally is, in effect, a partial repayment on a loan with an interest rate of 6.82% (weighed average rate of all your loans). It's not as good as repaying a 7% loan, but almost as good. It might be an option to save up until you can repay one of your 7% loans, but it depends - if it takes a lot of time, then you would've paid unneccessary interest during that time.", "title": "" }, { "docid": "2af792106cc5e769cbe0651e4aa9b4d9", "text": "They offer a coupon that is 40% to 60% the actual amount that it could in theory offer, if not for delinquent cases.... the banks pocket the difference in the name to be able to pay up consistently..... not a pretty picture but it covers their ass", "title": "" }, { "docid": "fad3312aee717d10d69a407a065030d0", "text": "The terms of most mortgages usually include the requirement for tax escrow. Some banks will let you handle your own taxes once you loan to value drops below 50%. It's annoying that you lose the use of your own funds, I agree. It can't hurt to write a note to the bank and see it they'll waive escrow.", "title": "" }, { "docid": "73f46ebcfc2e50b94d835095573d2fd9", "text": "You should definitely pay the remaining loan amount as quickly as possible. A loan in bad debts means that Bank has written it off books as its a education loan and there is no collateral. The defaults do get report to CIBIL [Credit Information Bureau India] and as such you will have difficulties getting credit card / new loans in future. Talk to the Bank Manager and ask can you regularize the loan? There are multiple options you would need to talk and find out; 1. You can negotiate and arrive at a number. Typically more than the principal outstanding and less than interest and penalties charged. 2. You can request to re-do the monthly payments with new duration, this will give you more time. 3. May one time large payment and subsequent amount in monthly payments. At the end its Bank's discretion whether to accept your terms or not.", "title": "" }, { "docid": "580a99928ac197a0f28d77e7f3786d50", "text": "That's why they're taking the deal. But it's not like they completely stole all that money. I don't have any stats, but I'd assume most of those people who got their loans are still in their homes. (Sorry, I could be way off. Please correct) But they still are bastards for not letting me refinance. Could have just been because they saw this penalty coming.", "title": "" }, { "docid": "d2e8aa4caff5531411d25c10c83ca508", "text": "Basically isn't this like if they loaned a bank 400b with 401b due tomorrow, and then the bank took the same loan the next day? Gross exaggeration I know, but I just want to make sure that is the way this works.", "title": "" }, { "docid": "ac30b6a293c9f11f2127bb4b8f1bbd2e", "text": "That's tricky. Typically you lock in the minimum monthly payment when you close the loan. You can pay more but not less. Options:", "title": "" }, { "docid": "dc8770d56350ffc67d89bf2d15efa198", "text": "You should read the provisions in your offer and any counteroffer that was signed before paying the earnest money, but generally if the appraisal comes in low, the price has to be adjusted. If you can't get a mortgage (because the appraisal is too low) the next guy usually can't either. Unfortunately without more information (the documents that were signed and the locale, to know which laws might be applicable) I can't tell you with certainty that you'll get your earnest money back.", "title": "" }, { "docid": "db55fcd2f97c74a6efdd5ddbac173c5b", "text": "It sounds like there are no provisions in the loan document for how to proceed in this case. I would view this as creating a brand new loan. The amount owed is going to be (Principal remaining + interest from 2 years + penalties). If you created a new loan for 13 years, that would not be how I would expect a lender to behave. I would expect most repayment plans to be something like make double payments until you are caught up or pay an extra $1000 per month until caught up and then resume normal payments.", "title": "" }, { "docid": "3b11f4fa7e336955f0eea0451f70dcdc", "text": "This is dumb. The sub company will lose money but the parent company will pay taxes on the income they made off of expenses to the subcompany. This doesn't systematically reduce their risk either. Banks will loan more money if the parent company is liable to pay the bills if the sub company can't. So yes, a bank may make a loan to the sub company without any liability on the parent company, but its going to be a very small loan compared to what they would've given the parent company.", "title": "" }, { "docid": "e2a856f472bd80bab9f4e6e37f0c37e6", "text": "From your question, it seems your problem is that you have a company that wants to make a deal, but does not currently have enough money to go through with it. Therefore it needs to raise capital. Assuming that you cannot get a loan from a bank and you do not want to seek funding from other sources, the two owners must provide the funds themselves somehow. Option A: The easiest and fairest way to do this is for the two shareholders to provide 75%, and 25% of the funding as a loan to the company. They will provide this loan knowing it may not be paid back if the company goes under. Note that it would not be fair for one of the shareholders to provide more, as that shareholder would be taking all the risk, while the other still reaps the rewards (although you could add a large interest rate to account for this). Option B: But say one of the shareholders cannot provide additional funds. In that case, the company should issue new shares, and each shareholder can purchase however many of the new shares he/she wants (each shareholder is entitled to purchase at least 75% or 25% respectively, but does not have to). The result of this may be that company ownership percentages have changed after the capital raising. This is more complex as it require valuing the company accurately to be fair, and probably requires reporting to a government (depending on the jurisdiction).", "title": "" }, { "docid": "2cfa0834b636fde849cb2ec3218d1032", "text": "To add to this, that risk is really only a problem if you don't have the cash flow to service the debt. If the surplus dips but your ultimately profitable on whatever trade you made, you're okay. If you default, you're not okay. Volitility relative to loan term effectively.", "title": "" }, { "docid": "0d6eaeb4ba54c786c2800de434892ca9", "text": "\"I'm going to give a simpler answer than some of the others, although somewhat more limited: the complicated loan parameters you describe benefit the lender. I'll focus on this part of your question: You should be able to pay back whenever; what's the point of an arbitrary timeline? Here \"\"you\"\" refers to the borrower. Sure, yes, it would be great for the borrower to be able to do whatever they want whenever they want, increasing or decreasing the loan balance by paying or not paying arbitrary amounts at their whim. But it doesn't benefit the lender to let the borrower do this. Adding various kinds of restrictions and extra conditions to the loan reduces the lender's uncertainty about when they'll be receiving money, and also gives them a greater range of legal recourse to get it sooner (since they can pursue the borrower right away if they violate any of the conditions, rather than having the wait until they die without having paid their debt). Then you say: And if you want, you can set a legal deadline. But the mere deadline in the contract doesn't affect how much interest is paid—the interest is only affected by how much money is borrowed and how long has passed. I think in many cases that is in fact how it works, or at least it is more how it works than you seem to think. For instance, you can take out a 30-year loan but pay it off in less than 30 years, and the amount you pay will be less if you pay it off sooner. However, in some cases the lender will charge you a penalty for doing so. The reason is the same as above: if you pay off the loan sooner, you are paying less interest, which is worse for the lender. Again, it would be nice for the borrower if they could just pay it off sooner with no penalty, but the lender has no reason to let them do so. I think there are in fact other explanations for these more complicated loan terms that do benefit the borrower. For instance, an amortization schedule with clearly defined monthly payments and proportions going to interest and principal also reduces the borrower's uncertainty, and makes them less likely to do risky things like skip lots of payments intending to make it up later. It gives them a clear number to budget from. But even aside from all that, I think the clearest answer to your question is what I said above: in general, it benefits the lender to attach conditions and parameters to loans in order to have many opportunities to penalize the borrower for making it hard for the lender to predict their cash flow.\"", "title": "" } ]	fiqa
bac6032a982df59d04d058432c6da357	What do people mean when they talk about the central bank providing “cheap money”? What are the implications for the stock market?	[ { "docid": "f80e0f2e047fe9bbcdf8b5f25628172f", "text": "Companies with existing borrowings (where borrowings are on variable interest rates) or in the case with fixed interest rates - companies that get new borrowings - would pay less interest on these borrowings, so their cost will go down and profits up, making them more attractive to investors. So, in general lower interest rates will make the share market a more attractive investment (than some alternatives) as investors are willing to take on more risk for potentially higher returns. This will usually result in the stock market rising as it is currently in the US. EDIT: The case for rising interest rates A central bank's purpose when raising interest rates is to slow down an economy that is booming. As interest rates rise consumers will tighten up their spending and companies will thus have less revenue on top of higher costs for maintaining existing borrowing (with variable rates) or new borrowing (with fixed rates). If rates are higher companies may also defer new borrowings to expand their business. This will eventually lead to lower profits and lower valuation for these companies. Another thing that happens is that as banks start increasing interest for saving accounts investors will look for safety where they can get a higher return (than before) without the risk of the stock market. With lowering profits and valuations, and investor's money flowing out of shares and into the money market, so will company share prices drop (although this may lag a bit with the share market still booming due to greed. But once the boom stops watchout for the crash).", "title": "" }, { "docid": "010d73c4cb8afc12328a1fa74b56c41e", "text": "\"There are a couple of different things that could be referenced by \"\"cheap money\"\": The money supply itself - This is the Federal Reserve printing more money which could devalue the existing US dollars and thus make the dollars even cheaper since there would be more of them. Interest rates - Currently in the US interest rates are rather low which means that borrowers could possibly get good rates on that money thus making it relatively cheap. Compare current interest rates to the early 1980s and there is a major difference. In terms of implications on the stock market, there are a couple that come to my mind: Investment options - With low interest rates, cash and bonds aren't necessarily yielding that much and thus some people may be more likely to invest elsewhere with stocks being an option. Thus, there may be some people that would rather invest in stocks than hold their investments in lower-yielding options. Corporate spending - If rates stay low, then for companies with good financial track records, they could borrow money to expand operations rather than sell more stock and thus there may be companies that borrow to grow so that they take advantage of these interest rates.\"", "title": "" }, { "docid": "0ded279c5a6897a501aa6f2fb2e255ad", "text": "\"Newspapers write a lot about the central bank stopping \"\"cheap money\"\" in the US. What is that exactly and what are the implications for the stock market? An interest rate is simply defined as the price of money. So if money is cheap, it must mean there is a low interest rate compared to normal. If milk is cheap, we're comparing it to past prices or prices at competitors' stores. Same with money. I don't think its fair to say just because the supply of dollars rises that the value of dollars will go down. Value or price is determined by supply and demand, not just supply. Its possible for the demand for dollars to be stronger than the rising supply, which would drive the price higher. A good example of this is to look at the value of the dollar recently. The Fed has been printing $85 billion per month, yet the value of them is going up compared to foreign currencies, gold, and just about everything. Why? Because the Fed has merely threatened to stop, but it hasn't stopped. That alone was enough to increase demand above supply. So if you want to know what will happen, take a look at what IS happening. When cheap money ends, the value of the dollar will go up, interest rates will go up. This will be a drag on the economy. It will be more difficult for companies to show profits and earnings should decline. In addition, those who have grown accustom to the easy money and have over-leveraged themselves (ie REITs) could go bankrupt.\"", "title": "" } ]	[ { "docid": "f60d0a00d26b6902b0811938684a0671", "text": "\"Quantitative Easing Explained: http://www.npr.org/blogs/money/2010/10/07/130408926/quantitative-easing-explained The short of it is that you're right; the Fed (or another country's Central Bank) is basically creating a large amount of new money, which it then injects into the economy by buying government and institutional debt. This is, in fact, one of the main jobs of the central bank for a currency; to manage the money supply, which in most fiat systems involves slowly increasing the amount of money to keep the economy growing (if there isn't enough money moving around in the economy it's reflected in a slowdown in GDP growth), while controlling inflation (the devaluation of a unit of currency with respect to most or all things that unit will buy including other currencies). Inflation's primary cause is defined quite simply as \"\"too many dollars chasing too few goods\"\". When demand is low for cash (because you have a lot of it) while demand for goods is high, the suppliers of those goods will increase their price for the goods (because people are willing to pay that higher price) and will also produce more. With quantitative easing, the central bank is increasing the money supply by several percentage points of GDP, much higher than is normally needed. This normally would cause the two things you mentioned: Inflation - inflation's primary cause is \"\"too many dollars chasing too few goods\"\"; when money is easy to get and various types of goods and services are not, people \"\"bid up\"\" the price on these things to get them (this usually happens when sellers see high demand for a product and increase the price to take advantage and to prevent a shortage). This often happens across the board in a situation like this, but there are certain key drivers that can cause other prices to increase (things like the price of oil, which affects transportation costs and thus the price to have anything shipped anywhere, whether it be the raw materials you need or the finished product you're selling). With the injection of so much money into the economy, rampant inflation would normally be the result. However, there are other variables at play in this particular situation. Chief among them is that no matter how much cash is in the economy, most of it is being sat on, in the form of cash or other \"\"safe havens\"\" like durable commodities (gold) and T-debt. So, most of the money the Fed is injecting into the economy is not chasing goods; it's repaying debt, replenishing savings and generally being hoarded by consumers and institutions as a hedge against the poor economy. In addition, despite how many dollars are in the economy right now, those dollars are in high demand all around the world to buy Treasury debt (one of the biggest safe havens in the global market right now, so much so that buying T-debt is considered \"\"saving\"\"). This is why the yields on Treasury bonds and notes are at historic lows; it's bad everywhere, and U.S. Government debt is one of the surest things in the world market, especially now that Euro-bonds have become suspect. Currency Devaluation - This is basically specialized inflation; when there are more dollars in the market than people want to have in order to use to buy our goods and services, demand for our currency (the medium of trade for our goods and services) drops, and it takes fewer Euros, Yen or Yuan to buy a dollar. This can happen even if demand for our dollars inside our own borders is high, and is generally a function of our trade situation; if we're buying more from other countries than they are from us, then our dollars are flooding the currency exchange markets and thus become cheaper because they're easy to get. Again, there are other variables at play here that keep our currency strong. First off, again, it's bad everywhere; nobody's buying anything from anyone (relatively speaking) and so the relative trade deficits aren't moving much. In addition, devaluation without inflation is self-stablizing; if currency devalues but inflation is low, the cheaper currency makes the things that currency can buy cheaper, which encourages people to buy them. At the same time, the more expensive foreign currency increases the cost in dollars of foreign-made goods. All of this can be beneficial from a money policy standpoint; devaluation makes American goods cheaper to Americans and to foreign consumers alike than foreign goods, and so a policy that puts downward pressure on the dollar but doesn't make inflation a risk can help American manufacturing and other producer businesses. China knows this just as well as we do, and for decades has been artificially fixing the exchange rate of the Renmin B (Yuan) lower than its true value against the dollar, meaning that no matter how cheap American goods get on the world market, Chinese goods are still cheaper, because by definition the Yuan has greater purchasing power for the same cost in dollars. In addition, dollars aren't only used to buy American-made goods and services. The U.S. has positioned its currency over the years to be an international medium of trade for several key commodities (like oil), and the primary currency for global lenders like the IMF and the World Bank. That means that dollars become necessary to buy these things, and are received from and must be repaid to these institutions, and thus the dollar has a built-in demand pretty much regardless of our trade deficits. On top of all that, a lot of countries base their own currencies on our dollar, by basically buying dollars (using other valuable media like gold or oil) and then holding that cash in their own central banks as the store of value backing their own paper money. This is called a \"\"dollar board\"\". Their money becomes worth a particular fraction of a dollar by definition, and that relationship is very precisely controllable; with 10 billion dollars in the vault, and 20 billion Kabukis issued from Kabukistan's central bank, a Kabuki is worth $.50. Print an additional 20 billion Kabuki and the value of one Kabuki decreases to $.25; buy an additional 10 billion dollars and the Kabuki's value increases again to $.50. Quite a few countries do this, mostly in South America, again creating a built-in demand for U.S. dollars and also tying the U.S. dollar to the value of the exports of that country. If Kabukistan's goods become highly demanded by Europe, and its currency increases relative to the dollar, then the U.S. dollar gets a boost because by definition it is worth an exact, fixed number of Kabukis (and also because a country with a dollar board typically has no problem accepting dollars as payment and then printing Kabukis to maintain the exchange rate)\"", "title": "" }, { "docid": "2237029210f2414fe0ef52b4b015cee7", "text": "\"It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's \"\"Supply:\"\" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank \"\"have\"\" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the \"\"multiplier effect.\"\" The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the \"\"supply\"\" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official \"\"basket of goods\"\" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.\"", "title": "" }, { "docid": "685969de8f725ad8bdedd6839e4ee42c", "text": "The general discussion of inflation centers on money as a medium of exchange and a store of value. It is impossible to discuss inflation without considering time, since it is a comparison between the balance between money and goods at two points in time. The whole point of using money, rather than bartering goods, is to have a medium of exchange. Having money, you are interested in the buying power of the money in general more than the relative price of a specific commodity. If some supply distortion causes a shortage of tobacco, or gasoline, or rental properties, the price of each will go up. However, if the amount of circulating money is doubled, the price of everything will be bid up because there is more money chasing the same amount of wealth. The persons who get to introduce the additional circulating money will win at the expense of those who already hold cash. Most of the public measures that are used to describe the economy are highly suspect. For example, during the 90s, the federal government ceased using a constant market basket when computing CPI, allowing substitutions. With this, it was no longer possible to make consistent comparisons over time. The so-called Core CPI is even worse, as it excludes food and energy, which is fine provided you don't eat anything or use any energy. Therefore, when discussing CPI, it is important to understand what exactly is being measured and how. Most published statistics understate inflation.", "title": "" }, { "docid": "b99dc157cb3a4c03c732075f1f7b9aa9", "text": ">First of all QE is an increase of money supply but using non conventional measures(there might be exceptions) some examples of this measures are changing interest rates or TLTRO. Ok, but how is this different from printing money? I mean the money supply goes up in both cases, right? Shouldn´t this cause massive inflation? >As to why this hasnt transitioned into more inflation, which in the end has but years after, has been a question that people have asked a lot. One of the reasons for this is the transmission mechanism not working properly, which implies that despite the fact banks have received money, they havent been able to move it to the real economy hence not increasing prices. I have read that all QE has done is basically make the prices of assets such as housing, stocks, art and whatnot skyrocket. As if all the extra money has gone to a very few, specific areas while not touching the rest of the economy. Is this something you agree with? Thanks for your reply, btw!", "title": "" }, { "docid": "340b75b1e37eecd052b891c6d5bbe629", "text": "Inflation can be a misleading indicator. Partly because it is not measured as a function of the change in prices of everything in the economy, just the basket of goods deemed essential. The other problem is that several things operate on it, the supply of money, the total quantity of goods being exchanged, and the supply of credit. Because the supply of goods divides - as more stuff is available prices drop - it's not possible to know purely from the price level, if prices are rising because there's an actual shortage (say a crop failure), or simply monetary expansion. At this point it also helps to know that the total money supply of the USA (as measured by total quantity of money in bank deposits) doubles every 10 years, and has done that consistently since the 1970's. USA Total Bank Deposits So I would say Simon Moore manages to be right for the wrong reasons. Despite low inflation, cash holdings are being proportionally devalued as the money supply increases. Most of the increase, is going into the stock market. However, since shares aren't included in the measures of inflation, then it doesn't influence the inflation rate. Still, if you look at the quantity of shares your money will buy now, as opposed to 5 years ago, it's clear that the value of your money has dropped substantially. The joker in the pack is the influence of the credit supply on the price level.", "title": "" }, { "docid": "d8d1a7ed650bccb30e84e1f254b57628", "text": "\"Currencies that are pegged or fixed require that foreign currencies are held by the central issuer at a proportional amount. This is analogous to having a portfolio of currencies that the central bank issues shares from - in the form of its own currency. We will continue with this analogy, if the central bank says these \"\"shares\"\" are worth $1, but the underlying components of the portfolio are worth $0.80 and decreasing, then it is expensive for the central bank to maintain its peg, and eventually they will have to disregard the peg as people start questioning the central bank's solvency. (People will know the $1 they hold is not really worth what the central bank says it is, because of the price changes people experience in buying goods and services, especially when it comes to imports. Shadow economies will also trade using a currency more reflective of labor, which happens no matter what the government's punishments are for doing so). Swiss National Bank (central bank) did this in early 2015, as it experienced volatility in the Euro which it had previously been trying to keep it's currency pegged to. It became too expensive for it to keep this peg on its own. The central bank can devalue its currency by adjusting the proportions of the reserve, such as selling a lot of foreign currency X, buying more of currency Y. They can and do take losses doing this. (Swiss National Bank is maintaining a large loss) They can also flood their economy with more of their currency, diluting the value of each individual 1 dollar equivalent. This is done by issuing bonds or monetizing goods and services from the private sector in exchange for bonds. People colloquially call this \"\"printing money\"\" but it is a misnomer in this day and age where printers are not relevant tools. The good and service goes onto the central bank's balance book, and the company/entity that provided the service now has a bond on its book which can be immediately sold to someone else for cash (another reading is that the bond is as good as cash). The bond didn't previously exist until the central bank said it did, and central banks can infinitely exchange goods and services for bonds. Bond monetization (also called Quantitative Easing) is practiced by the Federal Reserve in the United States, Bank of Japan, European Central Bank and now the Central Bank of the Republic of China\"", "title": "" }, { "docid": "4648dfc15b0c956e6a3a09c8f7728c39", "text": "Anything related to the central bank will have a large impact, as they are the ones who determine interest rates, and interest rates have a big effect on currency flows. GDP is also important, as when there is an economic slowdown it may result in the central bank reducing rates to boost economic activity. The opposite is also true, large increases in GDP may mean that an interest rate hike might be needed. Inflation data is also very important. Again, large changes in inflation either way may push the central bank towards changing rates. This data typically is in the form of CPI Note that each central bank is different. They all have specific mandates and specific pieces of economic data that they place emphasis on. The Federal Reserve as of late has closely been watching inflation data, especially wage inflation data, and employment. Significant deviations in these data points from whats expected by investors can greatly move the market. However, these specific factors are a little less important for, say, Mexico, which is mostly concerned with headline inflation. Read the statements issued by the central banks to find out whats important to them. Central banks also issue expectations for things like growth, CPI, etc. If these expectations are not met, it may result in a policy change, or at least talk of a policy change, at the next meeting of the central bank. Anticipating these policy changes and trading accordingly is one strategy to be a profitable forex trader Also, there are several forex news calendars online that indicate what is likely to be high impact news. These can be helpful starting out.", "title": "" }, { "docid": "41984750d1c504a6e65a8ae454f083ee", "text": "\"The Bank of England will simply increase some numbers in a computer. It will then buy UK Government Bonds (debt) and other financial assets from their favorite banks and investment firms with the newly created money that they just pulled out of thin air. It's a win-win-lose. Your government wins by getting more cash to waste, the elite global bankers win by getting more cash to swim around in, and you lose because the money supply inflates, so the small amount of cash you have now has even less buying power. It's the perfect scheme for the government and banking elites. They steal your money from you without you even noticing and just pretend it's a normal part of life. But I expect all the Krugman worshipers to tell me why I'm wrong, throw around some obscure keyensian terms like \"\"liquidity trap\"\", and tell you why this is all good for you and to just shut up, accept it and keep quite.\"", "title": "" }, { "docid": "7420e7383876ee81f6a06d78636e48e3", "text": "assuming that a couple big players are making the majority of money in the stock market (which is true), it is logical to assume that most smaller players are losing. For example, if one big hedge fund makes 20% a year, it means either 20 funds lost 1%, or 5 funds lost 4%, and etc. Assuming that the economy is not drastically getting much better, stocks are a zero sum game. Therefore, the couple of funds with the most resources will be taking from the people that aren't as advanced or taking a chance.", "title": "" }, { "docid": "11cbec902d575e4489084f6cde2ddb91", "text": "\"Most folks would loan out money for the purpose of being re-loaned. Depositing money in the bank, is loaning the bank money who will re-loan it. Buying bond based mutual funds is another way that it could be viewed that people are loaning money for the purpose of the money being re-loaned. The reason why banks always have money available for withdrawal, is because of the reserve. Fractional reserve banking in its simplest explanation, is that banks are allowed to take deposits and loan them out so long as they keep a set reserve. If the reserve rate is 10% (it's really much lower), and somebody deposits $100, then the bank is allowed to loan out $90, keeping $10 as a reserve. Now even with a reserve, a bank does run some risk of the deposits being withdrawn faster than the loans are paid back, this is called a run. What protects banks most from this, is that deposits, withdrawals, loans, and loan repayments, all happen at a fairly steady and predictable rate (short term), so banks are able to judge how many loans they should give out. Even when banks do see their reserve depleting, they have options. The first and most common, is simply getting a loan from another bank. The rule with the reserve, is that banks need to meet it at the end of the day, so banks will loan each other money overnight for the purpose of making up for the slight fluctuations that occur in a normal business day. If you have ever heard the Fed talking about the \"\"overnight rate\"\" they are talking about the rate banks loan each other money for the night. Another common way for banks to make up for a deficit in deposits, in a longer term solution,is to sell assets. Fairly rare for a bank to sell actual physical assets, but the loans they hold are assets, and they can sell them to other banks. Most banks will also hold some bonds that are available to sell. The major functions that allow a bank to be profitable would still apply to the OP's idea. The only real difference would be that commercial banks have direct access to the central banks, and the OP's idea would need to have a commercial bank to act as the middle man between the central bank.\"", "title": "" }, { "docid": "2e8427f6c06c93827246c711c98b9cb6", "text": "\"I've mostly seen this term peddled by those with large portfolios in gold/commodities. The incentive for these guys, who for example may have a large portfolio in gold, is to drive demand for gold up - which in turn drives the value of the gold they're holding up and makes their assets more valuable. The easiest way to get a large amount of people to invest in gold is to scare them into thinking the whole market is going to fall apart and that gold is their best/only option. I personally think that the path we're on is not particularly sustainable and that we're heading for a large correction/recession anyways - but for other reasons. Example: [Peter Shiff YouTube Channel called \"\"The Economist\"\" with conspiracy videos](https://www.youtube.com/user/PeterSchiffChannel/videos) [Actual \"\"The Economist\"\" magazine researching the market](https://www.youtube.com/user/EconomistMagazine/videos) (edit: formatting)\"", "title": "" }, { "docid": "18db0e4ca9c70f63f9dfd4813596faf3", "text": "\"I'll take a stab at this question and offer a disclosure: I recently got in RING (5.1), NEM (16.4), ASX:RIO (46.3), and FCX (8.2). While I won't add to my positions at current prices, I may add other positions, or more to them if they fall further. This is called catching a falling dagger and it's a high risk move. Cons (let's scare everyone away) Pros The ECB didn't engage in as much QE as the market hoped and look at how it reacted, especially commodities. Consider that the ECB's actions were \"\"tighter\"\" than expected and the Fed plans to raise rates, or claims so. Commodities should be falling off a cliff on that news. While most American/Western attention is on the latest news or entertainment, China has been seizing commodities around the globe like crazy, and the media have failed to mention that even with its market failing, China is still seizing commodities. If China was truly panicked about its market, it would stop investing in other countries and commodities and just bail out its own country. Yet, it's not doing that. The whole \"\"China crisis\"\" is completely oversold in the West; China is saying one thing (\"\"oh no\"\"), but doing another (using its money to snap up cheap commodities). Capitalism works because hard times strengthen good companies. You know how many bailouts ExxonMobil has received compared to Goldman Sachs? You know who owns more real wealth? Oil doesn't get bailed out, banks do, and banks can't innovate to save their lives, while oil innovates. Hard times strengthen good companies. This means that this harsh bust in commodities will separate the winners from the losers and history shows the winners do very well in the long run. Related to the above point: how many bailouts from tax payers do you think mining companies will get? Zero. At least you're investing in companies that don't steal your money through government confiscation. If you're like me, you can probably find at least 9 people out of 10 who think \"\"investing in miners is a VERY BAD idea.\"\" What do they think is a good idea? \"\"Duh, Snapchat and Twitter, bruh!\"\" Then there's the old saying, \"\"Be greedy when everyone's fearful and fearful when everyone's greedy.\"\" Finally, miners own hard assets. Benjamin Graham used to point this out with the \"\"dead company\"\" strategy like finding a used cigarette with one more smoke. You're getting assets cheap, while other investors are overpaying for stocks, hoping that the Fed unleashes moar QE! Think strategy here: seize cheap assets, begin limiting the supply of these assets (if you're the saver and not borrowing), then watch as the price begins to rise for them because of low supply. Remember, investors are part owners in companies - take more control to limit the supply. Using Graham's analogy, stock pile those one-puff cigarettes for a day when there's a low supply of cigarettes. Many miners are in trouble now because they've borrowed too much and must sell at a low profit, or in some cases, must lose. When you own assets debt free, you can cut the supply. This will also help the Federal Reserve, who's been desperately trying to figure out how to raise inflation. The new patriotic thing to do is stimulate the economy by sending inflation up, and limiting the supply here is key.\"", "title": "" }, { "docid": "e2cb477959dec39a9ffffc1413e15915", "text": "The monetary supply isn't a fixed number like in the old days of the [gold standard](https://en.wikipedia.org/wiki/Gold_standard) is part of the answer. Also, the actual spending of that one thousand dollars -- where the money is spent and on what -- does make a significant difference on how the overall economy is effected: People spending it on food, transportation and housing isn't going to drive up the costs of a Porshe 911.", "title": "" }, { "docid": "3b4aeff285314705c8077ab0cef577bf", "text": "\"This is the best tl;dr I could make, [original](http://themarketmogul.com/central-bank-policy/?hvid=uJZ0z) reduced by 94%. (I'm a bot) *** > A futures contract would be set at a certain level of NGDP growth, and from the buy and sell orders made on the contract, the central bank would ascertain the market&#039;s prediction of future nominal income and alter its policy rate in a way that would bring those expectations in line with its original target. > TLTRO. First launched by the ECB in 2014, with TLTRO-II introduced in 2016, the TLTRO program allows banks to borrow reserve balances from the central bank, long-term and with negative rates, of up to 30% of the value of their outstanding loans to businesses and consumers, directly incentivising new loan creation to spur growth. > The policy has the potential to be far more effective than the aforementioned policy innovations and is likely to be relied upon in an expanded form, which might be referred to as &#039;helicopter money&#039;, alongside negative policy rates, when the next recession occurs. * [Extended Summary*](http://np.reddit.com/r/autotldr/comments/6v2n2b/a_new_dawn_in_central_bank_policy/) \| [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~195528 tl;drs so far.\"\") \| [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") \| Top* keywords: rate^#1 inflation^#2 policy^#3 Bank^#4 central^#5\"", "title": "" }, { "docid": "941cf2ba28a5fb1b15c47aea99340118", "text": "It will have some positives, and some negatives. The hardest hit will be the insurance agencies, as well as banks. Manufacturing will also take a short term hit. When insurance payments come out, then there will be a boom in construction, consumer goods, industrial goods, etc. Companies will upgrade their equipment whereas before they might have let it run for another 10-20 years or longer. After all, if you are going to buy something, you aren't going to get it used, you'll get something more modern. Of course, Japan already was one of the most modern countries in the world, so they likely won't see as many gains as other countries, but this would hold more true in a less technologically advanced society. Long term, 10-20 years down the line, when everything is rebuilt, it might have a slight positive increase in productivity, but this will be somewhat offset because Japan already is such a technological powerhouse, and on the cutting edge in many technologies. But I agree, it's quite foolish to say that it'll improve the economy of Japan, some clarification should be done to clear that one up...", "title": "" } ]	fiqa
ccb07dbc75bb9ebd9a7f1767923a1814	Free brokerage vs paid - pros and cons	[ { "docid": "7bf0d506705cfb813417bf5edc31f44c", "text": "\"Emotion aside, you can calculate the cost of the funds you have tied up at the bank. If I can earn 5% in a CD, my \"\"free\"\" checking with minimum $5000 balance really costs me $250/yr. You have money tied up, I understand, but where would you place it otherwise, and at what return? The subject of frequent trading even at zero cost is worth addressing, but not the real subject of your question. So, I'll leave it for elsewhere.\"", "title": "" }, { "docid": "4c83b107714c3ed736f7c06ca4f817b8", "text": "Unless you're an active trader, 30 trades per month is a number you'll probably never hit, so you might as well take advantage of the offer while you have it. But don't trade more than you normally would. Discount brokerages make money on the arbitrage between the bid and ask prices on the exchanges (legal as long as you get a price that was available on the open market - they disclose this in the fine print in your account paperwork). So they want you to trade as often as they can get you to. As you say, it's really just a mind game. There is always a cost to doing business with a bank or brokerage. They charge you fees for services and they make money on your deposits while you're not using them. So while it looks like they're paying you interest, which they are, they're not paying you all the interest they've earned using your money. So there's the cost. It was only when interest rates dropped so low that they were starting to feel it, that they started rolling out more overt fees for services. If you'll notice, the conditions that cause the fees to be waived in your account all lead to increased deposits or transactions, either directly or indirectly. If your main concern is the efficiency of your investments, which by your description appear to be rather modest, you should consider dollar-cost averaging (DCA) into a mutual fund (of which there are plenty of high quality no-load/no-fee options around), or into a stock if your brokerage offers a lower-fee DCA program for stocks (where you can often buy partial shares).", "title": "" }, { "docid": "9c11c66486208fbc7b670604ab93b45e", "text": "\"The first consideration for the banking part of your portfolio is safety. In the United States that is FDIC protection, or the equivalent for a Credit Union. The second consideration is does it have the level of service you need. For this I mean the location of branches, ATMs, or its online services meet your needs for speed, accuracy, and ability to access or move the money as you need. The rest are then balanced on the extras. For your situation those extras include the ability to make free trades. For other it might be a discount on their mortgage. For others it is free checking. In your current situation if the first two things are met, and you are using those extra benefits then don't change. For me the free trades wouldn't be a benefit, so any major degradation in the safety and service would cause me to leave. Keep in mind that free services exist to entice you to make a deposit: which they can then make money by lending it out; or they offer a free service to entice you to use a service they can charge you to use. All Free services come with a cost. I earned a completely paltry $3.33 YTD over the last 9 months on my savings at my bank presumably in exchange for these \"\"free\"\" trades. Without knowing how much you had deposited in your savings account there is no way to know how much you could have made at the bank across the street. But with the low rates of the last decade there is not big money to be made off the emergency savings of a typical american family.\"", "title": "" } ]	[ { "docid": "77e655ae1c86c992ba418ffc070b4510", "text": "I use two different brokerages, both well-known. I got a bit spooked during the financial crisis and didn't want to have all my eggs in one basket. The SIPC limits weren't so much a factor. At the time, I was more worried about the hassle of dealing with a Lehman-style meltdown. If one were to fail, the misery of waiting and filing and dealing with SIPC claims would be mitigated by having half of my money in another brokerage. In hindsight, I was perhaps a bit too paranoid. Dealing with two separate brokerages is not much of an inconvenience, though, and it's interesting to see how their web interfaces are slightly different and some things are easier to do with one vs the other. Overall, they're really similar and I can't say there's much advantage (other than my tin-foil hat tendencies) to splitting it up like that.", "title": "" }, { "docid": "b26146f4690f6340fd7e29cdd4f8fd28", "text": "Here's the purely mathematical answer for which fees hurt more. You say taking the money out has an immediate cost of $60,000. We need to calculate the present value of the future fees and compare it against that number. Let's assume that the investment will grow at the same rate either with or without the broker. That's actually a bit generous to the broker, since they're probably investing it in funds that in turn charge unjustifiable fees. We can calculate the present cost of the fees by calculating the difference between: As it turns out, this number doesn't depend on how much we should expect to get as investment returns. Doing the math, the fees cost: 220000 - 220000 * (1-0.015)^40 = $99809 That is, the cost of the fees is comparable to paying nearly $100,000 right now. Nearly half the investment! If there are no other options, I strongly recommend taking the one-time hit and investing elsewhere, preferably in low-cost index funds. Details of the derivation. For simplicity, assume that both fees and growth compound continuously. (The growth does compound continuously. We don't know about the fees, but in any case the distinction isn't very significant.) Fees occur at a (continuous) rate of rf = ln((1-0.015)^4) (which is negative), and growth occurs at rate rg. The OPs current principal is P, and the present value of the fees over time is F. We therefore have the equation P e^((rg+rf)t) = (P-F) e^(rg t) Solving for F, we notice that the e^rg*t components cancel, and we obtain F = P - P e^(rf t) = P - P e^(ln((1-0.015)^4) t) = P - P (1-0.015)^(4t)", "title": "" }, { "docid": "fd7c234f7265e788866e04770fab0c5f", "text": "As an alternative to investing you'll find at least some banks eg. Rakuten that will give you preferential interest rates(still 0.1% though) just for opening a free brokering account. As this is still your individual savings account your money is as safe as it was before opening your account. I certainly wouldn't buy to hold any stock or fund that is linked to the Nikkei right now. Income stocks outside of the 225 may be safer, but you'd still need to buy enough of them that their individual results don't affect your bottom line.", "title": "" }, { "docid": "abecc66d27dfef17b7ee376ff4cc253a", "text": "There are fees on retail trades imposed by trading houses, but not on traders like MS and GS. That's why HFT is possible. Personally, I get 100 free trades per year and that's more than enough for me. Adding a tax to this is just stupid.", "title": "" }, { "docid": "2a6f89b2420cdafce495b6683f5493a8", "text": "This very informative link gives a clear and comprehensive comparison (pros and cons) of various popular brokers: https://www.nerdwallet.com/blog/investing/best-online-brokers-for-stock-trading/ (Best Online Brokers for Stock Trading 2016) There are indeed some significant cons for the super-low commission fee. Just for a quick example, the Interactive Broker requires a minimum of 10k account balance, as well as the frequent trading activity even on monthly basis (or the minimum $10 commission would be charged).", "title": "" }, { "docid": "94630e795ff7fd42e6357f0e6e1df8ad", "text": "It's 5% free money, if you believe the company's stock is fairly valued and likely to grow and/or return reasonable dividends until you're ready to sell it. There's usually a minimum holding period of a few months to a year before these discounted shares can be sold; take that into account", "title": "" }, { "docid": "675a70aadcb10c31e3cc28eca8b61c0c", "text": "Brokers will have transaction fees in addition to the find management fees, but they should be very transparent. Brokering is a very competitive business. Any broker that added hidden fees to their transactions would lose customers very quickly to other brokers than can offer the same services. Hedge funds are a very different animal, with less regulation, less transparency, and less competition. Their fees are tolerated because the leveraged returns are usually much higher. When times are bad, though, those fees might drive investors elsewhere.", "title": "" }, { "docid": "82c2ef3a0f37dfd65929f13ca4d90f18", "text": "I was going to comment above, but I must have 50 reputation to comment. This is a question that vexes me, and I've given it some thought in the past. Morningstar is a good choice for simple, well-organized financial histories. It has more info available for free than some may realize. Enter the ticker symbol, and then click either the Financials or the Key Ratios tab, and you will get 5-10 years of some key financial stats. (A premium subscription is $185 per year, which is not too outrageous.) The American Association of Individual Investors (AAII) provides some good histories, and a screener, for a $29 annual fee. Zacks allows you to chart a metric like EPS going back a long ways, and so you can then click the chart in order to get the specific number. That is certainly easier than sorting through financial reports from the SEC. (A message just popped up to say that I'm not allowed to provide more than 2 links, so my contribution to this topic will end here. You can do a search to find the Zacks website. I love StackExchange and usually consult it for coding advice. It just happens to be an odd coincidence that this is my first answer. I might even have added that aside in a comment, but again, I can't comment as of yet.) It's problem, however, that the universe of free financial information is a graveyard of good resources that no longer exist. It seems that eventually everyone who provides this information wants to cash in on it. littleadv, above, says that someone should be paid to organize all this information. However, think that some basic financial information, organized like normal data (and, hey, this is not rocket science, but Excel 101) should be readily available for free. Maybe this is a project that needs to happen. With a mission statement of not selling people out later on. The closest thing out there may be Quandl (can't link; do a search), which provides a lot of charts for free, and provides a beautiful and flexible API. But its core US fundamental data, provided by Sharadar, costs $150 per quarter. So, not even a basic EPS chart is available there for free. With all of the power that corporations have over our society, I think they could be tabulating this information for us, rather than providing it to us in a data-dumb format that is the equivalent of printing a SQL database as a PDF! A company that is worth hundreds of billions on the stock market, and it can't be bothered to provide us with a basic Excel chart that summarizes its own historical earnings? Or, with all that the government does to try to help us understand all of these investments, they cannot simply tabulate some basic financial information for us? This stuff matters a great deal to our lives, and I think that much of it could and should be available, for free, to all of us, rather than mainly to financial professionals and those creating glossy annual reports. So, I disagree that yet another entity needs to be making money off providing the BASIC transparency about something as simple as historical earnings. Thank you for indulging that tangent. I know that SE prides itself on focused answers. A wonderful resource that I greatly appreciate.", "title": "" }, { "docid": "3862e880f4ef2433c90221a639b0914e", "text": "The brokerage executes the transactions you tell them to make on your behalf. Other than acting as your agent for those, and maintaining your account, and charging a fee for the service, they have no involvement -- they do not attempt to predict optimal anything, or hold any assets themselves.", "title": "" }, { "docid": "62fb28744efe73943158d91328cfc45c", "text": "Well they do have incentive, the more volume you trade the more they make in commission. The shop is mostly daytrading oriented but you can do whatever you want. From what I gather, alot of their revenue comes in the form of training programs (although they offer one for free when you sign up, mostly in equities) which are completely optional. Also, they're willing to sponsor me for my 7, which is good. I mean this is a super risky career move but you roll the dice when you enter prop trading, in more ways than one.", "title": "" }, { "docid": "9e767c26bb5156cea063ee0911642690", "text": "\"Yes. I heard back from a couple brokerages that gave detailed responses. Specifically: In a Margin account, there are no SEC trade settlement rules, which means there is no risk of any free ride violations. The SEC has a FAQ page on free-riding, which states that it applies specifically to cash accounts. This led me to dig up the text on Regulation T which gives the \"\"free-riding\"\" rule in §220.8(c), which is titled \"\"90 day freeze\"\". §220.8 is the section on cash accounts. Nothing in the sections on margin accounts mentions such a settlement restriction. From the Wikipedia page on Free Riding, the margin agreement implicitly covers settlement. \"\"Buying Power\"\" doesn't seem to be a Regulation T thing, but it's something that the brokerages that I've seen use to state how much purchasing power a client has. Given the response from the brokerage, above, and my reading of Regulation T and the relevant Wikipedia page, proceeds from the sale of any security in a margin account are available immediately for reinvestment. Settlement is covered implicitly by margin; i.e. it doesn't detract from buying power. Additionally, I have personally been making these types of trades over the last year. In a sub-$25K margin account, proceeds are immediately available. The only thing I still have to look out for is running into the day-trading rules.\"", "title": "" }, { "docid": "307e12c983b5fd0bf60a9811f70883cb", "text": "\"While I've never used Wall Street Survivor, I took a look over the marketing materials and I've seen multiple similar contests run among investment interns also just out of college. I see some good here and some bad. First off, I love interactive web-based tutorials. I've used one to learn the syntax of a new programming language and I find the instant feedback and the ability to work at your own pace very useful. The reviews seem to say that Wall Street Survivor is a good way to learn the basics of how trading stocks works and the lingo. Also, it seems pretty fun which I've found helps a lot. Wall Street Survivor will hopefully teach you that there are many real stock markets and that they may have somewhat different prices and they likely take the real and timely data from a single market. Wall Street Survivor also frightens me. The big problem that I see with interns running similar contests is that the market is extremely random over short to medium periods of time. An intern can make an awful portfolio or even pick stocks at random and still win the contest. These interns know a lot about the randomness in markets already so they don't believe they are trading geniuses because they won a contest, I'm not sure there is much to temper this view on this web-site. Also, while Wall Street Survivor teaches you about trading it doesn't appear to teach you about investing. The website appears to encourage short term views and changing positions a lot and doesn't seem to simulate the full trading costs (including fees) that would eat away at the gains of a individual investor that trades that much. It gives some help with longer term thinking like diversification, but also seems to encourage trading that makes Wall Street Survivor more money, but are likely detrimental to the user. I would say have fun with Wall Street Survivor. Let it teach you some things about trading, but don't give the site much if any money. At the same time, pick up a copy of short book called \"\"A Random Walk Down Wall Street\"\" and start learning about investing at the same time. Feel free to come back to Stack Exchange with questions along the way.\"", "title": "" }, { "docid": "fd894d1730795d2534bc64b24977b373", "text": "Sure, but as a retail client you'd be incurring transaction fees on entry and exit. Do you have the necessary tools to manage all the corporate actions, too? And index rebalances? ETF managers add value by taking away the monstrous web of clerical work associated with managing a portfolio of, at times, hundreds of different names. With this comes the value of institutional brokerage commissions, data licenses, etc. I think if you were to work out the actual brokerage cost, as well as the time you'd have to spend doing it yourself, you'd find that just buying the ETF is far cheaper. Also a bit of a rabbit hole, but how would you (with traditional retail client tools) even coordinate the simultaneous purchase of all 500 components of something like SPY? I would guess that, on average, you're going to have significantly worse slippage to the index than a typical ETF provider. Add that into your calculation too.", "title": "" }, { "docid": "2268cd97ad96813139a7a735fb5a81c3", "text": "Unfortunately, that's a call only you can make and whichever route you choose comes with advantages and disadvantages. If you manage your money directly, you may significantly reduce costs (assuming that you don't frequently trade index funds or you use a brokerage like RobinHood) and take advantage of market returns if the indexes perform well. On the other hand, if the market experiences some bad years, a professional might (and this is a huge might) have more self-discipline and prevent a panic sell, or know how to allocate accordingly both before and after a rise or fall (keep in mind, investors often get too greedy for their own good, like they tend to panic at the wrong time). As an example of why this might is important: one family member of mine trusted a professional to do this and they failed; they bought in a rising market and sold in a falling market. To avoid the above example, if you do go with the professional service, the best course of action is to look at their track record; if they're new, you might be better on your own. Since I assume this one or more professionals at the company, testing to see what they've recommended over the years might help you evaluate if they're offering you a good choice. Finally, depending on how much money you have, you could always do what Scott Adams did: he took a portion of his own money and managed it himself and tested how well he did vs. how well his professional team did (if I recall, I believe he came out ahead of his professional team). With two decades left, that may help guide you the rest of the way, even through retirement.", "title": "" }, { "docid": "cc6373635f3f0a7b32ab64a05ae50d01", "text": "There is no free ride at most brokers. You will likely be charged a margin fee for that trade even though you only held the margin shares for part of one day. The margin fee would be the annual margin interest rate calculated down to a one day holding period,so it would be smaller. Check your broker's policies but most work like this.", "title": "" } ]	fiqa
646cfb85f22dd40c2dbac3acd44712b1	How does a change in market cap affect a company's operational decisions?	[ { "docid": "1c7e127b0fa41389b4f06b9f16c85775", "text": "It basically only affects the company's dealings with its own stock, not with operational concerns. If the company were to offer more stock for sale, it would get less cash. If it had a stock buy-back program, it could buy more shares for the same money. If it was to offer to acquire another company in exchange for its own stock, the terms would be less attractive to the other company's owners. Employee stock remuneration, stock options, and so forth would be affected, so there might be considerations and tax consequences for the company.", "title": "" }, { "docid": "720fb0af1697cce08258dd38ac4b44f1", "text": "In practical terms, it shouldn't. Market cap changes every day (assuming public trading, of course) or even second-by-second, and focusing on investor sentiment toward your company's stock is not the wisest way to make strategic decisions. That being said, company execs do need to be mindful of unusual swings in their company's share prices because it can sometimes be an indicator of news/information of which they're unaware. At the same time, you can't just disregard your shareholders, especially the big institutional players who may have large voting blocks with which to replace you if they feel you're not responsive to events. They are the ones who make strategic decisions based on your company's share price, right? (grin) The issue around swings in market cap is more about public perception than reality, so it is important for companies to have a good public relations strategy ready to go that can address questions/concerns in case of some market event. After all, consumers who hear that a company's share price has suddenly fallen by, say, 30% might be more hesitant to do business with that company because there's a (perhaps irrational) fear the company's not doing well and may not be around much longer. Investors are, by their very nature, emotional rather than rational. Any kind of news can cause a stampede toward or away from a stock for no reason that an investment professional could ever explain. That's why it's impossible to spend any real time focusing on market cap (leave that to your P.R. department to worry about). IF, as a company executive, you focus on doing the right things to make your company successful then any questions/concerns about market cap will resolve themselves. Good luck!", "title": "" } ]	[ { "docid": "dfa933229cc96a45eb5007baee03701a", "text": "The difference between the two numbers is that the market size of a particular product is expressed as an annual number ($10 million per year, in your example). The market cap of a stock, on the other hand, is a long-term valuation of the company.", "title": "" }, { "docid": "46f306dff57c96fa3e115a1e5e51a28b", "text": "In general, how does a large open market stock sale affect prices? A very general answer, all other things being equal, the price will move down. However there is nothing general. It depends on total number of shares in market and total turn over for that specific shares. The order book for the day etc. What is the maximum percentage of a company you could sell per day before the trading freezes, and what factors matter? Every stock exchange has rules that would determine when a particular stock would be suspended from trading, generally a 10-20% swing [either ways]. Generally highly liquid stock or stock during initial listing are exempt from such limits as they are left to arrive the market price ... A large sell order may or may not swing the price for it to get suspended. At times even a small order may do ... again it is specific to a particular stock.", "title": "" }, { "docid": "0c9e754e3769d7ad1a16dbc3e6c90ba5", "text": "It seems like you want to compare the company's values not necessarily the stock price. Why not get the total outstanding shares and the stock price, generate the market cap. Then you could compare changes to market cap rather than just share price.", "title": "" }, { "docid": "3923c963dd1ef3e1bea249001af5c433", "text": "\"If I held stock in these companies yesterday, would I have profited by these gains? No. For DZSI, your 5 shares at $1.10 would now be 1 share at $5.50, so you would have the same total amount. For SGY, they closed at $6.95, and opened at $32.80, so your five shares at $6.95 would now be one share at $32.80, so you would have actually lost money (not purely because of the split, but because the \"\"new\"\" shares are trading lower then the expected 1:5 split price). A split in general does not affect market cap (how much your total shares are worth) but there may be residual effects that cause the market value to fluctuate after a split that affect the price.\"", "title": "" }, { "docid": "9eb5e774cc8b567bedd9001e1c614725", "text": "\"Supply and Demand, pure and simple! There are two basic forms of this - a change in the quantity demanded/supplied at any given price, and a true change in the amount of demand/supply itself. Please note that this can be distinct from the underlying change in the value of the company and/or its expected future cash flows, which are a function of both financial performance and future expectations. If more people want the stock that are willing to sell it at a given price at a given point in time, sellers will begin to offer the stocks at higher prices until the market is no longer willing to bear the new price, and vice versa. This will reduce the quantity of stocks demanded by buyers until the quantity demanded and the quantity supplied once again reach an equilibrium, at which point a transaction occurs. Because people are motivated to buy and sell for different reasons at different times, and because people have different opinions on a constant flow of new information, prices change frequently. This is one of the reasons why executives of a recent IPO don't typically sell all of their stock at once. In addition to legal restrictions and the message this would send to the market, if they flooded the market with additional quantities of stock supplied, all else being equal, since there is no corresponding increase in the quantity demanded, the price would drop significantly. Sometimes, the demand itself for a company's stock shifts. Unlike a simple change in price driven by quantity supplied versus quantity demanded, this is a more fundamental shift. For example, let's suppose that the current demand for rare earth metals is driven by their commercial applications in consumer electronics. Now if new devices are developed that no longer require these metals, the demand for them will fall, regardless of the actions of individual buyers and sellers in the market. Another example is when the \"\"rules of the game\"\" for an industry change dramatically. Markets are behavioral. In this sense prices are most directly driven by human behavior, which hopefully is based on well-informed opinions and facts. This is why sometimes the price keeps going up when financial performance decreases, and why sometimes it does not rise even while performance is improving. This is also why some companies' stock continues to rise even when they lose huge sums of money year after year. The key to understanding these scenarios is the opinions and expectations that buyers and sellers have of that information, which is expressed in their market behavior.\"", "title": "" }, { "docid": "6db8ff167a2027d4fa6c4eb9c132fc41", "text": "\"I think the key concept here is future value. The NAV is essentially a book-keeping exercise- you add up all the assets and remove all the liabilities. For a public company this is spelled out in the balance sheet, and is generally listed at the bottom. I pulled a recent one from Cisco Systems (because I used to work there and know the numbers ;-) and you can see it here: roughly $56 billion... https://finance.yahoo.com/q/bs?s=CSCO+Balance+Sheet&annual Another way to think about it: In theory (and we know about this, right?) the NAV is what you would get if you liquidated the company instantaneously. A definition I like to use for market cap is \"\"the current assets, plus the perceived present value of all future earnings for the company\"\"... so let's dissect that a little. The term \"\"present value\"\" is really important, because a million dollars today is worth more than a million dollars next year. A company expected to make a lot of money soon will be worth more (i.e. a higher market cap) than a company expected to make the same amount of money, but later. The \"\"all future earnings\"\" part is exactly what it sounds like. So again, following our cisco example, the current market cap is ~142 billion, which means that \"\"the market\"\" thinks they will earn about $85 billion over the life of the company (in present day dollars).\"", "title": "" }, { "docid": "22f70c08e60d9f5b1375bca604d8599f", "text": "It is ALWAYS possible for a company's valuation in the market to be larger than the market it serves, and in fact it is not uncommon. There's valid argument that Uber would be a good example of this, with a market cap of more than $60 billion. Market cap is the total value of all shares outstanding. Keep in mind that what a company's shares trade for is less a reflection of its past (or, to some degree, even present) revenue activity and more of a speculative bet on what the company will do in the future.", "title": "" }, { "docid": "8cb0ac31479e70307a2d97aa57be238e", "text": "I remember my Finance Professor at b-school answering this question: The next moment the dividend is paid the total market cap is decreased by the amount paid This makes sense as cash leaves company, the value of the company is decreased by exactly the same amount. To summarise: the moment you paid dividend, the value of the stock is decreased by the same amount.", "title": "" }, { "docid": "4b3b7cdfb6a85bd1b9986d8b380894a1", "text": "There's an interesting paper, Does Investor Attention Affect Stock Prices? (Sandhya et al), where researchers look at related stock tickers. When a large cap, better-known stock jumps, smaller firms with similar symbols also rise. Pretty nuts -- I interviewed the author of the paper [here](http://www.tradestreaming.com/?p=3745). There's also a transcript.", "title": "" }, { "docid": "980f83b9957fd05caa022968bff806c0", "text": "Large-scale price range of a stock isn't directly meaningful; that reflects how many shares exist, not just how desirable they are. A stock split, for example, doubles the number of shares everyone holds while cutting the value of each share in half; that's meaningless except that it makes the shares a bit easier to trade in. Change in price is more interesting. In the case of energy companies, that often reflects major changes in energy supply, distribution, use, or how well positioned people feel the company is for the next change in these. Fracking's surge and the questions raised against it, whether a major pipeline will or won't be built, international energy price trends, breakthroughs in renewables... if it might affect energy price, it might affect the company's strength, both absolute and relative to others. In other words, the same kinds of things that affect any stock.", "title": "" }, { "docid": "91b417b497de26427f7464a4309b0339", "text": "As said previously, most of the time volume does not affect stock prices, except with penny stocks. These stocks typically have a small volume in the 3 or 4 figure range and because of this they typically experience very sharp rises and drops in stock prices, contrasting normal stocks that go up and down constantly every minute. Volume is not one thing you should be looking at when analyzing a stock in most cases, since it is simply the number of people of trades made in a day. That has no effect on the value of the company, whereas looking at P/E ratios, dividend growth, etc all can be analyzed to see if a company is growing and is doing well in its field. If I buy an iPhone, it doesn't matter if 100 other people or 100,000 other people have bought it as well, since they won't really affect my experience with the product. Whereas the type of iPhone I buy will.", "title": "" }, { "docid": "66bf45f6087c29960afe97f1a27cf57a", "text": "Most of the money gained through PE is done through financial engineering/deal structuring. There are funds that are operationally focused which do make changes on the portfolio company level. From what I have seen, most people who are operationally focused do not achieve that much in the way of results. Picture it as consulting, except that the results of your initiatives are actually important. As for turn-arounds, there are funds that specialize in that. Golden Gate Capital comes to mind. These are far more exciting investments, but can be very frustrating. If you want to look at it in terms of the public markets, turnarounds in PE are essentially levered value investments. It is likely that you aren't going to change the business much, but are actually just buying an out-of-favor business and waiting on the industry to bounce back. The argument that PE funds just gut companies and sell with the new higher operating profitability is somewhat flawed. There is really only so much cost cutting you can do, once you have fired staff or corrected a mistake you won't likely have more chances to gain from that original problem. What people should be criticizing is that funds often cut capex and reinvestment to increase results at the expense of the future profitability of the company.", "title": "" }, { "docid": "c1c2620e960c66a3465df030519f8644", "text": "\"It is important to first understand that true causation of share price may not relate to historical correlation. Just like with scientific experiments, correlation does not imply causation. But we use stock price correlation to attempt to infer causation, where it is reasonable to do so. And to do that you need to understand that prices change for many reasons; some company specific, some industry specific, some market specific. Companies in the same industry may correlate when that industry goes up or down; companies with the same market may correlate when that market goes up or down. In general, in most industries, it is reasonable to assume that competitor companies have stocks which strongly correlate (positively) with each-other to the extent that they do the same thing. For a simple example, consider three resource companies: \"\"Oil Ltd.\"\" [100% of its assets relate to Oil]; \"\"Oil and Iron Inc.\"\" [50% of its value relates to Oil, 50% to Iron]; and \"\"Iron and Copper Ltd.\"\" [50% of its value relates to Iron, 50% to Copper]. For each of these companies, there are many things which affect value, but one could naively simplify things by saying \"\"value of a resource company is defined by the expected future volume of goods mined/drilled * the expected resource price, less all fixed and variable costs\"\". So, one major thing that impacts resource companies is simply the current & projected price of those resources. This means that if the price of Oil goes up or down, it will partially affect the value of the two Oil companies above - but how much it affects each company will depend on the volume of Oil it drills, and the timeline that it expects to get that Oil. For example, maybe Oil and Iron Ltd. has no currently producing Oil rigs, but it has just made massive investments which expect to drill Oil in 2 years - and the market expects Oil prices to return to a high value in 2 years. In that case, a drop in Oil would impact Oil Inc. severely, but perhaps it wouldn't impact Oil and Iron Ltd. as much. In this case, for the particular share price movement related to the price of Oil, the two companies would not be correlated. Iron and Copper Ltd. would be unaffected by the price of Oil [this is a simplification; Oil prices impact many areas of the economy], and therefore there would be no correlation at all between this company's shares. It is also likely that competitors face similar markets. If consumer spending goes down, then perhaps the stock of most consumer product companies would go down as well. There would be outliers, because specific companies may still succeed in a falling market, but in generally, there would be a lot of correlation between two companies with the same market. In the case that you list, Sony vs Samsung, there would be some factors that correlate positively, and some that correlate negatively. A clean example would be Blackberry stock vs Apple stock - because Apple's success had specifically negative ramifications for Blackberry. And yet, other tech company competitors also succeeded in the same time period, meaning they did not correlate negatively with Apple.\"", "title": "" }, { "docid": "5871566697910ffc03fc7f607eb651c9", "text": "\"Market cap is speculative value, M = P * W, where W is stock (or other way of owning) percentage of ownership, P - price of percentage of ownership. This could include \"\"outside of exchange\"\" deals. Some funds could buy ownership percentage directly via partial ownership deal. That ownership is not stock, but fixed-type which has value too. Stock market cap is speculative value, M2 = Q * D, where D is free stocks available freely, Q - price of stock, in other words Quote number (not price of ownership). Many stock types do NOT provide actual percentage of ownership, being just another type of bond with non-fixed coupon and non-fixed price. Though such stocks do not add to company's capitalization after sold to markets, it adds to market capitalization at the moment of selling via initial price.\"", "title": "" }, { "docid": "2bf62c09fe325de41096aaf3e8b4b8f3", "text": "\"Does your planning include contingencies for Can you afford the late fees, insurance increases, bad credit hits and all the other downsides when this goes bad? Why does she NEED a new car on lease? Personally? I'd go for option B) Do what it takes to have her OWN a car. Why not just have her get a car that costs IN ENTIRE the $3k that would be used for a down payment on a lease? Maybe add a bit of your own money \"\"for old times sake\"\" to the pile? Or a small loan to get to where she can get a usable, dependable car? Say, a $3-5k loan in your name that she's responsible for the payments. $3-10k can get a very dependable old car. 10 great cars for 6k or less Everyone else has been burned by her - for whatever reason. No idea what the reasons are, but she seems to be unable to pay her bills. Why would this time be any different? Your name on a car + someone who can't pay bills = a bad proposition. I would LOVE to help anyone who's been important in my life. Including MY x-wife. But I wouldn't agree to this deal unless I KNEW that I could 100% cover the costs when things go bad - because at this point, odds are they will.\"", "title": "" } ]	fiqa
053a42495a814a3a1b13a586e7b62fc8	VAT in UK, case of cultural industry and overseas invoices	[ { "docid": "e6c0ce6d855e23a095166cf2c36b03e8", "text": "Your answer will need loads of information and clarification, so I will ask you to visit the VAT and have a peruse. 1) Obligation is for you to find out the correct rate of VAT, charge and pay tax accordingly. You can call up the HMRC VAT helpline for help, which they will be happy to oblige. Normally everybody pays VAT every 3 months or you can pay once in a year. 2) Depends on your annual turnover, including VAT. Less than £150000 you join the Flat rate scheme. There are schemes for cultural activities. Might be good to check here on GOV.UK. 3) If you pay VAT in EU countries, you can reclaim VAT in UK. You need to reclaim VAT while filing in your VAT returns. But be careful about your receipts, which can be checked to verify you are not defrauding HMRC. The basic rule is that B2B services are, as the name suggests, supplies from one business to another. And, subject to some exceptions, are treated as made where the customer belongs. No VAT is chargeable on B2B supplies to an overseas customer. But where you make a B2C supply, VAT depends on where your customer is located: 1) if they are outside the EU, you don’t need to charge VAT 2) if they are located in an EU country, then you must charge VAT. Source All in all keep all records of VAT charged and paid to satisfy the taxman. If the rules get complicated, get an accountant to help you out. Don' take chances of interpreting the law yourself, the fines you might pay for wrong interpretation might be a deal breaker.", "title": "" } ]	[ { "docid": "3560962730b36bd73e5f0bc79750065f", "text": "With the W8-Ben filed, tax will be withheld at a lower rate. (I would expect 10%). Tax treaty treatment will mean that this witholding will reduce your UK tax even if this payment is not taxable there. This is only effective if you actually pay tax. This is how it works for lotteries and dividends as well.", "title": "" }, { "docid": "2f60fb76c08ea1f64395a9964f0a8970", "text": "I suspect that the new VATMOSS rules come in to play here. So you owe VAT for donations from EU countries, providing you are below £81k there would be no UK vat payable though, however then you couldn't recoup the vat you paid out. Note I am not an accountant but I did speak to one this week about a similar issue.", "title": "" }, { "docid": "e9f94939f5b071e051a47b7b967a29dd", "text": "It is breaking the law, it's just difficult to demonstrate it. It's easy for international companies to make individual territories look unprofitable, reducing local tax bills. The law forbids this when abused, but not easy to prove. In this case Starbucks execs have been mouthing off about how profitable it is in the UK!", "title": "" }, { "docid": "74d0fa61b92d8638efba87d10c7cae27", "text": "This taxation guide may be helpful in sorting out some of your questions. I'm not entirely versatile with UK tax, so my answer will stay broad. I think the answer may be to consult a professional advisor. You may become non-resident but remain UK domiciled. Everybody has exactly one domicile and it is essentially their permanent home (the place where they intend to one day return and live. The test is based on your intent - do you intend to return to the UK or do you intend to make another land your permanent home? Simply traveling about the world will not establish a new domicile for you. So you may owe some taxes on your worldwide income or capital gains while a UK-domiciled non-resident, as suggested here. If it helps, the UK tax residence rules are listed by HMRC online. If your business is a corporation, there's a different analysis. You may also want to refer to the UK-BVI tax treaty. HMRC offers a tax residence calculator to help sort your residence, if you plan to return often.", "title": "" }, { "docid": "389d8a6a83455ead18724a4ee4a05f95", "text": "The paper is appealing to its readership to consider the profit and loss generated by Starbucks in UK operations as independent of other operations in other countries. Starbucks was profitable in the UK, but they offset these profits with investments in other overseas operations (not UK), to lower their tax rate in the UK. To the Guardian this seems unfair, even though UK law permits this. Seems like there is some case to be made for considering a change in the law.", "title": "" }, { "docid": "4bb02012bad3dddacdc41b24f133285a", "text": "Assuming this to be in the UK, and I suspect the rules are similar elsewhere, this indeed may be true. There is a threshold beneath which a business does not have to register for VAT - currently a turnover of £81,000. A non VAT registered business does not charge VAT but also cannot reclaim the VAT on their business expenses. For some businesses below the threshold it is worthwhile registering because the amount they can reclaim is significant. However, there are also many small businesses that do a lot of cash only jobs so as to not put the money through the books and therefore avoid any tax liability. There are also many who will get the the customer to buy materials direct to avoid including these in their turnover. Like every type of tax rule there is a grey area between people trying to avoid paying more tax than is needed and dodgy deals to avoid paying their fair share of tax.", "title": "" }, { "docid": "5bbb5414747ce9d5812c9eb7c8af0030", "text": "Yes, you can. That the books were purchased from abroad is irrelevant: you incurred an expense in the course of earning your income. If the books are expensive (>$300 per set iirc) you will need to deprecate them over a reasonable life time rather than claiming the entire amount up front. It doesn't matter whether what you got was a VAT Invoice; as long as you have some reasonable documentation of the expense you're ok.", "title": "" }, { "docid": "9fed7947cf3797ff10394446994e2c9d", "text": "The most important thing to remember is that being VAT registered, you must add VAT to every bill, so every bill will be 20% higher. If the bill payer is a company, they don't care because they deduct the 20% VAT from their own VAT bill. If the bill payer is a private person, their cost of your services has just gone up by 20% and it is going to hurt your business. So the question is, what kind of customers do you have? But if your customers are companies, then the flat rate scheme mentioned above is very little work and puts a nice little amount of extra cash in your pocket (suitable if your bills are mostly for your work and not for parts that you buy for the customer and bill them for).", "title": "" }, { "docid": "f3cb37eeb83f058f405b20ac90fddb52", "text": "There's one huge difference. Generally speaking, the entire burden of paying VAT is intended to be placed upon end consumers, and not upon businesses themselves. So ditching corporation tax and increasing VAT would mean shifting a huge amount of the tax burden from corporations to every-day people. Such a policy could kill the party that attempted to push it.", "title": "" }, { "docid": "48b53ceb967c84617f5899bbf19d2dc8", "text": "Usually, your situation is a generalized form of import/export, with you as the net exporter of goods/services and the individual consuming your goods/service as net importer. Import export laws vary from country to country but following are the general tariffs/taxes applicable: Export tax/duty: From your sovereign jurisdiction (read country/region/EU region), there could be export restriction or tariffs applicable to your exported goods/services on the other hand there may not be any, check with EU export law on this and then your country specific law. If there is any tax/tariff payable, you shall have to pay the same on the transactions. Import tax/duty: This is more related to your customer who is purchasing the goods/services from you, however, you should know this. Your customer will be liable to pay any import tax/duty as applicable for importing of your goods/services in that country/region, if it is applicable. Shipping Insurance: If it is a physical goods, there would be shipping and with shipping comes insurance and indemnity (if applicable). So there is a cost to it, you need to be aware of this. Sales Tax: There is no Govt. on earth or history which does not or did not charge sales tax in some form or the other. EU/country will also have sales tax, you should be aware of this as per transaction you may have to pay sales tax to the Govt. This would add to the cost. Credit of Foreign Currency Payments: Some countries have tax/tariffs attached to foreign currency credits/transfers or bank charges attached to the same, you may have to open specific type of bank A/C to receive the credits. These laws are specific to country/region, you should be aware of the same. The above are generic considerations and not specific to EU and to a greater/lesser extent applicable to all countries/regions. Best would be to search the net on the above points for EU region and get answers or approach a chartered accountant who will give you all the information.", "title": "" }, { "docid": "75241ae021a30004005c57a56cb360ab", "text": "If the VAT is offset by not having to pay for employees health insurance, then I wonder what net effect it would have on goods? Also, if the employees are no longer paying for their share of the employer funded health insurance, then that would, effectively, be more money in the employees pockets. You're right though, it all comes down to what the numbers look like.", "title": "" }, { "docid": "31dd8c969c8a715cae3a09966b339ea4", "text": "\"Believe it or not, unless you directly contact an accountant with experience in this field or a lawyer, you may have a tough time getting a direct answer from a reputable source. The reason is two fold. First, legally defining in-game assets is exceptionally difficult from a legal/taxation stand point. Who really owns this data? You or the company that has built the MMO and manages the servers containing all of the data? You can buy-and-sell what is effectively \"\"data\"\" on their servers but the truth is, they own the code, the servers, the data, your access rights, etc. and at any point in time could terminate everything within their systems. This would render the value of your accounts worthless! As such, most countries have overwhelmingly avoided the taxation of in-game \"\"inventory\"\" because it's not really definable. Instead, in game goods are only taxed when they are exchanged for local currency. This is considered a general sale. There may be tax codes in your region for the sale of \"\"digital goods\"\". Otherwise, it should be taxed as sale a standard good with no special stipulations. The bottom line is that you shouldn't expect to find much reliable information on this topic, on the internet. Law's haven't been welled defined, regarding in-game content worth and taxing of sales and if you want to know how you should pay your taxes on these transactions, you need to talk to a good accountant, a lawyer or both.\"", "title": "" }, { "docid": "ed623c193cfc05a8c04cb3925bf45a18", "text": "If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required!", "title": "" }, { "docid": "390033140caf6afd5b6091dd66fc7e81", "text": "\"As far as I know any business can register for VAT regardless of the nature of the business. If all the goods you sell (or services you provide) are VAT-exempt or zero-rated then you will get refunds from HMRC on VAT your business pays. Any business whose non-VAT exempt turnover (which would include zero-rated goods and services provided) exceeds the registration threshold must register, again even if that means they are \"\"forced\"\" to claim refunds. So the only question would be whether your rather nebulous activities were enough to qualify you as a business or organisation to which the VAT regime applies at all. The one-liner answer to that is generally, if goods or services are provided in return for a charge, there’s a business activity for VAT purposes Inevitably there's a much bigger body of statute and case law and it won't always be obvious whether the one-liner answer applies or not to a particular activity so it may be necessary to seek specialist advice.\"", "title": "" }, { "docid": "f124e58474b0b1306f55d91522c674b1", "text": "The big problem I see with this article is it does not state what the profits would be minus the licensing fees. It only states revenue, which is obviously a bad indicator of taxes owed. Also, licensing fees are applicable in some markets. For example in markets like China that mandate a company do business under a subsidiary, licensing is a legitimate expense, considering the subsidiary might not be wholly owned by the parent company (per the country's laws). That said, this is the UK we're talking about, so it is clearly not in that situation. I was just pointing out in some markets it is a legitimate expense. Maybe the UK could make licensing fees a non-deductible expense after a certain percentage of subsidiary income. Its a complex problem, I would be interested to see if any other jurisdictions have tackled it.", "title": "" } ]	fiqa

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